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S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

Margaret Yang, CFA, Strategist

S&P 500, ASX 200, NIKKEI 225, ASIA-PACIFIC MARKET OUTLOOK:

  • The S&P 500, Dow Jones and Nasdaq plunged 2.57%, 2.05% and 2.61% respectively
  • The FOMC meeting revealed little changes; Apple and Facebook earnings beat
  • Asia-Pacific indices are poised to open sharply lower following a sour US lead

Market Turmoil, FOMC, Earnings, Asia-Pacific Stocks Outlook:

Wall Street stocks had a bloodbath day without clear fundamental reasons behind, leading market participants to question if the short squeeze in GameStop (+134%) and AME entertainment (+301%) have forced some hedge funds to liquidate their long positions in other stocks to cover losses. This appeared to have sparked broader risk aversion and encouraged more liquidation in a time when stock markets valuations are at their highest levels since the Dotcom bubble.

The S&P 500, Dow Jones and Nasdaq indices fell the most since October 28th, ending -2.57%, -2.05% and -2.61% lower respectively. It seems like the time is ripe for a technical correction after all three indices broke their “Ascending Channels” formed since early November. Profit-taking activity may ramp up in the days to come should selling momentum start to gain traction. The VIX volatility index surged to 33.6 from 26.3 overnight, marking a 28% jump.

Apple, Facebook revealed upbeat Q4 earnings results after Wednesday market close, but their share prices were trading lower amid souring market sentiment. Tesla share price fell 4.2% after reporting a slight EPS miss. Here is a quick earnings takeaway from the trio:

Apple (beat):

  • EPS: US$ 1.680 vs US$1.417 estimated, up 34.7% YoY
  • Revenue: US$ 111.4 billion vs 103.1 billion estimated, up 21% YoY
  • Sales from every product category registered double digit growth for the quarter

Facebook (beat):

  • EPS: US$ 3.88 vs US$3.54 estimated, up 51.6% YoY
  • Revenue: US$ 28.07 billion vs US$ 26.74 billion estimated, up 33.2% YoY
  • Daily Active Users (DAU): 1.84 billion vs 1.828 billion estimated, up 10.8% YoY

Tesla (slight miss):

  • EPS: US$ 0.80 vs US$ 1.03 estimated
  • Revenue: US$ 10.74billion vs US$ 10.4 billion estimated, up 45.5% YoY
  • Tesla expects 50% average annual growth in vehicle deliveries over a multi-year horizon

The FOMC meeting offered little changes in terms of Fed’s monetary policy. The central bank will maintain an accommodative stance and continue asset purchasing at the pace of US$ 120 billion per month until its long-term goal of maximum employment and 2 percent inflation target are achieved. Today’s US Q4 GDP, initial jobless claims and core PCE inflation data are among the top events. Find out more from DailyFX economic calendar.

Sector-wise, all 11 S&P 500 sectors declined, with only 15% of the index’s constituents closing in the green on Wednesday. Communication services (-3.82%), consumer discretionary (-3.13%) and healthcare (-3.05%) were among the hardest hit.

S&P 500 Sector Performance 27-01-2021

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

Source: Bloomberg

Without much surprise, the Nikkei 225 and Australia’s ASX 200 indices opened sharply lower following a sour US lead. Equity index futures across Japan, mainland China, Australia, Hong Kong, South Korea, Taiwan, Singapore, India and Thailand are looking to retrace broadly.

The ASX 200 index tumbled more than 2% in early trading hours, dragged by healthcare (-2.33%), information technology (-2.27%), and financials (-2.01%) sectors, whereas defensive-linked consumer staples (-0.33%) and utilities (-0.36%) sectors registered smaller losses. All eleven ASX 200 sectors opened lower.

