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Nasdaq 100, S&P 500 Hit New Highs on Bipartisan Stimulus Bets. ASX 200 to Rise?

Nasdaq 100, S&P 500 Hit New Highs on Bipartisan Stimulus Bets. ASX 200 to Rise?

Daniel Dubrovsky, Strategist

Nasdaq 100, S&P 500, ASX 200, US Stimulus, Covid Vaccine – Asia Pacific Indices Briefing

  • Nasdaq 100, S&P 500 hit new all-time highs on vaccine, stimulus bets
  • APAC equities could rise, Chinese CPI may dim PBOC normalization
  • ASX 200 pushing for a key resistance break, but momentum is fading
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Wall Street Trading Session Recap

Following a mixed European session, equities pushed higher during Tuesday’s Wall Street trading hours. The tech-heavy Nasdaq Composite (+0.50%) outperformed the S&P 500 (+0.28%), both hitting new all-time highs as the Dow Jones rose 0.35%. The VIX market ‘fear gauge’ declined towards lows seen at the end of November, signaling fading prospects of volatility despite recent surges in coronavirus cases.

Sentiment was bolstered by a couple of developments. First, there were rising prospects of a Covid vaccine rollout in the US. The Food and Drug Administration (FDA) reported that the vaccine by Pfizer and partner BioNTech met expectations of the agency’s guidance. It was about 95 percent effective in preventing the disease as well as found safe. That may open the door to emergency authorization use soon.

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Stimulus bets was another driver of the rosy mood. Senate Majority Leader Mitch McConnell opened the door to setting aside business liability protections if Democrats drop demands for state government aid in the $908 billion bipartisan bill. Meanwhile, Treasury Secretary Steven Mnuchin presented a separate $916b stimulus pitch on the behalf of the Trump Administration that includes state aid and $600 checks per eligible adult.

Taking a look at sectoral performance in the Dow Jones, 80% of constituents closed higher. The top 3 performing sectors were materials (+2.52%), energy (+0.86%) and health care (+0.71%). Meanwhile, the worst-performing one was consumer discretionary (-0.17%).

Dow Jones Sectoral Performance

Nasdaq 100, S&P 500 Hit New Highs on Bipartisan Stimulus Bets. ASX 200 to Rise?

Data Source: Bloomberg

Nasdaq 100 Technical Analysis

Nasdaq 100 futures extended gains, pushing above the 12197 – 12465 resistance zone. That has exposed the 38.20% Fibonacci extension at 12886. Maintaining the focus to the upside is a short-term rising trendline from late October. In the event of a material turn lower, keep a close eye on the medium-term 50-day Simple Moving Average (SMA).

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Nasdaq 100 Futures – Daily Chart

Nasdaq 100, S&P 500 Hit New Highs on Bipartisan Stimulus Bets. ASX 200 to Rise?

Chart Created in TradingView

Wednesday’s Asia Pacific Trading Session – ASX 200, Nikkei 225, Kospi, Chinese CPI

Asia Pacific equities are trading broadly higher during morning Wednesday trade, following the rosy lead from Wall Street. Dow Jones and S&P 500 futures are also rising. As such, regional equities such as Australia’s ASX 200 and Japan’s Nikkei 225 may extend gains. South Korea’s Kospi index is attempting to recover Tuesday’s 1.62% drop which may have been as a result of profit-taking following persistent gains.

Reports crossed the wires that Speaker of the House Nancy Pelosi and Senate Minority Leader Chuck Schumer said Mnuchin’s proposed plan was ‘unacceptable’. For now, traders seem to be focused on the bipartisan relief bill as well as Covid vaccine distribution. This update may come back into play down the road if more gridlock delays much-needed fiscal support.

Chinese CPI turned negative both y/y and m/m in November, the first time since 2009. That has poured cold water on PBOC normalization bets which may offer a boost to the Shanghai Composite and CSI 300. Later today, Canada’s TSX Composite index is eyeing the BoC rate decision. For more data, check out the DailyFX economic calendar.

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ASX 200 Technical Analysis

The ASX 200 is attempting to climb above the November high at 6713, exposing the 6893 inflection zone. Negative RSI divergence is showing that upside momentum is fading. This may precede a turn lower, placing the focus on the inflection zone from August 2019 between 6396 and 6475. The broader uptrend could hold via the 50-day SMA in the event of a material pullback.

ASX 200 – Daily Chart

Nasdaq 100, S&P 500 Hit New Highs on Bipartisan Stimulus Bets. ASX 200 to Rise?

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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