Hang Seng May Gain With S&P 500 on Moderna Vaccine Breakthrough

HANG SENG, ASX 200, S&P 500 INDEX OUTLOOK:

• US equities climbed for a second day on positive vaccine news, Dow and S&P 500 at all-time highs
• Hong Kong’s Hang Seng Index (HSI) and Australia’s ASX 200 index look set to extend gains
• Vaccine breakthroughs may boost cyclical sectors more than the tech shares

Moderna’s Vaccine, S&P 500, Asia-Pacific at Open:

The prospects for an economic recovery was brightened by another vaccine breakthrough, which propelled US stocks to their record highs. US biopharmaceutical company Moderna reported a 94.5% effective rate of its coronavirus vaccine named mRNA-1273, according to an interim analysis of a late-stage clinical trial. The news echoed Pfizer’s vaccine, which was proven 90% effective in a phase-3 clinical study earlier last week. Unlike Pfizer's vaccine, Moderna's shot can be stored at normal fridge temperatures, which should make it easier to distribute.

It means that the US will likely have two types of coronavirus vaccines available for emergency use as early as December, which may be viewed as “the light at the end of the tunnel”. The Dow Jones, the S&P 500 and the Nasdaq indexes rose 1.60%, 1.16% and 0.80% respectively on Monday, propelled by encouraging vaccine news. The Dow Jones and the S&P 500 also closed at all-time highs.

Electric car maker Tesla will join the S&P 500 index in December. The company’s share price jumped more than 13.5% in afterhours trade. As of Monday’s close, Tesla’s market cap stood at US$ 386 billion, which is roughly 19% of Apple’s size. Tesla’s inclusion into the S&P 500 index will not only result in passive inflows into the stock via index-tracking ETFs and funds, but also in making the S&P 500 index more diversified.

Cyclical sectors namely energy (+6.5%), industrials (+2.48%), financials (2.28%) and materials (2.00%) outperformed the defensive healthcare (-0.19%) and real estate (+0.51%) on Monday, as investors continued to reshuffle their portfolios in response to positive vaccine news. The technology sector gained 0.98%, losing some steam after registering an astonishing gain this year.

S&P 500 Sector Performance 16-11-2020

Source: Bloomberg, DailyFX

Asia-Pacific stocks look set to open mildly higher, with Japan’s Nikkei 225, Australia’s ASX 200, and Hong Kong’s Hang Seng Index (HSI) futures all pointing to extend Monday’s gains, albeit at a smaller magnitude.

On the macro front, US retail sales is among the top events today. Find out more on the DailyFX economic calendar.

S&P 500 Index Technical Analysis:

Technically, the S&P 500 index has likely broken above a key resistance level at 3,550, which has since became a support level. The index appears to be riding an upward trend with its Bollinger Band width widening, reflecting strong bullish momentum. An immediate resistance level can be found at around 3,660 – the 38.2% Fibonacci extension.

S&P 500 Index – Daily Chart

Hang Seng Index Technical Analysis:

The Hang Seng Index (HSI)appears to have regained strength after a brief correction seen last week. The overall trend remains bullish-biased, with the 20-, 50- and 100-Day Simple Moving Averages (SMAs) all sloping upward. 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.

Hang Seng Index – Daily Chart

ASX 200 Index Technical Analysis:

Technically, the ASX 200 index is facing an immediate resistance level at 6,530 – the 76.4% Fibonacci retracement. The overall trend appears bullish-biased, although some near-term consolidation could be seen before it attempts to break the resistance once again. An immediate support level can be found at 6,400.

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