ASX 200 Top 10 Stocks Performance at Open 28-01-2021

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

Source: Bloomberg, DailyFX

S&P 500 Index Technical Analysis:

Technically, the S&P 500 index broke the “Ascending Channel” decisively, suggesting that a technical correction might be underway. Price pierced through the 20-Day Simple Moving Average (SMA) line and is about to test the 50-Day SMA at 3,740. Breaking the 50-Day SMA may open the door for further losses with an eye on 3,705 (50% Fibonacci extension) and 3,660 (38.2% Fibonacci extension) for support. The MACD indicator has likely formed a “Death Cross”, suggesting that downward momentum is prevailing.

S&P 500 IndexDaily Chart

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

ASX 200 Index Technical Analysis:

The ASX 200 index registered a large bearish candlestick on the daily chart today, breaking below a key support level at 6,630 (161.8% Fibonacci extension). The lower bound of the range between 6,570 to 6,810 that it has been trading within since late November may serve as an immediate support, as highlighted in the chart below. The index is also broken its 50-Day SMA, signally that a deeper pullback could be underway.

ASX 200 Index Daily Chart

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index pulled back from recent highs and is poised to test an immediate support level at 28,200- the 161.8% Fibonacci extension. Breaking below this level may lead to a deeper correction with an eye on its 50-Day SMA for support. The MACD indicator has formed a bearish crossover, hinting at short-term selling pressure.

Nikkei 225 Index Daily Chart

S&P 500 Leads Nikkei 225, ASX 200 Lower as Volatility Spikes

S&P 500 Earnings Calendar 27-28th January 2021

Name

Date

Period

Actual

Estimate

Surprise

Anthem Inc

27/1/2021

Q4 20

2.54

2.516

1.00

Packaging Corp of America

27/1/2021

Q4 20

1.33

1.468

(9.40)

Whirlpool Corp

27/1/2021

Q4 20

6.64

6.176

7.50

Xilinx Inc

27/1/2021

Q3 21

0.69

0.674

2.40

Tesla Inc

27/1/2021

Q4 20

0.80

1.026

(22.00)

United Rentals Inc

27/1/2021

Q4 20

5.04

4.241

18.80

Crown Castle International Cor

27/1/2021

Q4 20

4.45

1.572

182.90

Edwards Lifesciences Corp

27/1/2021

Q4 20

0.50

0.532

(6.00)

Teradyne Inc

27/1/2021

Q4 20

1.10

0.999

10.10

MarketAxess Holdings Inc

27/1/2021

Q4 20

1.91

1.821

4.90

Textron Inc

27/1/2021

Q4 20

1.06

0.911

16.40

Prosperity Bancshares Inc

27/1/2021

Q4 20

1.49

1.344

10.60

AT&T Inc

27/1/2021

Q4 20

0.75

0.727

3.20

Teledyne Technologies Inc

27/1/2021

Q4 20

3.20

3.17

0.90

Brinker International Inc

27/1/2021

Q2 21

0.35

0.298

17.40

Blackstone Group Inc/The

27/1/2021

Q4 20

1.13

0.912

23.90

VF Corp

27/1/2021

Q3 21

0.93

0.90

3.30

Automatic Data Processing Inc

27/1/2021

Q2 21

1.52

1.289

17.90

Nasdaq Inc

27/1/2021

Q4 20

1.60

1.454

10.00

General Dynamics Corp

27/1/2021

Q4 20

3.49

3.552

(1.70)

Corning Inc

27/1/2021

Q4 20

0.52

0.485

7.20

Hess Corp

27/1/2021

Q4 20

(0.58)

(0.659)

12.00

Rollins Inc

27/1/2021

Q4 20

0.13

0.112

16.10

Abbott Laboratories

27/1/2021

Q4 20

1.45

1.356

6.90

Boeing Co/The

27/1/2021

Q4 20

(4.18)

(2.113)

(97.60)

Amphenol Corp

27/1/2021

Q4 20

1.13

1.026

10.10

Norfolk Southern Corp

27/1/2021

Q4 20

2.64

2.468

7.00

Progressive Corp/The

27/1/2021

Q4 20

1.83

1.701

7.70

SL Green Realty Corp

27/1/2021

Q4 20

1.556

PTC Inc

27/1/2021

Q1 21

0.97

0.658

47.40

Cree Inc

27/1/2021

Q2 21

(0.24)

