Dow Jones pulls back as Nasdaq rises, Hang Seng could rise

DOW JONES, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:

  • It closed the Dow Jones, S&P 500 and Nasdaq 100 indices -0.16%, + 0.43% and + 1.12% respectively
  • Cyclical sectors retreated as tech stocks rose on Monday, encouraging the Fed’s patient stance on rate hikes.
  • China’s NBS manufacturing PMI disappoints. APAC markets are positioned to trade higher

Jackson Hole, Tech Rally, USD, Crude Oil, Asia Pacific in Open:

Wall Street stocks spiked higher into record territory as market participants welcomed a dove-guilt message from Fed Chairman Jerome Powell in his speech to the Jackson Hole symposium last week. Powell said the central bank is likely to start cutting its bond buying program by $ 120 billion a month later this year, largely in line with market expectations. He also noted that interest rate increases will not follow immediately after the reduction is completed. That said, the environment’s ultra-low interest rate is here to stay, benefiting the tech sector that is probably the most sensitive to switching to fees.

Markets responded positively, with the S&P 500 and Nasdaq 100 climbing 0.43% and 1.12% up respectively Monday. Dow Jones However, the industrial average lost 0.16% due to the decline of the cyclically oriented sectors. Consolidated US Dollar DXY Index along with Treasury yields, easing pressure on risky assets. This suggests investors are well prepared for downsizing and Powell’s speech has allayed market fears and boosted sentiment.

Meanwhile, the Chinese NBS manufacturing PMI reading fell to 50.1 in August, below the base forecast of 50.2. This also marked the lowest reading since February 2020, when the Covid-19 epidemic broke out. A weaker-than-expected expansion in the manufacturing sector underscored the growing downward momentum in the world’s second-largest economy. This could weigh on business confidence in the Asia Pacific markets today.

NBS China Manufacturing PMI – last 12 months

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Source: Bloomberg, DailyFX

Asia-Pacific markets are positioned to start the day on a mixed basis. futures of Japan, mainland China, South Korea, Taiwan, Singapore and India are in red, and those of Australia, Hong Kong, Malaysia and Thailand are in green.

Looking ahead, the eurozone’s core inflation rate drives the economic agenda alongside consumer confidence from the US central bank. Meanwhile, traders are also waiting for Friday’s US Non-Farm Payroll Issue for clues on the Fed’s next policy move. Learn more at DailyFX Calendar.

Hong Kong’s Hang Seng Index (HSI) on Monday rose 0.52% as investors took the recent selloff as an opportunity to rack up more. Equity bonds posted HK $ 4.17 billion in net outflows to the south, marking a 4-day total loss of HK $ 11.56 billion. It suggests mainland investors remain bearish on Hong Kong stocks amid an intensification of regulatory crackdown on the private sector. overall trend remains bearish for the Hang Seng Index.

Hang Seng vs. flows south

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Source: Bloomberg, DailyFX

Looking back to Monday’s close, 4 of the 9 sectors of the Dow Jones finished higher, with 50% of the index components closing in the green. Basic needs (+ 0.63%), discretionary consumption (+ 0.45%) and information technology (+ 0.42%) were among the best, while materials (-2.14%) and financial (-1.72%).

Dow Jones Industry trend 08-30-2021

Source: Bloomberg, DailyFX

Technical analysis of the Dow Jones index

Dow Jones Index broke a key resistance level at 34,920, thus opening the door for further gains towards 37,500, the Fibonacci extension of 261.8%. Prices remain in an ‘upward channel’, as highlighted in the chart below, suggesting that the overall trend remains biased upward. However, the MACD’s bearish divergence suggests that the bullish momentum may weaken.

Dow Jones Index – Daily Chart

Hang Seng Index Technical Analysis:

Hang Seng Index has formed an “ascending triangle” with a downtrend in recent months. An immediate support level can be found at 24,850, followed by 23,125, the previous low seen in September 2020. Breaking immediate resistance at 26,200 could open the door to higher profits. MACD indicator has recently formed a higher low, suggesting that it may be picking up bullish momentum.

Hang Seng Index – Daily Chart

ASX 200 Index Technical Analysis:

ASX 200 index retreated sharply to test an immediate support level at 7,500, the previous resistance. overall trend remains bullish, as suggested by the consecutive highs and lows formed in recent months. MACD indicator formed a bearish crossover after hitting trend line resistance, suggesting that selling pressure may prevail.

ASX 200 Index – Daily Chart

– Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy in R.

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