Nasdaq 100, Russell 2000, ASX 200, RBA – Asia Pacific Indices Briefing
- Nasdaq 100, S&P 500, Dow Jones rise on Wall Street to start the week
- Russell 2000 outperforms on economic growth expectations before Fed
- ASX 200 at risk to volatility, facing the RBA rate decision and YCC comments
Monday’s Wall Street Trading Session Recap
Wall Street benchmark stock indices pushed slightly higher on Monday as the Nasdaq 100, Dow Jones and S&P 500 futures gained 0.35%, 0.27% and 0.19% respectively. Small-cap stocks outperformed the broader market, with Russell 2000 futures climbing 2.57%. The rosy mood from traders comes as over 80% of companies in the S&P 500 saw third-quarter earnings top estimates, according to Bloomberg.
The rotation into small-cap stocks could be a sign that traders are becoming more confident in the economic recovery. These tend to be more cyclically focused, sensitive to the swings in growth. The sharp drop in US GDP growth during the third quarter could perhaps explain why the Russell has spent these past few months in a consolidative state.
Still, this week could be volatile for global stock markets. The Federal Reserve is anticipated to begin tapering its monthly asset purchases. Elevated inflationary pressures have been rapidly increasing 2022 rate hike expectations. This week will also wrap up with non-farm payrolls data, where traders will be closely watching earnings data. The latter may continue revealing where inflation is going in the country.
Nasdaq 100 Technical Analysis
Even though the Nasdaq 100 closed at a new high, prices left behind a Hanging Man candlestick pattern. This is a sign of indecision that could hint at a top within an uptrend. Further downside progress from here may confirm the Hanging Man, opening the door to a turn lower. Still, a bullish Golden Cross emerged between the 20- and 50-day Simple Moving Averages (SMAs). This hints at a broader upside technical bias. This leaves the index facing conflicting technical cues.
Introduction to Technical Analysis
Candlestick Patterns
Recommended by Daniel Dubrovsky
Nasdaq 100 – Daily Chart
Tuesday’s Asia Pacific Trading Session
The rosy day on Wall Street could bode well for Tuesday’s Asia-Pacific trading session. Top-tier event risk will likely come from the Reserve Bank of Australia’s November monetary policy announcement. Last week, the central bank withheld from capping surging front-end government bond yields. This likely hints at a change coming for its yield-curve control policy.
Australia’s benchmark ASX 200 stock market index remains around levels from June, likely due to a combination of slowing economic growth and anticipated hawkish RBA policy bets. The former has been due to the nation’s struggle with the Delta Covid variant, which the country is now seemingly moving past. A more hawkish RBA risks inducing volatility into the ASX.
Trading Strategies and Risk Management
Global Macro
Recommended by Daniel Dubrovsky
ASX 200 Technical Analysis
The ASX 200 has been struggling to achieve further upside progress above a near-term falling trendline from August. Still, the 200-day SMA continues to point to a broader upward technical bias. In the event of losses, keep a close eye on the 7207 – 7167 support zone. Extending gains since September entails a push above 7480 towards the all-time high at 7650.
ASX 200 – Daily Chart
--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
Trade Smarter - Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
