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Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Margaret Yang, CFA, Strategist

S&P 500, NIKKEI 225, ASIA-PACIFIC MARKET OUTLOOK:

  • US stocks erased gains on Pfizer’s vaccine news, setting a mixed tone for APAC
  • Congress moved a step closer to reaching a relief package, sinking the US Dollar
  • Asia-Pacific stock market rally appears to be talking a pause; nonfarm payroll data in focus
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Asia-Pacific stocks opened mixed after Wall Street stocks were sold off in late trading hours. The Nikkei 225 index edged lower while the ASX 200 index struggled to hold gains. Futures across Hong Kong, Singapore, Malaysia, India and Thailand pointed to small gains at open.

The Dow Jones and Nasdaq closed 0.29% and 0.23% higher respectively, while the S&P 500 index ended with marginal losses. This is after news crossed the wires that Pfizer will cut its coronavirus vaccine distribution capacity by half this year to 50 million doses due to supply chain issues. The company kept its 1 billion doses target unchanged for 2021. Meanwhile, Moderna’s recent study shows its vaccine has potential for durable immunity.

A bipartisan stimulus package received more support from Republicans, raising prospects for a deal to be struck by end of the year. The US Dollar sank as a result, sending crude oil and precious metal prices higher. Energy (+1.07%) was once again the best performing sector among S&P 500 peers on Thursday. The DXY US Dollar index fell to a two-and-half-year low of 90.60.

US Dollar Index

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Chart from IG

On the macro side, tonight’s nonfarm payroll report will be closely scrutinized by investors to assess the health of the US job market amid another viral wave. Economists foresee a 475k increase in nonfarm jobs in November, marking a fifth consecutive monthly slowdown in positions added. The unemployment rate is expected to decline to 6.8% partly due to a pause in the labor force participation rebound. A large deviation from the consensus readings could potentially lead to a spike in volatility in the US Dollar, bond and equity markets. Read more from DailyFX’s economic calendar.

US Nonfarm Payroll Forecast

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Source: Bloomberg, DailyFX

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Sector-wise, 6 out of 11 S&P 500 sectors closed in the green, with 57.2% of the index’s constituents ending higher on Thursday. Energy (+1.07%) and real estate (+0.73%) were doing the heavy lifting, whereas utilities (-1.10%), materials (-0.68%) and communication services (-0.40%) were lagging behind.

S&P 500 Sector Performance 03-12-2020

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Source: Bloomberg, DailyFX

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S&P 500 Index Technical Analysis:

The S&P 500 index trades higher within an “Ascending Channel” as highlighted in the chart below. The uptrend was well supported by its 20-Day Simple Moving Average (SMA) line. Immediate support and resistance level can be found at 3,66 (38.2% Fibonacci extension) and 3,705 (50.0% Fibonacci extension) respectively. A narrowing Bollinger Band width points to a weakening upward momentum however, which points to risk of a possible technical pullback.

S&P 500 IndexDaily Chart

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index appears to have entered a consolidative period and has fallen to the lower bound of its “Ascending Channel” (chart below). Breaking the lower bound may lead to further downside potential. Immediate support levels can be found at 26,700 (61.8% Fibonacci extension) and then 26,350 (50% Fibonacci extension). An MACD divergence appears to be forming, highlighting risk of a potential trend reversal.

Nikkei 225 Index Daily Chart

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll

ASX 200 Index Technical Analysis:

The ASX 200 index entered a brief correction since the end of November, retracing from a 9-month high. The overall trend is well supported by its 20-Day SMA, which serves as an immediate support. An immediate resistance level can be found at 6,642 – the 23.6% Fibonacci extension.

ASX 200 Index Daily Chart

Nikkei 225, ASX 200 Hover At Recent Highs Ahead of Nonfarm Payroll
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--- 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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