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Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

Margaret Yang, CFA, Strategist

NASDAQ 100, ASX 200, HANG SENG INDEX OUTLOOK:

  • APAC stocks may rebound following a strong lead on Wall Street, oil climbed to a 9-month high
  • Senate Majority Leader Mitch McConnel hinted that a Covid-relief package might be around the corner
  • Traders are holding their breath for the FOMC meeting, the USD sank to a 2.5-year low
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Risk-On Session, US Relief Package, FOMC Meeting, Asia-Pacific at Open:

Asia-Pacific equities look set to open broadly higher after a ‘risk-on’ session on Wall Street overnight. US stocks gained across all sectors as House and Senate leaders continued their negotiation over a Covid relief package on Tuesday evening. In view of rapidly climbing coronavirus cases across the country and a softer job market environment, lawmakers might face the urgency to strike a deal that is needed to support small business loans, jobless benefits and vaccine distribution. Senate Majority Leader Mitch McConnell said that they won’t leave for the new year without an agreement.

Nikkei 225, ASX 200 and Hang Seng Index futures are up 0.56%, 0.88% and 0.50% respectively, setting a positive tone for the rest of the Asia-Pacific. Singapore’s Straits Times Index is poised to open 0.78% higher.

Among Hang Seng Index constituents, technology and financial sectors dragged the index lower on Tuesday. Tencent (-1.93%), Alibaba (-2.23%), Meituan (-2.97%), HSBC (-0.85%), HKEX (-1.39%) were among the top losers yesterday. A strong rally in the Nasdaq 100 index overnight could give Hong Kong’s tech stocks a boost.

Hang Seng Index Sector Performance 15-12-2020

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

The Nasdaq 100 index jumped 1.25% and closed just beneath its all-time high overnight. The S&P 500 and Dow rebounded 1.29% and 1.13% respectively amid favorable sentiment. All 11 S&P 500 sectors ended higher, with 89.9% of the index’s constituents closing in the green on Tuesday. Utilities (+1.94%) , energy (+1.92%) and materials (+1.88%) were among the best performers, while consumer staples (+0.23%) and communication services (+0.70%) registered smaller gains.

S&P 500 Sector Performance 15-12-2020

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

Source: Bloomberg, DailyFX

The DXY US Dollar index edged lower amid strength in the British Pound, Canadian Dollar and Norwegian Krone. The Sterling was underpinned by an extension of the Brexit talks after EU and UK failed to strike a deal to meet last week’s deadline. The commodity-linked Canadian Dollar and Norwegian Krone were supported by rising crude oil prices, which have surged to a 9-month high.

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The US Dollar fell to a 2.5-year low ahead of Wednesday’s FOMC meeting and the Federal Reserve interest rate decision. A weaker USD hints that markets are probably anticipating an even more dovish stance from the central bank in view of worsening virus situations across the country.

DXY US Dollar Index – 4-Hour Chart

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

Chart from IG

Aside from the FOMC meeting, core inflation rates from the UK and Canada, alongside US retail sales and Markit Manufacturing PMI figures are also among the top events today. Find out more on the DailyFX economic calendar.

Nasdaq 100 Technical Analysis:

The Nasdaq 100 index appears to have rebounded from the 50% Fibonacci extension level and is about to challenge the 76.4% Fibonacci extension level of 12,620. An immediate support level can be found at 12,410, where the 20-Day Simple Moving Average (SMA) line and the 61.8% Fibonacci extension level intercept. The overall trend remains bullish-biased, as highlighted in the green “Ascending Channel” below.

Nasdaq 100 Index Daily Chart

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?

Hang Seng Index Technical Analysis:

The Hang Seng Index has entered a “Range-bound” trading condition since December as highlighted in the red zone below. The MACD indicator formed a “Death Cross” and trended lower since, reflecting bearish momentum. The lower Bollinger Band may serve as an dynamic support level for the near term, whereas the 20-Day Simple Moving Average (SMA) line can be viewed as an immediate resistance level.

Hang Seng Index – Daily Chart

Nasdaq 100 Approaches All-Time High, Will Hang Seng and ASX 200 Follow?
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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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