Asian Open: Wall Street Rallies with Risk-On Vibe
Matt Simpson April 18, 2021 10:41 PM
Strong data from the US and China last week helped push global indices to new highs, whilst treasury yields fell at their fastest pace this year.
- Australia's ASX 200 closed on Friday at 7,063.50
- Japan's Nikkei 225 futures are up 70 points (0.24%), the cash market is currently estimated to open at 29,753.37
- Hong Kong's Hang Seng futures are up 57 points (0.2%), the cash market is currently estimated to open at 29,026.71
- Euro STOXX 50 futures are up 53 points (1.34%)
- Germany's DAX futures are up 240 points (1.57%)
Friday US Close:
- The Dow Jones Industrial rose 164.67 points (0.48%) to close at 34,200.67
- The S&P 500 index rose 15.05 points (0.37%) to close at 4,185.47
- The Nasdaq 100 index rose 15.713 points (0.11%) to close at 14,041.91
Indices finish on a high
The Nikkei 225 aside, it was a strong finish for global stock market indices last week. The DAX broke out from its tight congestion phase to new record highs, the FTSE 100 and ASX 200 closed above 7,000 for the first time in 14 months and Wall Street hit new record highs. With strong data, decent earnings, vaccine rollouts and more stimulus than you can shake a stick at, investors think the only way is up when it comes to equity prices.
Tech stocks were given an extra helping hand thanks to lower yields, which saw the US 10-year treasury yield endure its worst week this year. Resistance has been found at its 200-week eMA although the 50-day eMA may provide support around 1.5%.
The ASX 200 closed above 7,000 last week and traded above it for three consecutive sessions. Friday’s bearish hammer (and inside day) shows of a hesitancy to push higher, but its of no major concern to the bull case taking its uptrend into account. We remain bullish above the 6957 low but hopefully it won’t trade back below 7,000 over the near-term anyway, on route to the 7100 interim target.
ASX 200 Market Internals
ASX 200: 7063.5 (0.07%), 18 April 2021
- Real Estate Investment Trusts (1.36%) was the strongest sector and Energy (-1.48%) was the weakest
- 6 out of the 11 sectors outperformed the index
- 104 (52.00%) stocks advanced and 86 (43.00%) declined
- 0 hit a new 52-week high, 0 hit a new 52-week low
- 77.5% of stocks closed above their 200-day average
- 80% of stocks closed above their 50-day average
- 80.5% of stocks closed above their 20-day average
- + 5.93% - Monadelphous Group Ltd (MND.AX)
- + 4.64% - Beach Energy Ltd (BPT.AX)
- + 4.58% - Zip Co Ltd (Z1P.AX)
- -8.94% - Origin Energy Ltd (ORG.AX)
- -5.29% - Mineral Resources Ltd (MIN.AX)
- -4.49% - Whitehaven Coal Ltd (WHC.AX)
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Forex: US dollar falls to a four-week low.
The US dollar index (DXY) fell to a four-week low, stopping around 0.20 points shy of our initial 91.30/40 target. Technically, there is a case for a minor rebound from current levels which should see EUR/USD remain below 1.2000.
- EUR/USD is consolidating just below 1.2000 and trades within a bullish channel on the four-hour chart. A break above 1.2000 assumes bullish continuation, whilst a break below 1.1950 warns of a counter-trend phase and invalidates the bullish channel.
- A bullish outside day formed on GBP/JPY on Friday, after a false break beneath 149.60 support. Given its reluctance to break lower, we suspect a swing low has formed and a break above 150.83 confirms a near-term reversal.
- NZD/JPY has spent two days consolidating just below 78.00 after printing Wednesday’s large bullish candle. Given its longer-term uptrend, we would assume bullish continuation with a break above Thursday’s high (78.13).
- NZD/USD is also consolidating near its highs after Wednesday’s strong bullish candle closed above 0.7100 resistance. The bias remains bullish above this support level and, like NZD/JPY, a break above last week’s high assumes bullish continuation.
AUD/USD is back above 77c and is trading in a tight consolidation near last week’s highs. Its recent rally invalidated a head and shoulders top pattern, and Wednesday’s bullish close broke above trendline resistance. As the US dollar index is near support then its plausible to expect a retracement on AUD/USD before its bullish move resumes.
- The bias is bullish above 0.7677.
- Bulls could seek bullish setups above 0.7677 is pries retrace or wait for a break above last week’s high.
- The initial target is the 0.7800 - 0.7849 zone.
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Weekly COT Report (Commitment of Traders)
As of Tuesday 13th April 2021:
- Only minor adjustments were made last week across FX majors.
- Bulls increased their net-long exposure to DXY (US dollar index) futures to their highest level since June 2020.
- Net-long exposure to silver futures rose for a second consecutive week to a six-week high.
- Bulls trimmed net-long exposure to NZD futures for a fifth consecutive week and its at it least bullish level since August, at just 2.5k contracts.
- Net-long exposure to platinum futures were trimmed by -15%, which now sits at their least bullish level this year.
- Gold closed above 1764.73 resistance and at a five-week high. The double bottom pattern projects a target around 1835, and the bias remains bullish above 1760.
- Silver reached our bull flag target around 26.30 on Friday with a spike before quickly reversing back below 26.00. It remains within its bullish channel but a bearish hammer on the four-hour chart tested its upper trendline. From here, we’d prefer to see if prices consolidate or retrace a little before reconsidering longs. The bias remains bullish above 25.62.
- Oil prices closed just off their weekly high, after rising to a four-week high on the back of an upgrade for oil demand in 2021. Bulls could look for support to build above WTI’s breakout level of 62.27, or above Wednesday’s low of 60.38. For brent these levels equate to 65.49 and 63.58.
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