Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

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NASDAQ 100, HANG SENG, ASX 200 INDEX OUTLOOK:

  • Dow Jones, S&P 500 and Nasdaq 100 closed +0.17%, +0.42% and +1.04% respectively
  • Powell reiterated his dovish stance and calmed market’s inflation fear in an IMF seminar. The US Dollar fell alongside 10-year yields, buoying the technology sector
  • ASX 200 opened lower while the Hang Seng may extend higher amid tech rebound

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Powell Speech, Yields, US Data, Tech Rebound, Asia-Pacific at Open:

The Nasdaq 100 index approached its all-time highs as Fed Chair Jerome Powell reiterated his dovish stance in an IFM seminar. Powell said upward pressure on prices will likely be “temporary” and the central bank would react if inflation expectations move “persistently and materially above levels” they are comfortable with. His comment echoed the FOMC minutes released earlier, in which the central bank committed to support the economic recovery with accommodative policies.

Powell’s dovish rhetoric calmed market inflation fears, sending the 10-year Treasury yields lower. The rate fell 6.2 bps, or 3.7% on Thursday to a two-week low of 1.614%. This marks the first time the 10-year yield fell below its 20-day SMA line since January 25th, opening the door for further downside potential. Falling longer-term rates may alleviate pressure on non-yielding precious metals and risk assets in general, as risk-free rates (discounting rates) drop.

The DXY US Dollar index fell 0.38% to 92.07, buoying precious metal prices. Gold breached above a key resistance level of US$ 1,744 and signaled the completion of a “Double Bottom” chart pattern.

US Treasury Yield Curve – 1 Week Change

Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

Source: Bloomberg, DailyFX

A strong rebound in the tech sector overnight may boost sentiment in Asia-Pacific markets, with futures across Japan, mainland China, Taiwan, Singapore and India pointing to open higher. The Nasdaq rally may lead to a rebound in technology stocks across the APAC region, especially those listed in Hong Kong. The Hang Seng Index (HSI) suffered a significant pullback during mid-February to the end of March as the technology sector underperformed. An improved risk appetite would likely revitalize this sector.

Australia’s ASX 200 index opened down -0.25%, dragged by information healthcare (-0.78%), materials (-0.31%) and energy (-0.22%) sectors, whereas information technology (+0.61%) and utilities (+0.40%) outperformed.

On the macro side, Chinese inflation data headlines the economic docket alongside German balance of trade and Canadian employment change. The US weekly jobless claims data missed market expectations last night, pointing to an uneven recovery in the labor market. Some 744k unemployment claims were filed in the week ending April 3rd, compared to a 680k forecast. Find out more from the DailyFX calendar.

Looking back to Wednesday’s close, 6 out of 11 S&P 500 sectors ended higher, with 50.7% of the index’s constituents closing in the green. Information technology (+1.42%), consumer discretionary (+0.48%) and industrials (+0.21%) were among the best performers, while energy (-1.36%) and real estate (-0.56%) trailed behind.

S&P 500 Sector Performance 08-04-2021

Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

Source: Bloomberg, DailyFX

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Nasdaq 100 Index Technical Analysis

The Nasdaq 100 index has likely formed an inverse “Head and Shoulders” pattern, which may serve as a strong bullish reversal indicator. The index is moving closer to its all-time highs at 13,807 seen on February 12th. Breaking above this level would likely intensify near-term buying pressure and open the door for further upside potential towards 14,023 – the 127.2% Fibonacci extension. The MACD indicator is trending up after forming a bullish crossover, underscoring upward momentum.

Nasdaq 100 Index Daily Chart

Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

Hang Seng Index Technical Analysis:

The Hang Seng Index (HSI) breached above the “Descending Channel” as highlighted in the chart below, signaling a near-term trend reversal. The price is facing an immediate resistance level of 29,284 – the 50-day SMA line. A daily close above this level may open the door for upside potential with an eye on 29,500 – the 38.2% Fibonacci extension. The MACD indicator is trending lower beneath the neutral midpoint, underscoring downward momentum.

Hang Seng IndexDaily Chart

Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

ASX 200 Index Technical Analysis:

The ASX 200 index breached above the ceiling of the “Ascending Channel” that formed since the end of November, and thus opened the door for further upside potential. A daily close above 6,935 – the 200% Fibonacci extension level – would likely intensify near-term buying pressure and pave the way for further upside potential towards a psychological resistance at 7,000. The MACD indicator is trending higher above the neutral midpoint, suggesting that buying power is building up.

ASX 200 Index – Daily Chart

Nasdaq 100 Aims For All-Time Highs, Will Hang Seng and ASX 200 Follow?

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— Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitter

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