S&P 500, STRAITS TIMES, CHINA A50, ASX 200 INDEX OUTLOOK:
- US equity futures erased some gains after a “risk-on” session, the S&P 500 closed at record high
- Congress is bringing stimulus talks back on the table, boosting risk
- Straits Times and ASX 200 indexes look set to open higher, China A50 index at 12-year high
US Stimulus Talks, Herd Immunity, Asia-Pacific at Open:
The S&P 500 index surged 1.1% and finished at its record high, buoyed by renewed stimulus hopes as Congress restarted talks on relief packages. 10 out of 11 S&P 500 sectors ended in the green, with 76% of the index’s constituents closing higher on Tuesday. A top US infectious disease doctor forecasted that most Americans could be vaccinated by the second quarter of next year, which could lead to herd immunity in the summer. A vaccine-led rally appears to have revitalized after a brief consolidation, setting a positive tone for Asia-Pacific stocks at open.
Asia-Pacific markets look set to follow a strong US lead, with equity futures pointing to a positive start in Japan, mainland China, Australia, Hong Kong, South Korea, India and Singapore. The China A50 index has reached its highest level seen since 2008, driven by a strong rally in financial stocks. Singapore’s Straits Times Index (STI) experienced a technical pullback and has likely found a strong support at 2,800.
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Macro data were largely mixed overnight, with Germany registering a lower-than-expected unemployment rate while Italy’s Q3 GDP reading came below expectations. Canada saw a slower-than-expected pace of economic recovery in the third quarter. The US ISM manufacturing PMI came in at 57.5, failing to meet economists’ forecasts of 58.0 and marked a decline from previous months’ reading of 59.3. Find out more on the DailyFX economic calendar.
Source: Bloomberg, DailyFX
Sector-wise, 10 out of 11 S&P 500 sectors ended higher, with about 76.0% of the index’s constituents closing in the green. Communication services (+1.96%), financials (+1.57%) and information technology (+1.41%) were among the best performers, while industrials (-0.18%) and energy (+0.44%) were lagging behind.
S&P 500 Sector Performance 01-12-2020
Source: Bloomberg, DailyFX
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Straits Times Index Outlook:
The Singaporean stock market saw institutional money inflow for 4 weeks in a row, with S$329.4 million pumping in last week (chart below). Fund managers’ top picks include banks, real estate, aviation, transportation and entertainment stocks. Strong and consistent institutional buy reflects perhaps a brighter economic outlook for the island country, as stock markets usually lead economic cycles by 3-6 months.
Source: SGX
Technically, the STI appears to have entered a consolidative period after a strong rally in November. A healthy pullback should not derail the index from its recovery path in the medium term. An immediate support level can be found at 2,800, breaking which may lead to a deeper correction with an eye on 2,728 – the 23.6% Fibonacci retracement.
Straits Times Index – Daily Chart
China A50 Index Technical Analysis:
The China A50 index is riding a strong upward trend, forming an “Ascending Channel” over the past two months. The index has reached its highest level seen since 2008. The overall trend remains bullish-biased, as suggested by its 20-, 50- and 100-Day Simple Moving Average (SMA) lines. An immediate support level can be found at 16,880- the 100% Fibonacci extension.
China A50 Index – Daily Chart
ASX 200 Index Technical Analysis:
Technically, the ASX 200 index appears to have entered a brief consolidative period since last week, but the overall trend remains bullish biased. An immediate support level can be found at 6,640 – the 20-Day SMA line. Immediate resistance level can be found at 6,640 – the 38.2% Fibonacci extension.
ASX 200 Index – Daily Chart
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— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
