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Asia Pacific Markets Wrap Talking Points

  • Upside momentum on US-China trade news dissipates as Asia stocks fall
  • Will Fed Chair Jerome Powell offer sigh of relief if stocks aim lower next?
  • Technical warning signs hint that the S&P 500 could turn around ahead

Find out what retail traders’ equities buy and sell decisions say about the coming price trend!

Asia Pacific benchmark stock indexes generally traded lower in the aftermath of supposedly supportive fundamental news. On Monday, US President Donald Trump said that the planned tariff hike on around $200b in Chinese import tariffs would be postponed. This update helped most global equities rise over the past 24 hours, but upside momentum quickly fell apart.

Japan’s Nikkei 225 and South Korea’s KOSPI both declined about 0.4% heading into the close. Meanwhile, Australia’s ASX 200 was on pace for its worst performance since the beginning of this month, falling over one percent. Chinese indexes saw the best performance with the Shanghai Composite gaining around 0.9%.

Taking a look at currencies, the anti-risk Japanese Yen aimed higher alongside the similarly-behaving Swiss Franc. On the flip side of the spectrum, the sentiment-oriented Australian and New Zealand Dollars cautiously weakened. The latest Brexit news, as UK Prime Minister Theresa May is mulling delaying it, kept the British Pound afloat.

Over the remainder of the day, Fed Chair Jerome Powell is set to testify before Congress. Recently, certainty around the possibility that the central bank could halt a runoff in its balance sheet boosted optimism in the markets. If Mr Powell reiterates the support for this, as opposed to the uncertainty around the path for rates, this may offer a sigh of relief for stocks if they tread lower ahead. S&P 500 futures are pointing to the downside.

S&P 500 Futures Technical Analysis

After failing to push into resistance (2824.25 – 2814.00), S&P 500 futures formed a shooting star candlestick on the daily chart below. This is a sign of indecision that can at times, precede a turn lower. This might be the case given the presence of negative RSI divergence which shows fading upside momentum. Near-term support is a rising trend line from earlier this year.

S&P 500 Futures Daily Chart

Stocks Eye Powell Testimony, Technical Signs Hint S&P 500 May Top

Chart Created in TradingView

FX Trading Resources

--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter