Nasdaq Leads Nikkei 225 and ASX 200 Lower, US-China Talks Postponed

NASDAQ, NIKKEI 225, ASX 200 INDEX OUTLOOK:

• Nasdaq composite retraced 0.21% from its all-time-high, consolidating at 11,160
• Nikkei 225 index failed to break through 23,300 resistance, positioning to open lower
• ASX 200 index fell to support at 6,100 support as Australia extended lockdown to mid-Sep

Nasdaq Index Outlook:

Nasdaq retraced slightly after hitting its all-time-high of 11,250 last Thursday. The index has surged 68% from its trough observed in late March, making it one of the best-performing major stock indices this year. Market participants are waiting for this Wednesday’s Federal Reserve meeting minutes for clues about the inflation outlook and any shift in policy tone.

The postponing of the review of the phase-one US-China trade deal adds uncertainty to the Chinese technology sector, as well as general trading sentiment across the Asia-Pacific region. Investors may remain cautious before trade talks deliver a clear message.

Technically, Nasdaq is trending up nicely in an ‘ascending channel’ as highlighted in the chart below. Upward momentum seems to show no sign of reversing soon. Immediate support level can be found at the 20-Day Simple Moving Average (SMA) line at 10,960.

Nasdaq Index – Daily Chart

Nikkei 225 Index Outlook:

The Nikkei 225 index is set to open 0.68% lower at 23,120, as suggested by the futures markets.Japan’s 2Q GDP reading came in at an annualized rate of -27.8%, slightly lower than the markets’ forecast of a -27.2% decline. On a QoQ basis, the economy shrank 7.8%, also missing consensus forecasts of a 7.6% decline. A weaker GDP reading may inhibit risk-taking in the stock market today.

Uncertainties surrounding US-China trade talks may also have some impact on investor confidence.

Technically, the Nikkei 225 index has broken above the 21,800 to 22,900 range and moved higher. Its immediate resistance level could be found at 23,300 – the previous high seen in early June. Its 20- and 50-Day Simple Moving Averages (SMAs) lines are likely becoming immediate support levels. Breaking above 23,300 will likely open the door for more upside towards resistance at 24,000.

Nikkei 225 Index – Daily Chart

ASX 200 Outlook:

Australia’s ASX 200 (ASX) index stock market benchmark is set to open lower at around 6,040, according to the futures markets. Victoria’s state of emergency declaration was extended to mid-September, despite falling daily cases recently (Chart below).

Source: health.gov.au

Technically, the ASX 200 index has fallen back to its ‘ascending triangle’ as shown in the chart below, failing to register a meaningful break above key resistance at 6,100. It’s overall trend, however, remains bullish as the 20-Day, 50-Day and 100-Day Simple Moving Averages (SMAs) are all moving upwards.

ASX 200 Index – Daily Chart

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter