Nasdaq 100, Hang Seng Index, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 closed -0.96%, -0.97%, and -1.07% respectively
- Bank earnings topped market estimates, but failed to lift sentiment as investors mulled rate hikes
- Asia-Pacific markets look set to open mixed. Hong Kong stocks may lead the gains
Nasdaq 100, US Earnings, Hang Seng Index, Asia-Pacific at the Open:
Wall Street stocks closed lower on Wednesday as investors weighed rising inflation and its ramifications for tightening monetary policy. Defensive-oriented consumer staples and utilities outperformed, whereas cyclical-linked consumer discretionary, financials and information technology sectors trailed behind. This reflects a cautious sentiment on Wall Street. Recently, investors rotated out from the rate-sensitive tech sector into value names, in an attempt to price in the impact of multiple rate hikes this year. Next week’s Federal Reserve meeting will be in the spotlight as market participants scrutinize the Fed’s roadmap for tightening.
On the earnings front, a slew of upbeat results helped to alleviate rising cost concerns and underpin market sentiment. Bank of America topped analysts’ estimate for profit on strong asset management and banking fees. The bank also released $851 million in reserves as credit quality improved. Unlike Goldman Sachs and JPMorgan, BoA only see a small increase in operational expenses. Morgan Stanly also beat market’s EPS forecast as the company managed to keep a lid on expenses. Consumer giant P&G released better-than-expected earnings, and the company raised its outlook for sales growth in 2022. The company said price hikes helped offset higher commodity and freight costs, and it expects inflation to weigh even more heavily on its fiscal 2022 results.
Top 10 Stocks by Market Cap in the Nasdaq 100
Source: Bloomberg, DailyFX
Hong Kong stocks look set to trade mildly higher despite a sour lead on Wall Street. Chinese lenders are expected to lowerborrowing costs for a second month on Thursday after the PBOC reduced 1-year MLF rate by 10bps and pledged more easing to stabilize the economy.
The stock connections registered a small HK$ 591million of net Southbound inflows on Wednesday, marking the 11th consecutive day of net inflow. This suggests that mainland investors are probably looking for bargain hunting opportunities after months of selling. The PBOC’s stance to ease monetary policy is another positive catalyst for stocks, especially the rate-sensitive real estate and technology sectors.
Hang Seng Index vs. Southbound Daily Net Flow
Source: Bloomberg, DailyFX
Looking ahead, Australian jobs report dominates the economic docket alongside Eurozone core inflation figures and ECB monetary policy meeting accounts. Find out more from the DailyFX economic calendar.
Asia-Pacific markets look set to open mixed on Thursday. Futures in Japan, mainland China, Australia, South Korea, Singapore, India are in the red, whereas those in Hong Kong, Taiwan, Malaysia, Thailand and Indonesia are in the green.
Looking back to Wednesday’s close, 9 out of 11 S&P 500 sectors ended lower, with 76.6% of the index’s constituents closing in the red. Consumer discretionary (-1.81%), financials (-1.65%) and information technology (-1.39%) were among the worst performers, whereas defensive-linked consumer staples (+0.68%) and utilities (+0.46%) registered small gains.
S&P 500 Sector Performance 19-01-2022
Source: Bloomberg, DailyFX
Nasdaq 100 Index Technical Analysis
The Nasdaq 100 index breached below a key support level of 15,550 – the lower bound of the range-bound zone – and thus opened the door for further losses. An immediate support level can be found at 14,880 – the 100% Fibonacci extension. The moving average lines are about to form a “Death Cross”, pointing to downside potential. The MACD indicator is trending lower, suggesting that downward momentum may be prevailing.
Nasdaq 100Index – Daily Chart
Chart created with TradingView
Hang Seng Index Technical Analysis:
The Hang Seng Index (HSI) is attempting to breach a “Falling Wedge” pattern from the upside, as highlighted in the chart below. A successful attempt may signal a bullish trend reversal and open the door for further gains. Prices have pulled back to the upper trendline looking for immediate support. The MACD indicator is converging, suggesting that bullish momentum may be fading.
Hang Seng Index – Daily Chart
Chart created with TradingView
ASX 200 Index Technical Analysis:
The ASX 200 index is trading within a range-bound zone between 7,200 to 7,500 for a few months. The floor and ceiling of the range may be viewed as immediate support and resistance levels respectively. A meaningful breach above 7,500 may intensify buying pressure and expose the next resistance level of 7,760. The MACD indicator formed a “Death Cross” and trended lower, suggesting that near-term momentum is weak.
ASX 200 Index – Daily Chart
Chart created with TradingView
--- Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
