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Dow Jones Gains as Nasdaq 100 Sinks, Crude Oil Boosts Energy Stocks. ASX 200 in Focus

Dow Jones Gains as Nasdaq 100 Sinks, Crude Oil Boosts Energy Stocks. ASX 200 in Focus

Daniel Dubrovsky, Strategist

Dow Jones, Nasdaq 100, ASX 200, Crude Oil, Iron Ore, Technical Analysis – Asia Pacific Indices Briefing

  • Dow Jones sees best day compared to the Nasdaq 100 since May 10th as bond yields rise
  • S&P 500 declines, but energy sector outperforms as crude oil prices extend recent gains
  • ASX 200 could find some relief from iron ore prices pausing losses since the end of July

Monday’s Wall Street Trading Session Recap

The Dow Jones outperformed the S&P 500 and Nasdaq 100, with futures tracking the 3 major US benchmark stock indices closing +0.20%, -0.29% and -0.81% respectively. Monday was the best day for the Dow Jones relative to the tech-heavy Nasdaq 100 since May 10th. This likely speaks to struggling growth-oriented stocks, which can be largely found in the Nasdaq.

Taking a look at the makeup of the S&P 500, the energy sector outperformed the broader market, rising 3.43%. WTI crude oil continued climbing, extending gains from last week as prices closed at the highest since early July. Concerns are rising about a global supply shortage in the natural gas market, which is driving nations to find alternative fuel sources, such as crude oil.

This is as global Covid case growth appears to be slowing, opening the door for pent-up demand to be slowly introduced into the market. Meanwhile, real estate equities underperformed, sinking 1.71%. Rising Treasury yields may be playing a key role for the latter, with the 30-year rate rising about 10% since last week’s low. This could translate into higher mortgage rates down the road, deterring homebuyers.

Dow Jones Technical Analysis

The Dow Jones continues to make cautious upside progress in the aftermath of a bullish Morning Star candlestick pattern. This also follows a bounce off the 33478 – 33839 support zone. Moreover, the Dow is struggling to extend losses after the index broke under a bearish Rising Wedge chart pattern in August. A close above the 35000 – 34760 inflection zone may open the door to extending gains towards all-time higher. Otherwise, a turn back lower may place the focus on current September lows.

Dow Jones Futures – Daily Chart

Dow Jones Gains as Nasdaq 100 Sinks, Crude Oil Boosts Energy Stocks. ASX 200 in Focus

Chart Created in TradingView

Tuesday’s Asia Pacific Trading Session

Futures tracking Wall Street are pointing cautiously lower as Asia-Pacific equities head for Tuesday’s session. A lack of notable economic event risk may place sentiment as the key driver for financial markets. This risks opening the door to a broadly disappointing day. For the ASX 200, Australian retail sales data are in focus. A softer-than-expected print could increase dovish RBA monetary policy expectations.

That may offer the index some upside potential as the descent in iron ore prices loses momentum. A crackdown from China on steel production amid reducing emissions has been denting iron ore prices. Australia’s top export to China is iron ore. Futures tracking the commodity are pointing higher. According to Bloomberg, Chinese steel mill profits are jumping to their highest since May. Demand is expected to improve after the summer lull. This could boost the ASX.

ASX 200 Technical Analysis

The ASX 200 finds itself in an interesting place. Prices have recovered after bouncing just above the 200-day Simple Moving Average (SMA). However, a bearish Death Cross between the 20- and 50-day lines is underscoring the near-term technical bias lower. The ASX was unable to hold a push above the 20-day SMA over the past 24 hours. Immediate support seems to be the midpoint of the Fibonacci retracement at 7243.85.

ASX 200 – Daily Chart

Dow Jones Gains as Nasdaq 100 Sinks, Crude Oil Boosts Energy Stocks. ASX 200 in Focus

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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