NASDAQ 100,HANG SENG INDEX, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 are poised to extend lower amid heightened Ukraine risks
- Russian President Vladimir Putin backed two breakaway regions in eastern Ukraine as independent entities
- Asia-Pacific markets look set to open lower as sentiment sours. Crude oil and gold prices gained
Nasdaq 100, Ukraine, Crude Oil, Gold, Asia-Pacific at the Open:
US equity futures extended lower on Monday amid re-escalating geopolitical tensions in Eastern Europe. Russian President Putin recognized two breakaway regions in eastern Ukraine as independent entities, a move that the US and Europe have condemned. Putin has also described Ukraine as an integral part of Russia’s history in a TV interview on Monday. This may risk a new wave of US and European sanctions should the situation deteriorate further.
Earlier on, the Biden administration has warned about an imminent Russian attack of Ukraine, even though meetings are scheduled between high level officials between the US and Russia to find diplomatic solutions. A re-escalation of geopolitical tensions in Eastern Europe dampened market sentiment, weighing on risk assets while buoying haven assets. The key risk is that the highly fluid situation creates a large amount of uncertainty that investors dislike, adding to worries that this may unfold into a larger-scale crisis.
Gold prices rallied to a fresh eight-month high of 1,910, extending an upward trajectory. WTI crude oil prices traded above $93 as investors worried about supply disruption between Russia and the European Union if an invasion takes place. Haven currencies such as the Japanese Yen and Swiss Franc rallied, while risk-oriented Australian and New Zealand Dollar underperformed.
Trading volumes were light overnight as the US markets were closed for the Presidents’ Day holiday. US equity futures plunged at Tuesday’s open, with the Dow Jones, S&P 500 and Nasdaq 100 falling 1.5%, 1.9% and 2.7% respectively. This may set a sour tone for Asia-Pacific stocks at open.
Gold – Daily Chart
Source: Bloomberg, DailyFX
Asia-Pacific markets look set to open broadly lower amid rising geopolitical tensions. Futures in Japan, Australia, mainland China, Hong Kong, Taiwan, Singapore, Malaysia, India, Thailand and Indonesia are in the red, whereas those in South Korea are in the green.
Looking ahead, US Markit manufacturing PMI dominates the economic docket alongside the Conference Board consumer confidence index. Find out more from the DailyFX economic calendar.
Hong Kong’s technology stocks plunged on Monday amid concerns new regulations will hurt the earnings prospect of China’s Big Tech firms. Investors are also trimming holdings ahead of 4Q earnings result from Alibaba and HSBC this week. Last Friday, regulator ordered Meituan – China’s largest food delivery and lifestyle platform – to reduce fees they charge restaurants. Meituan’s share price tumbled 15% on Friday and plunged another 4% on Monday, weighing on market sentiment.
Exchange data showed that a total HKD 7.44 billion have flown out from Hong Kong into mainland China over the last 8 trading sessions via stock connections (chart below). This suggests that mainland investors have turned bearish on Hong Kong stocks in the near term, rendering them vulnerable to a deeper pullback.
Southbound Flow vs. Hang Seng Index
Source: Bloomberg, DailyFX
Nasdaq 100 IndexTechnical Analysis
The Nasdaq 100 index is trending lower within a “Descending Channel” as highlighted on the chart below. An immediate support level can be found at around 13,660 – the 161.8% Fibonacci extension. Failing to hold above this level would bring the next support level of 13,115 into focus. The MACD indicator is about to form a bearish crossover beneath the neutral midpoint, suggesting that the overall momentum remains weak.
Nasdaq 100 Index– Daily Chart
Chart created with TradingView
Hang Seng Index Technical Analysis:
The Hang Seng Index (HSI) is trending higher within an “Ascending Channel” as highlighted on the chart below. Prices risk breaching below the lower bound of the channel, a move that may open the door for further downside potential. An immediate support level can be found at around 24,040 – the 161.8% Fibonacci extension. Breaching below this level may expose the next resistance level of 23,070. The MACD indicator is trending lower above the neutral midpoint, suggesting that near-term momentum has turned bearish.
Hang Seng Index – Daily Chart
Chart created with TradingView
ASX 200 Index Technical Analysis:
The ASX 200 index has rebounded after a meaningful correction in January. Prices are challenging the 61.8% Fibonacci retracement – a key resistance level. Breaching this level will likely intensify buying pressure and open the door for further upside potential with an eye on 7,435. The MACD indicator is about to form a bearish crossover beneath the neutral midpoint, suggesting that selling pressure may be building.
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
