S&P 500, NIKKEI 225, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 closed +1.13%, +1.44%, and +2.02% respectively
- Market digested a strong US jobs report while waiting for RBA’s policy meeting
- The Nikkei 225 and ASX 200 indexes may move higher. The HKEX remains shut for a holiday.
| Change in | Longs | Shorts | OI |
| Daily | 1% | -4% | -2% |
| Weekly | 17% | -17% | -4% |
Record Rally, Top Gainers, RBA, US Dollar, Asia-Pacific at Open:
Wall Street equities closed broadly higher on Monday as investors cheered solid March nonfarm payrolls data, which underscored a rapid recovery in the labor market with the help of vaccine rollouts. Market sentiment was further boosted by a record reading in the ISM non-manufacturing PMI index, which came in at 63.7 versus a 59.0 forecast. It suggests that the service sector is rebounding at a faster-than-expected pace, echoing a large increase in service jobs in the nonfarm payrolls report.
The S&P 500 index surged 1.44% to a fresh record of 4,077.9, paving the way for further upside potential amid favorable macro data and hopes for a massive infrastructure stimulus plan. Tesla (+4.43%), Alphabet (+4.19%) and Facebook (+3.43%) were among the top gainers in the S&P 500 overnight, as tech shocks regained investors’ favor after recent selloff. The Nasdaq 100 index jumped 2.02% as it continued to recover from March’s low.
The DXY US Dollar index dropped nearly half a percent as an IFM report showed that the US Dollar’s share of global central banks’ reserves fell from 60.7% to 59.0% over 2020, extending its two-decade decline since 2001. On the other hand, the Chinese Yuan continued to gain share from a low base, with its portion in reserves rising to 2.3%.
DXY – US Dollar Index
Source: Bloomberg, DailyFX
Asia-Pacific markets look set to follow a strong US lead higher, with futures across Japan, Australia, mainland China, Taiwan, and Singapore in positive territory. The Hong Kong market remains shut for Easter.
Australia’s ASX 200 index opened up by 0.55%, led by information technology (+2.40%), materials (+0.88%) and industrials (+0.53%) sectors, while real estate (-0.03%) lagged behind. Traders are eyeing the RBA interest rate decision and monetary policy guidance on Tuesday. Market participants do not foresee any shift in policy despite a much stronger-than-expected Australian jobs report in March.
Japan’s Nikkei 225 index opened modestly higher on Tuesday after rising 0.79% a day ago. Japanese household spending fell -6.6% in February, more than earlier expectation of a -5.3% decline. This may weigh on sentiment as the Covid-19 “state of emergency” declaration in the Tokyo region since early January through end March appeared to have a larger-than-expected impact on consumer spending.
Looking ahead, RBA interest rate decision headlines the economic docket alongside Caixin China servicePMI data and Euro Area unemployment rate. Find out more from the DailyFX calendar.
Looking back to Monday’s close, 10 out of 11 S&P 500 sectors ended higher, with 80.8% of the index’s constituents closing in the green. Consumer discretionary (+2.28%), communication services (+2.27%) and information technology (+2.02%) were among the best performers, while energy (-2.41%) lagged behind.
Dow Jones Sector Performance 05-04-2021
Source: Bloomberg, DailyFX
S&P 500 Index Technical Analysis
The Dow Jones indexextended higher towards the ceiling of the “Ascending Channel”, underscoring strong upward momentum. The index has also broken a psychological resistance level at 4,000 (the 127.2% Fibonacci extension) and thus opened the door for further upside potential with an eye on 4,125 (161.8% Fibonacci extension). The overall trend remains bullish-biased as suggested by the upward-sloped moving averages. The MACD indicator is trending higher above the neutral midpoint, suggesting that bulls are still in control.
S&P 500 Index – Daily Chart
Nikkei 225 Index Technical Analysis:
The Nikkei 225 index is challenging a key resistance level at 30,200 (127.2% Fibonacci extension), breaking above which would probably intensify near-term buying pressure and open the door for further upside potential. Another failed attempt however, may lead to the formation of a “Triple Top” chart pattern and thus a deeper pullback. The overall trend remains bullish-biased, as suggested by the upward sloped 20- and 50-day SMA lines. The MACD indicator is trending lower, suggesting that near-term momentum is tilted to the downside.
Nikkei 225 Index – Daily Chart
Chart by TradingView
ASX 200 Index Technical Analysis:
The ASX 200 index is testing a key resistance level at 6,935 (the 200% Fibonacci extension) and appears to be facing selling pressure here. A firm breakout may open the door for further upside potential and expose the psychological resistance of 7,000. The overall trend remains bullish as suggested by upward-sloped 50- and 100-day SMA lines. The MACD indicator formed a bullish crossover and has been trending higher since, pointing to upward momentum.
ASX 200 Index – Daily Chart
--- Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
