NASDAQ 100, HANG SENG, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.15%, -0.33% and -0.71% respectively
- Crude oil prices pulled back for a second day, reflecting weakening demand outlook
- Asia-Pacific markets are positioned to follow a negative lead, with most futures trading in the red
Tech Pullback, Delta Variant, Oil Retreat, Asia-Pacific at Open:
The Nasdaq 100 index pulled back from record highs for a second day as the emerging Delta variant of the Covid-19 virus casted a shadow over the outlook of global recovery. The energy (-1.47%) and technology (-0.84%) sectors were leading the decline. Los Angeles reinstated mask mandates for all residents in indoor public spaces as the county is scrambling to fight a rising number of Covid-19 cases. Los Angeles has seen a steep increase in coronavirus cases recently, with 1,077 new ones reported on July 14th, more than doubled from a week ago.
Crude oil prices fell for a second day as the viral resurgence around the globe raised uncertainties about the outlook for energy demand. WTI may be testing $71.00 for immediate support, breaking which may lead to further price weakness towards a psychological level at $70.00.
Top 10 Stock Performance in the NASDAQ 100 Index 15-07-2021
Source: Bloomberg, DailyFX
New Zealand saw its inflation rate surge to 3.3% in Q2, topping economists’ forecasts of 2.8%. This reinforced the RBNZ’s rate-hike bets and led the New Zealand Dollar higher. The inflation figure came just two days after the central bank decided to scale back its monthly asset purchases as the economic outlook and labor market condition improve.
Rising inflationary pressures may prompt the RBNZ and other central banks to consider tightening sooner. This may flag a warning sign for stock markets after a year of magnificent rallies, which were partially fueled by central banks’ unprecedented monetary easing and ultra-low interest rate environments.
Daily New Covid-19 Cases in Los Angeles
Asia-Pacific markets look set to end the week on the back foot. Futures in Japan, Hong Kong, Australia, Taiwan, Malaysia, Singapore and Thailand are in the red, whereas those in mainland China, South Korea, Malaysia and India are in the green.
Hong Kong’s Hang Seng Index (HSI) is positioned to retreat form a one-week high following a sour lead from Wall Street. The index climbed 0.75% on Thursday after China released Q2 GDP figures, which removed growth concerns and justified the PBoC’s unexpected ease on Friday. ADRs of Tencent and Alibaba outperformed the US peers on rumors that they may open their eco-systems to each other amid intensified regulatory pressures.
Nasdaq 100 Index Technical Analysis
The Nasdaq 100 index pulled back from a key resistance level at 14,950 after failing to breach it. The index appears to have entered a healthy correction, which may pave the way for it to attempt higher highs. An immediate support level can be found at the 20-day SMA line. The MACD indicator formed a bearish crossover, suggesting that bearish pressure is building.
Nasdaq 100 Index – Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng Index is attempting to challenge the support trendline that it broke down a week ago. A failed attempt may reinforce selling pressure and lead to further losses. A key support level can be found at 27,150 – the 50% Fibonacci retracement. The overall trend appears to be bearish-biased as the MACD indicator pierced below the neutral line and continued to trend lower.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index entered a tight range between 7,230-7,370 over the past few weeks, waiting for fresh catalysts for a breakout. The overall bullish trend remains intact as suggested by the upward-sloped SMA lines. The MACD indicator is about to form a bullish crossover, suggesting that upward momentum may be building.
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