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ASX 200, Nikkei 225 Climb as S&P 500 Hits Record High on Stimulus Bill

ASX 200, Nikkei 225 Climb as S&P 500 Hits Record High on Stimulus Bill

Margaret Yang, CFA, Former Strategist

S&P 500, NIKKEI 225, ASX 200 INDEX OUTLOOK:

  • ASX 200, Nikkei 225 indexes likely to follow a strong US lead overnight and trade higher
  • President Trump signed a giant US$ 2.3 trillion bill containing funding and stimulus, buoying sentiment
  • Nasdaq 100 and Shenzhen Composite are among the best performing indexes YTD, while the FTSE 100 and STI lagged global peers
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Record US session, Stimulus, YTD Performance, Asia-Pacific at Open:

Stocks across the Asia-Pacific may embrace a ‘risk-on’ session as all three major US indices hit their record highs on Monday after President Donald Trump signed on a US$ 2.3 trillion package. The giant spending bill that contains $900 billion in pandemic relief aid and $1.4 trillion in government spending will provide much needed support to individuals and small businesses to counter the pandemic’s impact.

The ASX 200 index resumes trading from the Christmas holiday break and is rising 0.73% in early hours. The Nikkei 225 index climbed for a second day in an attempt to break an immediate chart resistance level. Stock benchmarks in Hong Kong, South Korea, Singapore and Malaysia are edging higher too.

Falling crude oil and gold prices put energy (-0.54%) and material (-0.36%) stocks under mild pressure in the US session. Similar patterns could be observed in Asia-Pacific trading today.

Although the Covid-19 pandemic continued to develop around the globe and resulted in tightening border controls and social distancing measures, fiscal support and ultra-loose monetary policy are likely to stay with us for a longer period before vaccines help to bring down the numbers and normalize business activity. This assumption appears to keep the stock markets floated in one of the worst global recession decades.

The tech-led Nasdaq 100 index (and likewise the Nasdaq Composite) is the best performing benchmark this year with a year-to-date gain of 47%. China’s Shenzhen Composite and CSI 300 are following tightly behind, rising 34% and 23% YTD respectively. On the bottom of the list are the FTSE 100 index (-13.8%), the Straits Times Index (-11.9%) and Stock Exchange of Thailand index (-8%).

YTD Performance of Major Equity Indices

IndexLast Price% Change YTDP/E Ratio
NASDAQ 100 STOCK INDX12,83947.039.4
Shenzhen Component Index14,04434.631.2
CSI 300 INDEX5,06423.619.4
S&P 500 INDEX3,73515.629.7
Nifty 5013,87314.034.5
NIKKEI 22526,85413.537.6
SHANGHAI SE COMPOSITE3,39711.417.8
DOW JONES INDUS. AVG30,4046.525.3
DAX INDEX13,7904.166.4
FTSE Bursa Malaysia KLCI1,6443.523.3
S&P/ASX 200 INDEX6,7080.444.1
Euro Stoxx 50 Pr3,575-4.553.0
HANG SENG INDEX26,315-6.715.0
STOCK EXCH OF THAI INDEX1,453-8.024.9
Straits Times Index STI2,840-11.924.6
FTSE 100 INDEX6,502-13.8175.8

As at December 28th 2020

Source: Bloomberg, DailyFX

Sector-wise, 9 out of 11 S&P 500 sectors ended higher, with 60% of the index’s constituents closing in the green on Monday. Communication services (+1.86%), consumer discretionary (+1.47%) and information technology (+1.16%) were among the best performers, whereas energy (-0.54%) and materials (-0.36%) lagged behind.

S&P 500 Sector Performance 28-12-2020

Source: Bloomberg, DailyFX

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S&P 500 Index Technical Analysis

The S&P 500 indexis trending up within the “Ascending Channel” formed since early November, forming consecutive higher highs. The overall trend remains bullish-biased, as suggested by the upward-sloped 20-, 50- and 100-Day Simple Moving Average (SMA) lines. Prices are hitting the upper Bollinger Band, which could lead to a mild technical pullback. Immediate support and resistance levels can be found at 3,705 (50% Fibonacci extension) and 3,750 (61.8% Fibonacci extension) respectively.

S&P 500 Index Daily Chart

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index is attempting to breach a “range-bound” condition formed since early December as highlighted in the red color below. Breaking this resistance may open the door for further upside potential with an eye on 2,7500 – the 61.8% Fibonacci extension. An immediate support level can be found at 27,000 – the upper bound of the rectangle.

Nikkei 225 IndexDaily Chart

ASX 200 Index Technical Analysis:

The ASX 200 index is drifting higher within its “Ascending Channel”, but upward momentum appears to be faltering as the MACD indicator suggests. An immediate support level can be found at 6,630, where the lower Bollinger Band and 161.8% Fibonacci extension level intercept. A key resistance level can be found at 6,810 – the 200% Fibonacci extension.

ASX 200 Index – Daily Chart

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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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