Hang Seng, ASX 200 May Fall with S&P 500 as Vaccine Optimism Cools
HANG SENG, ASX 200, S&P 500 INDEX OUTLOOK:
- Havens were on bid as rising coronavirus cases threatened another lockdown wave
- US equity indices closed broadly lower as markets reassessed the vaccine’s impact
- Hang Seng Index (HSI), ASX 200 index may face a near-term pullback amid souring sentiment
Rising Covid-19 Cases, S&P 500, Asia-Pacific at Open:
US equity indices ended broadly lower on Thursday, dragged by cyclically-linked energy and material sectors. A “risk off” sentiment is prevailing at Asia-Pacific open, as global Covid-19 infections continue climbing at an alarming rate, posing a risk for more lockdown measures around the globe. Around the world, new coronavirus cases surpassed 7.3 million over the past 14 days, reaching a record high. Meanwhile, vaccine optimism appeared to have cooled as investors re-focused on near-term headwinds. The Dow Jones, S&P 500 and Nasdaq index closed at -1.08%, -1.00% and -0.65% respectively.
The US 10-year Treasury yield fell 80 bps to 0.881%, flagging souring risk appetite as capital fled into the safe-havens. In the forex market, the risk-sensitive New Zealand Dollar was among the worst-performing G10 currencies, reflecting fragile market sentiment. Crude oil and gold prices retreated.
Asia-Pacific stocks look set to open broadly lower, with Japan’s Nikkei 225, Australia’s ASX 200, Singapore’s Straits Times Index (STI) and Hong Kong’s Hang Seng Index (HSI) futures all pointing to retreat from recent highs. Profit taking could be the main theme on Friday as vaccine enthusiasm faded while pandemic risk is back in the center of the stage.
Global New Covid-19 Cases Surpassed 7 Million in The Last 14 Days
On the macro front, Hong Kong, Russia and the EU will post their Q3 GDP readings later today. Several Fed and BoE officials will deliver speeches, which will be eyed for further stimulus hints as the pandemic swept the US and most parts of the EU. The University of Michigan Consumer Sentiment is also among the top events. Find out more on the DailyFX economic calendar.
Sector-wise, all eleven S&P 500 sectors closed in the red, with 87.9% of the index’s constituents ending lower on Thursday. Energy (-3.39%), materials (-2.17%) and utilities (-1.73%) were among the hardest hit, whereas defensive consumer staples (-0.21%) healthcare (-0.40%) registered smaller losses.
S&P 500 Sector Performance 12-11-2020
Source: Bloomberg, DailyFX
S&P 500 Index Technical Analysis:
Technically, the S&P 500 index retreated to test a key support level at 3,550, which was once a key resistance. Support levels, once broken, become immediate support levels. Profit taking activities may kick in after a strong rally last week. The MACD indicator appeared to have flattened, reflecting weakening upward momentum. Holding above 3,550 may pave way for further upsides, whereas breaking below may lead to a deeper pullback. An immediate resistance level can be found at around 3,610.
S&P 500 Index – Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng Index (HSI) has likely entered a consolidative phase after rising more than 11% in early November. An immediate resistance level can be found at 26,840 – which is the 161.8% Fibonacci extension level. An immediate support level can be found at around 25,740 – the 100% Fibonacci extension. Near-term momentum appears to biased towards the downside, whereas the overall trend remains bullish-biased.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
Technically, the ASX 200 appears to have entered a consolidative phase after registering an impressive 9.5% month-to-date gain. The index retreated after hitting a key resistance level at 6,525, which is the 76.4% Fibonacci retracement. The overall trend remains bullish-biased, but some short term pullback is possible as the RSI indicator has reached overbought territory following a strong rally over the past two weeks. A key support level can be found at around 6,200 – previous key resistance.
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
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.