NIKKEI 225, ASX 200, S&P 500 INDEX OUTLOOK:
- Encouraging vaccine news boosted cyclical energy, financials, industrials and materials sectors
- Nikkei 225 and ASX 200 indexes look set to aim higher highs as safe haven assets retrace
- US equity futures climbed as the General Services Administration (GSA) was reported ready to begin the post-election transition
Astra-Oxford vaccine, GSA report, Asia-Pacific at Open:
US futures extended gains after the General Services Administration (GSA) filed a report to inform president-elect Joe Biden that it is ready to begin the transition process. This seems to have mostly cleared the uncertainties surrounding the post-election disputes, confirming Mr Biden’s victory. The Dow Jones, S&P 500 and Nasdaq futures are in a ‘risk on’ mood after climbing 1.12%, 0.56% and 0.22% respectively on another encouraging vaccine breakthrough.
Successful trial results from the Astra-Oxford coronavirus vaccine marks a third promising candidate to fight the pandemic following Pfizer and Moderna, which announced encouraging trial results earlier this month. More successful developments may bring the world a step closer to relaxing social distancing and travel restrictions, allowing businesses to normalize gradually. A key advantage of the Astra-Oxford vaccine is its relatively low cost – at £3 a dose – compared with more than £20 for the Pfizer and Moderna vaccines. This means it might be a lot more affordable to emerging countries, especially those who face public health funding shortages.
Asia-Pacific markets look set to follow a bullish US lead, with equity futures pointing to a higher start in Japan, Australia, Mainland China, South Korea, Singapore and Thailand. The Nikkei 225 index jumped 2.3% as it reopened on Tuesday.
On the currency front, the New Zealand Dollar surged 0.6% against the greenback after its Finance Minister Grant Robertson raised concerns over rising house prices to the central bank, proposing the RBNZ to consider adding house prices as a factor when making monetary decisions. The New Zealand and Australian dollars are among the best performing G10 currencies on Tuesday morning.
The Markit US Manufacturing PMI reading came well above market expectations at 56.7, registering its fastest pace of expansion in 74 months. Markit economist Chris Williamson painted an optimistic outlook, writing that “Expectations about the year ahead have surged to the most optimistic for over six years, reflecting the combination of a post-election lift to confidence and encouraging news that vaccines may allow a return to more normal business conditions”
Markit US Manufacturing PMI
Source: DailyFX
Sector-wise, 7 out of 11 S&P 500 sectors ended higher, with 73.1% of the index’s constituents closing in the green. Cyclical energy (+7.09%) , financials (+1.88%) and industrials (1.64%) were among the best performers, whereas real estate (-0.34%), healthcare (-0.30%) and information technology (-0.03%) were lagging.
S&P 500 Average Sector Performance 23-11-2020
Source: Bloomberg, DailyFX
On the macro front, German final Q3 GDP growth rate, the IFO business climate index, ECB President Christine Lagarde’s speech and US CB consumer confidence data are among the top events later. Find out more on the DailyFX economic calendar.
S&P 500 Index Technical Analysis:
The S&P 500 index rebounded from an immediate support level at 3,550, attempting to challenge the 23.6% Fibonacci extension level at 3,606. Some range trading between 3,550 and 3,606 could be seen before a solid breakout can be seen, as the MACD indicator has likely formed a “Death Cross” recently.
S&P 500 Index – Daily Chart
Nikkei 225 Index Technical Analysis:
Technically, the Nikkei 225 index broke above the “Ascending Wedge” that it formed since early June, propelled by strong upward momentum. The index hit a multi-year high of 26,200 before entering into a technical correction. Prices appear to have regained strength after the brief consolidation period, and may attempt higher highs. Immediate resistance levels can be found at 26,366, followed by 26,763.
Nikkei 225 Index – Daily Chart
ASX 200 Index Technical Analysis:
Technically, the ASX 200 index has broken above several key resistance levels this month, reflecting strong upward momentum. An immediate resistance level can be found at 6,642 – the 38.2% Fibonacci extension. Breaking above this level may open the door to further upside potential with an eye on 6,724 0 the 50% Fibonacci extension.
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
