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S&P 500 Gains on Fed, ASX 200 May Follow. Indonesia, Philippine Rates Next

S&P 500 Gains on Fed, ASX 200 May Follow. Indonesia, Philippine Rates Next

Daniel Dubrovsky, Strategist

S&P 500, Fed, ASX 200, AU jobs, Indonesian and Philippine Central Banks – Asia Pacific Indices Briefing

  • S&P 500 recovers on Fed rate decision after disappointing retail sales
  • APAC equities may rise, with ASX 200 benefiting from local jobs data
  • Indonesian and Philippine equities eyeing local central bank meetings
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Wednesday Wall Street Trading Session Recap

US equities largely traded higher on Wednesday following gains in European shares, with the S&P 500 rising 0.18% as the tech-heavy Nasdaq Composite climbed 0.50%. The Dow Jones Industrial Average lagged behind slightly, falling 0.15% as energy and industrials shares dragged the index lower. A disappointing retail sales report was partially offset by the FOMC monetary policy announcement later in the session.

The former slumped 1.1% m/m, worse than the -0.3% estimate and continues an overall downward trend since May. Consumption is the largest segment of the world’s largest economy. The data is a worrying sign as government officials have yet to come to terms with another fiscal package since the US$2.2 trillion CARES act expired earlier this year.

As for the Fed, Chair Jerome Powell cooled what was initially perceived as slight hawkishness after the central bank raised economic and inflation projections higher for next year. Benchmark lending rates were left unchanged and the central bank will continue bond purchases at US$120 billion per month until ‘substantial’ progress is made on goals. He added that markets will receive a warning before changes are made to QE.

S&P 500 Sectoral Performance

Focusing on the S&P 500, only 41.7% of stocks ended higher on Wednesday. The best-performing sectors were consumer discretionary (+1.07%) and information technology (+0.74%). Meanwhile, utilities (-1.15%) and industrials (-0.61%) underperformed.

S&P 500 Gains on Fed, ASX 200 May Follow. Indonesia, Philippine Rates Next

Data Source: Bloomberg

S&P 500 Technical Analysis

S&P 500 futures remain in a precarious setting. Last week, a ‘Bearish Engulfing’ candlestick pattern formed. While there was some follow-through, the near-term 20-day Simple Moving Average (SMA) maintained the focus to the upside. This leaves the index in a fairly neutral setting as it hovers under the 38.2% Fibonacci extension using March–August as the uptrend and the dip in September as the retracement.

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S&P 500 Futures – Daily Chart

S&P 500 Gains on Fed, ASX 200 May Follow. Indonesia, Philippine Rates Next

Chart Created in TradingView

Thursday’s Asia Pacific Trading Session – ASX 200, Nikkei 225, Indonesian and Philippine Central Banks

Asia Pacific equities may follow the cautiously optimistic lead from Wall Street. Japan’s Nikkei 225 index gained slightly at the open. Futures tracking Hong Kong’s Hang Seng Index appear little changed. A bit of caution could be expected, especially as policymakers from the US continue to negotiate a bipartisan Covid relief package. Senate Majority Leader Mitch McConnell said he still thinks they are ‘going to get there’.

Australia’s ASX 200 rallied in the aftermath of a stellar local jobs report as the unemployment rate dipped to 6.8% in November from 7.0% prior. The RBA is unlikely to shift away from its ultra-lose setting in the near-term, opening the door to gains in local equities.

Indonesian and Philippine equities are eyeing local interest rate decisions. Benchmark lending rates are anticipated to remain unchanged after surprise cuts last month. The focus on keeping policy accommodative ahead may continue supporting stocks, though they remain sensitive to capital flows and external trends.

For more data, check out the DailyFX economic calendar.

ASX 200 Technical Analysis

The ASX 200 continues to trade within an ‘Ascending Triangle’ chart pattern. This is typically a bullish continuation formation. A break above the 6713 – 6745 resistance zone opens the door to extending gains since late March. However, keep a close eye on RSI. Signs of negative divergence could hint at fading upside momentum, opening the door to a turn lower.

ASX 200 – Daily Chart

S&P 500 Gains on Fed, ASX 200 May Follow. Indonesia, Philippine Rates Next

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

https://www.tradingview.com/symbols/XJO

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

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