Dow Jones, Nasdaq, Treasury Yields, Hang Seng, China Lockdowns – Asia Pacific Indices Briefing
- Dow Jones, S&P 500 and Nasdaq 100 fall as Treasury yields preserve rising
- Nasdaq/Dow ratio sits close to one-month low amid extra hawkish Fed
- Chinese lockdown woes weighing on power shares and the Hang Seng
Monday’s Wall Street Trading Session Recap
Market sentiment was reeling on Wall Street on the finish of Monday’s session. Dow Jones, S&P 500 and Nasdaq 100 futures declined 1.14%, 1.66% and a pair of.28% respectively. This is because the VIX volatility index, also referred to as the market’s most popular ‘fear gauge’, soared 15% to shut at its highest in nearly one month. Risk aversion continued within the aftermath of an more and more hawkish Federal Reserve.
There had been no sectors inside the S&P 500 that closed within the inexperienced. The 3 worst-performing ones had been power (-3.11%), data know-how (-2.60%) and well being care (-1.97%). Losses in power shares adopted weak point in WTI crude oil costs, the place the futures contract fell 2.65%. Concerns over China’s worst Covid-induced lockdown on report is dampening demand from a key shopper of oil.
The 10-year Treasury yield gained 2.9% because the Nasdaq/Dow ratio sank to the bottom in nearly one month. Chicago Fed President Charles Evans spoke at this time, noting that the central financial institution ‘has to be on top of prices and reposition ourselves’. At this charge, a 50-basis level hike appears very probably on the subsequent assembly in May, with quantitative tightening simply across the nook as nicely.
Dow Jones Technical Analysis
On the four-hour chart, Dow Jones futures seem like carving out a bearish Head and Shoulders chart formation. After forming the appropriate shoulder, costs are testing the neckline round 34263. Confirming a breakout underneath the latter might open the door to reversing the near-term uptrend seen throughout the second half of March. Otherwise, pushing above 34820 opens the door to revisiting 35281.
Dow Jones 4-Hour Chart
Tuesday’s Asia Pacific Trading Session
With that in thoughts, the reasonably pessimistic day on Wall Street dangers being a precursor to follow-through throughout Tuesday’s Asia-Pacific session. The financial docket can also be pretty mild, putting the give attention to sentiment. Hong Kong’s Hang Seng Index stays an attention-grabbing one to observe given lockdowns in China. According to Bloomberg, China accredited the primary batch of latest online game licenses since July in a single day.
That has introduced hopes of a turnaround within the authorities’s views on crackdowns which were weighing on native indices since February 2021. Unfortunately, that is coming at a time when China’s financial system is slowing and world financial tightening is permeating all through monetary markets. The latter may nonetheless weigh on the Hang Seng, particularly the tech index (HST).
Hang Seng Technical Analysis
Hang Seng Index futures seem to have damaged underneath a Rising Wedge chart formation. This may trace at extending losses again in direction of the March low at 18134. Immediate assist is the 23.6% Fibonacci extension at 20992 earlier than the 38.2% degree comes into focus at 19954. Overturning the Rising Wedge might even see costs retest the present April excessive at 22670.
Hang Seng Index Futures 4-Hour Chart
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter