DOW JONES, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.61%, +0.11% and +1.46% respectively
- Cyclical sectors rallied after the FDA granted Pfizer and BioNTech full US approval for their Covid-19 vaccine
- The Nasdaq 100 hit an all-time high. APAC markets are positioned to follow higher.
The Dow Jones Industrial Average advanced for a second day, lifted by cyclically-oriented sectors such as energy, materials and industrials. The FDA granted Pfizer and BioNTech full US approval for their Covid-19 vaccines, boosting reflation hopes. The Nasdaq 100 surged 1.46% to an all-time high. Semiconductor giant NVIDIA (+5.49%) and electric vehicle maker Tesla (+3.83%) were among the best performers.
The DXY US Dollar index fell 0.52% to 93.00 amid vaccine optimism, alleviating pressure on commodity and precious metal prices. Gold prices breached above a key resistance level at $1,785, opening the door to further gains. Immediate resistance levels can be found at $1,810 and then $1,834. A pullback from here may lead to a test of $1,785 for support. WTI crude oil prices rebounded 5.7% to $65.50 as vaccine approval boosted prospects for energy demand. An immediate resistance level can be found at around $66.15.
WTI Crude Oil Price – Daily
Asia-Pacific markets are positioned for a positive start to the day. Futures in Japan, mainland China, Hong Kong, Australia, Hong Kong, South Korea, Singapore, India and Thailand are all in the green.
Looking ahead, German GDP leads the economic docket alongside US new home sales. Meanwhile, traders are also waiting for Thursday’s Jackson Hole symposium for clues about the Fed’s next policy move. Find out more from the DailyFX calendar.
Hong Kong’s Hang Seng Index (HSI) rebounded 1.05% on Monday as investors took the recent selloff as an opportunity to accumulate more. The stock connections registered HK$ 423 million of net Southbound inflows (chart below), suggesting that some mainland buyers are returning to Hong Kong’s market for bargain hunting.
Source: Bloomberg, DailyFX
Looking back to Monday’s close, 7 out of 9 Dow Jones sectors ended higher, with 70% of the index’s constituents closing in the green. Energy (+2.58%), materials (+1.92%) and industrials (+1.53%) were among the best performers, whereas healthcare (-0.48%) and consumer staples (-0.43%) trailed behind.
Dow Jones Sector Performance 23-08-2021
Source: Bloomberg, DailyFX
Dow Jones Index Technical Analysis
The Dow Jones index breached above a key resistance level at 34,920, thus opening the door for further gains towards 37,500 – the 261.8% Fibonacci extension. Prices remain in an “Ascending Channel”, as highlighted on the chart below, suggesting that the overall trend remains tilted to the upside. Bearish MACD divergence suggests that upward momentum may be weakening however.
Dow Jones Index – Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng Index found some support at 24,850 and has since rebounded. Holding above this level may pave the way for a technical rebound towards 26,200 – the 61.8% Fibonacci retracement. The MACD indicator remains below the neutral midpoint, underscoring bearish momentum.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index pulled back sharply to test an immediate support level at 7,500 – the previous resistance. The overall trend remains bullish-biased, as suggested by the consecutive higher highs and higher lows formed over the past few months. The MACD indicator formed a bearish crossover after hitting trendline resistance, suggesting that selling pressure may be prevailing.
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