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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, Former 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
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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

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

Source: Bloomberg, DailyFX

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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

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

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 Earnings Calendar 27-28th January 2021

NameDatePeriodActualEstimateSurprise
Anthem Inc27/1/2021Q4 20 2.54 2.516 1.00
Packaging Corp of America27/1/2021Q4 20 1.33 1.468 (9.40)
Whirlpool Corp27/1/2021Q4 20 6.64 6.176 7.50
Xilinx Inc27/1/2021Q3 21 0.69 0.674 2.40
Tesla Inc27/1/2021Q4 20 0.80 1.026 (22.00)
United Rentals Inc27/1/2021Q4 20 5.04 4.241 18.80
Crown Castle International Cor27/1/2021Q4 20 4.45 1.572 182.90
Edwards Lifesciences Corp27/1/2021Q4 20 0.50 0.532 (6.00)
Teradyne Inc27/1/2021Q4 20 1.10 0.999 10.10
MarketAxess Holdings Inc27/1/2021Q4 20 1.91 1.821 4.90
Textron Inc27/1/2021Q4 20 1.06 0.911 16.40
Prosperity Bancshares Inc27/1/2021Q4 20 1.49 1.344 10.60
AT&T Inc27/1/2021Q4 20 0.75 0.727 3.20
Teledyne Technologies Inc27/1/2021Q4 20 3.20 3.17 0.90
Brinker International Inc27/1/2021Q2 21 0.35 0.298 17.40
Blackstone Group Inc/The27/1/2021Q4 20 1.13 0.912 23.90
VF Corp27/1/2021Q3 21 0.93 0.90 3.30
Automatic Data Processing Inc27/1/2021Q2 21 1.52 1.289 17.90
Nasdaq Inc27/1/2021Q4 20 1.60 1.454 10.00
General Dynamics Corp27/1/2021Q4 20 3.49 3.552 (1.70)
Corning Inc27/1/2021Q4 20 0.52 0.485 7.20
Hess Corp27/1/2021Q4 20 (0.58)(0.659)12.00
Rollins Inc27/1/2021Q4 20 0.13 0.112 16.10
Abbott Laboratories27/1/2021Q4 20 1.45 1.356 6.90
Boeing Co/The27/1/2021Q4 20 (4.18)(2.113)(97.60)
Amphenol Corp27/1/2021Q4 20 1.13 1.026 10.10
Norfolk Southern Corp27/1/2021Q4 20 2.64 2.468 7.00
Progressive Corp/The27/1/2021Q4 20 1.83 1.701 7.70
SL Green Realty Corp27/1/2021Q4 20 1.556
PTC Inc27/1/2021Q1 21 0.97 0.658 47.40
Cree Inc27/1/2021Q2 21 (0.24)(0.247)2.80
Hologic Inc27/1/2021Q1 21 2.86 2.17 31.80
Facebook Inc27/1/2021Q4 20 3.88 3.217 20.60
Lam Research Corp27/1/2021Q2 21 6.03 5.722 5.40
Duke Realty Corp27/1/2021Q4 20 0.41 0.406 1.00
Ameriprise Financial Inc27/1/2021Q4 20 4.53 4.468 1.40
Las Vegas Sands Corp27/1/2021Q4 20 (0.37)(0.329)(12.50)
ServiceNow Inc27/1/2021Q4 20 1.17 1.06 10.40
Raymond James Financial Inc27/1/2021Q1 21 2.23 1.68 32.70
Apple Inc27/1/2021Q1 21 1.68 1.417 18.60
Rexnord Corp28/1/2021Q4 20 0.383
Dow Inc28/1/2021Q4 20 0.67
T Rowe Price Group Inc28/1/2021Q4 20 2.723
McDonald's Corp28/1/2021Q4 20 1.769
Marsh & McLennan Cos Inc28/1/2021Q4 20 1.127
McCormick & Co Inc/MD28/1/2021Q4 20 0.808
Sherwin-Williams Co/The28/1/2021Q4 20 4.863
A O Smith Corp28/1/2021Q4 20 0.585
MSCI Inc28/1/2021Q4 20 1.935
Danaher Corp28/1/2021Q4 20 1.858
Murphy Oil Corp28/1/2021Q4 20 (0.099)
Comcast Corp28/1/2021Q4 20 0.473
PulteGroup Inc28/1/2021Q4 20 1.40
Westrock Co28/1/2021Q1 21 0.543
Valero Energy Corp28/1/2021Q4 20 (1.417)
Stanley Black & Decker Inc28/1/2021Q4 20 2.996
Northrop Grumman Corp28/1/2021Q4 20 5.773
Xcel Energy Inc28/1/2021Q4 20 0.54
ABIOMED Inc28/1/2021Q3 21 1.089
American Airlines Group Inc28/1/2021Q4 20 (4.111)
JetBlue Airways Corp28/1/2021Q4 20 (1.671)
Flex Ltd28/1/2021Q3 21 0.37
Nucor Corp28/1/2021Q4 20 1.192
Mastercard Inc28/1/2021Q4 20 1.514
Alliance Data Systems Corp28/1/2021Q4 20 2.392
Tractor Supply Co28/1/2021Q4 20 1.517
NVR Inc28/1/2021Q4 20 80.448
Southwest Airlines Co28/1/2021Q4 20 (1.668)
Altria Group Inc28/1/2021Q4 20 1.017
Dover Corp28/1/2021Q4 20 1.375
Celanese Corp28/1/2021Q4 20 1.683
ResMed Inc28/1/2021Q2 21 1.25
Juniper Networks Inc28/1/2021Q4 20 0.533
Skyworks Solutions Inc28/1/2021Q1 21 2.058
Visa Inc28/1/2021Q1 21 1.278
Arthur J Gallagher & Co28/1/2021Q4 20 0.789
Western Digital Corp28/1/2021Q2 21 0.54
MicroStrategy Inc28/1/2021Q4 20
United States Steel Corp28/1/2021Q4 20 (0.68)
Mondelez International Inc28/1/2021Q4 20 0.663
Principal Financial Group Inc28/1/2021Q4 20 1.428
Robert Half International Inc28/1/2021Q4 20 0.679
Eastman Chemical Co28/1/2021Q4 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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