Nasdaq Poised to Rise with Hang Seng, ASX 200. Apple Earnings in Focus

NASDAQ 100, HANG SENG, ASX 200 INDEX OUTLOOK:

• Nasdaq 100 futures are advancing in afterhours trade on earnings optimism, weaker US Dollar
• Facebook and Apple climbed as investors anticipated strong Q4 earnings release
• Asia-Pacific markets are poised for a rebound after suffering heavy selling on Tuesday

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Nasdaq 100, Apple, Facebook earnings, Asia-Pacific at Open:

US equity futures advanced on Wednesday morning, led by the Nasdaq 100 index ahead of big tech earnings from Apple, Facebook and Tesla. The US Dollar Index retreated from a one-week high while the 10-year US Treasury yield rose slightly to 1.04%, alleviating pressure over risk assets. Improving sentiment and earnings optimism may encourage a rebound in Asia-Pacific equities today.

Reflation trades appeared to have lost their momentum recently due to covid-related lockdowns and uncertainties brought about by mutant viral strains. As a result, energy and materials sectors have lagged behind information technology as the latter appeared to have more earnings certainty during lockdown times. On the positive front, US daily Covid-19 new cases have fallen to 133,913 on January 25th, marking the lowest reading since November 15th. The 7-day moving average of daily cases has also been declining with the rollout of coronavirus vaccines (chart below).

Daily Trends in US Covid-19 Cases

Source: covid.cdc.gov

US corporate earnings continued to fare well, with more than 83% of S&P 500 companies beating market estimations so far this season. Last night, 26 out of 31 companies, including Microsoft, 3M and America Express delivered positive EPS surprises whereas General Electric disappointed.

Looking ahead, Facebook and Apple’s Q4 results today will be closely watched by investors and may set the tone for broader market sentiment. Consensus shows that the street is expecting Apple’s Q4 2020 EPS to come in at US$ 1.417, up by 13.6% YoY due to strong 5G iPhone and Mac sales in the fourth quarter. Facebook’s Q4 EPS is expected to reach a record high of US$ 3.54, marking a 38.2% YoY growth. Both Apple and Facebook share prices advanced more than 1 percent in after-hour trade, lifting the Nasdaq 100 futures higher. More earnings information can be found in the calendar at the end of the article.

Sector-wise, 4 out of 9 Dow Jones sectors advanced on Tuesday, with 46.7% of the index’s constituents closing in the green. Defensive-linked consumer staples (+1.08%), information technology (+0.82%) and industrials (+0.44%) were among the best performers, whereas materials (-2.60%), communication services (-1.81) and energy (-1.69%) trailed behind.

Dow Jones Sector Performance 26-01-2021

Source: Bloomberg, DailyFX

Asia-Pacific markets look set to erase some of Tuesday’s losses and trade higher. The Hang Seng Index may attempt for a rebound after losing 2.5% in the previous day. On Tuesday, southbound net capital flows via the stock connections receded to HK$ 13.9 billion from HK$ 19.2 billion seen on Monday, reflecting cooling appetite from mainland investors as the tech stocks are getting more and more expensive. 30,000 remains a key psychological resistance for the index.

Australia’s ASX 200 Index opened 0.52% lower, dragged by energy (-2.7%), materials (-2.67%) and healthcare (-0.85%) sectors, while consumer staples (+1.16%), financials (+0.64%) and information technology (+0.53%) are leading. Metal & mining giant Fortescue (-6.32%), Rio Tinto (-3.38%) and BHP Group (-2.4%) are among the hardest hit.

ASX 200 Top 10 Stocks Performance at Open 26-01-2021

Source: Bloomberg, DailyFX

Nasdaq 100 Index Technical Analysis:

Technically, the Nasdaq 100 index looks set to continue its upward trajectory within the “Ascending Channel” as highlighted in the chart below. The bull trend remains intact and is well-supported by its 20-Day Simple Moving Average (SMA) line. Widening Bollinger Band width points to strong upward momentum, while the RSI indicator flags risk of overbought. Immediate support and resistance levels can be found at 13,360 (127.2% Fibonacci extension) and 13,860 (161.8% Fibonacci extension) respectively.

Nasdaq 100 Index – Daily Chart

Hang Seng Index Technical Analysis:

The Hang Seng index is facing a strong resistance zone between 29,870 to 30,000 and has since entered a consolidative period. Breaching the psychological level of 30,000 may open the door for further upside potential with an eye on 30,930 – the 161.8% Fibonacci extension. The MACD indicator is about to form a “Death Cross”, which suggests that a near-term pullback is more likely.

Hang Seng Index – Daily Chart

ASX 200 Index Technical Analysis:

The ASX 200 index is range-bound between 6,575 to 6,810 since late November, as highlighted in the chart below. The price is attempting to breach the upper bound of 6,810, and a successful attempt may open the door for further upside potential with an eye on 6,900. The overall trend remains bullish-biased, as suggested by upward-sloped simple moving average lines.

ASX 200 Index – Daily Chart

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S&P 500 Earnings Calendar – 26-27thJan 2021

Source: Bloomberg

--- Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter