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S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

2020-10-09 02:00:00
Margaret Yang, CFA, Strategist
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S&P 500, NIKKEI 225 INDEX OUTLOOK:

  • S&P 500 index futures extended gains after climbing 0.8%, all eleven sectors ended higher
  • Nikkei 225 index has broken through a key resistance level at 23,500, opening more room for upside
  • Mainland Chinese stock exchanges resume trading today, Caixin service PMI in focus
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S&P 500 Index Outlook:

The S&P 500 index climbed to a one-month high at 3,446 after the vice presidential debate, in which Democratic nominee Kamala Harris seemed to have outshined Republican nominee Mike Pence. Markets are perhaps pricing in a post-election fiscal stimulus package, even though chances for a near-term solution likely remains thin.

Polls shows that Joe Biden is having a wider advantage over Donald Trump after the debates so far. Pro-Biden votes increased from 279 to 308 from September 30th to October 8th, whereas pro-Trump votes rose only from 119 to 125 during the same period of time. A wider poll gap, however, will not eliminate all the political uncertainty and guarantee a Democratic sweep. The roadmap to the US election is likely to remain bumpy and investors should adopt a cautious risk management approach during these volatile times.

2020 Electoral Map Based on Polls – October 8th 2020

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

Source: 270towin.com

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Asia-Pacific markets look set to open mixed as Chinese investors return from the “golden week” break. Caixin China Service PMI, UK August GDP, the Reserve Bank of India (RBI) interest rate decision and Canada’s unemployment rate are among top data risk today. Read more on our economic calendar.

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

Source: Bloomberg, DailyFX

Sector-wise, all eleven S&P 500 sectors closed in the green, with 84.4% of the constituent companies ending higher. Energy (+3.76%), utilities (+1.80%), real estate (+1.59%) and financials (+1.36%) are among the best performers.

S&P 500 Index Sector Performance 8-10-2020

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

Source: Bloomberg, DailyFX

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Technically,the S&P 500 index extended its upward trajectory as it cleared higher highs. It has broken above its 20- and 100-Day Simple Moving Average (SMA) lines recently, aiming for more upside potential. As the index attempts to break the upper bound of its Bollinger Band (chart below), the band width may widen further. This movement appears bullish-biased, although the upper Bollinger Band may also serve as an immediate resistance level.

The MACD indicator is expanding further into the positive territory, pointing to strong upward momentum. A key resistance level may be observed at 3,550 – the previous peak and all-time high.

S&P 500 IndexDaily Chart

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

Nikkei 225 Index Outlook:

Japan’s August household spending came in at -6.9% YoY, marking a slight improvement form -7.6% seen in the previous month. The reading was largely in line with economists’ expectations. USD/JPY is little moved these two days, consolidating at around 106.0 area.

Technically, Japan’s Nikkei 225 index has likely broken a key resistance level at 23,500 and has since opened room for further upside towards the next resistance at 24,000. Its 20-, 50- and 100-Day SMA lines are sloped upwards, suggesting that upward trend remains intact.

Nikkei 225 Index Daily Chart

S&P 500 Climbs to One-Month High, Nikkei 225 Breaks Key Resistance

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

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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