(0.247)

2.80

Hologic Inc

27/1/2021

Q1 21

2.86

2.17

31.80

Facebook Inc

27/1/2021

Q4 20

3.88

3.217

20.60

Lam Research Corp

27/1/2021

Q2 21

6.03

5.722

5.40

Duke Realty Corp

27/1/2021

Q4 20

0.41

0.406

1.00

Ameriprise Financial Inc

27/1/2021

Q4 20

4.53

4.468

1.40

Las Vegas Sands Corp

27/1/2021

Q4 20

(0.37)

(0.329)

(12.50)

ServiceNow Inc

27/1/2021

Q4 20

1.17

1.06

10.40

Raymond James Financial Inc

27/1/2021

Q1 21

2.23

1.68

32.70

Apple Inc

27/1/2021

Q1 21

1.68

1.417

18.60

Rexnord Corp

28/1/2021

Q4 20

0.383

Dow Inc

28/1/2021

Q4 20

0.67

T Rowe Price Group Inc

28/1/2021

Q4 20

2.723

McDonald's Corp

28/1/2021

Q4 20

1.769

Marsh & McLennan Cos Inc

28/1/2021

Q4 20

1.127

McCormick & Co Inc/MD

28/1/2021

Q4 20

0.808

Sherwin-Williams Co/The

28/1/2021

Q4 20

4.863

A O Smith Corp

28/1/2021

Q4 20

0.585

MSCI Inc

28/1/2021

Q4 20

1.935

Danaher Corp

28/1/2021

Q4 20

1.858

Murphy Oil Corp

28/1/2021

Q4 20

(0.099)

Comcast Corp

28/1/2021

Q4 20

0.473

PulteGroup Inc

28/1/2021

Q4 20

1.40

Westrock Co

28/1/2021

Q1 21

0.543

Valero Energy Corp

28/1/2021

Q4 20

(1.417)

Stanley Black & Decker Inc

28/1/2021

Q4 20

2.996

Northrop Grumman Corp

28/1/2021

Q4 20

5.773

Xcel Energy Inc

28/1/2021

Q4 20

0.54

ABIOMED Inc

28/1/2021

Q3 21

1.089

American Airlines Group Inc

28/1/2021

Q4 20

(4.111)

JetBlue Airways Corp

28/1/2021

Q4 20

(1.671)

Flex Ltd

28/1/2021

Q3 21

0.37

Nucor Corp

28/1/2021

Q4 20

1.192

Mastercard Inc

28/1/2021

Q4 20

1.514

Alliance Data Systems Corp

28/1/2021

Q4 20

2.392

Tractor Supply Co

28/1/2021

Q4 20

1.517

NVR Inc

28/1/2021

Q4 20

80.448

Southwest Airlines Co

28/1/2021

Q4 20

(1.668)

Altria Group Inc

28/1/2021

Q4 20

1.017

Dover Corp

28/1/2021

Q4 20

1.375

Celanese Corp

28/1/2021

Q4 20

1.683

ResMed Inc

28/1/2021

Q2 21

1.25

Juniper Networks Inc

28/1/2021

Q4 20

0.533

Skyworks Solutions Inc

28/1/2021

Q1 21

2.058

Visa Inc

28/1/2021

Q1 21

1.278

Arthur J Gallagher & Co

28/1/2021

Q4 20

0.789

Western Digital Corp

28/1/2021

Q2 21

0.54

MicroStrategy Inc

28/1/2021

Q4 20

United States Steel Corp

28/1/2021

Q4 20

(0.68)

Mondelez International Inc

28/1/2021

Q4 20

0.663

Principal Financial Group Inc

28/1/2021

Q4 20

1.428

Robert Half International Inc

28/1/2021

Q4 20

0.679

Eastman Chemical Co

28/1/2021

Q4 20

1.501

Source: Bloomberg

--- 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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