Asian Open: Wall Street Shakes-Off Early Losses

Despite a rise in geopolitical tensions and covid cases, a solid earnings season in the US helped equity markets shake off early losses and hit (marginal) new highs.

Stocks (3)

Asian Futures:

  • Australia’s ASX 200 futures are down -14 points (-0.18%), the cash market is currently estimated to open at 7568.5
  • Japan's Nikkei 225 futures have risen 180 points (0.66%), the cash market is currently estimated to open at 27703.19
  • Hong Kong's Hang Seng futures are up 18 points (0.07%), the cash market is currently estimated to open at 26199.46

European Friday close:

  • UK's FTSE 100 index fell -64.73 points (-0.9%) to close at 7153.98
  • Europe's Euro STOXX 50  index fell -27.26 points (-0.64%) to close at 4202.44
  • Germany's DAX index fell -51.71 points (-0.32%) to close at 15925.73
  • France's CAC 40 index fell -57.27 points (-0.83%) to close at 6838.77

US Friday close:

  • The Dow Jones rose 110.02 points (0.31%) to close at 35,625.40
  • The S&P 500 rose 11.71 points (0.27%) to close at 4,479.71
  • The Nasdaq 100 rose 4.094 points (0.03%) to close at 15,140.77


US Indices shake-off weak start to the session:

Despite a weak start, Wall Street erased early losses to close to new highs and shake off geopolitical concerns and the rise of the Delta variant, helped by a stronger earnings season. Around 91% of &P 500 companies have now reported, 87% of which have beaten estimated according to FactSet.

The S&P 500 rose 0.26% with 6 of its 11 sectors posting gains, led by utilities and consumer staples sectors. 56% of stocks advanced, 42% declined and Dentsply Sirona (XRAY) was the top performer rising 3.17%. 

The Nasdaq 100 printed a potentially bullish hammer after finding support at the 20-day eMA, and sits just -43 points from its record high. A break above yesterday’s high confirms the hammer candle, although bulls may want to wait for a break of its all-time high for extra confirmation.

The ASX 200 printed a bearish engulfing candle yesterday, opening at the high of the day and closing at the low. Whilst this leaves open the potential for a correction from its record highs, keep in mind that the last time it printed such a pattern the day after a record high marked a decent long entry for bulls. At this stage we suspect a pause in trend may be likely and remain bullish above 7506, which leaves some wriggle room for an orderly retracement.


ASX 200 Market Internals:


ASX 200: 7582.5 (-0.61%), 16 August 2021

  • Consumer Staples (1.14%) was the strongest sector and Financials (-1.26%) was the weakest
  • 7 out of the 11 sectors closed lower
  • 80 (40.00%) stocks advanced, 107 (53.50%) stocks declined
  • 69% of stocks closed above their 200-day average
  • 64% of stocks closed above their 50-day average
  • 66.5% of stocks closed above their 20-day average

Outperformers:

  • + 12.1%   -  A2 Milk Company Ltd  (A2M.AX) 
  • + 3.85%   -  Carsales.Com Ltd  (CAR.AX) 
  • + 3.00%   -  GPT Group  (GPT.AX) 

Underperformers:

  • -9.92%   -  Beach Energy Ltd  (BPT.AX) 
  • -9.91%   -  Bendigo and Adelaide Bank Ltd  (BEN.AX) 
  • -7.55%   -  LendLease Group  (LLC.AX) 


Forex: Safe havens lead the way


JPY and CHF were the strongest major currencies as they were supported by safe-haven flows, whilst commodity currencies (CAD, AUD and NZD) were the weakest during classic risk-off play. The baulk of volatility was also seen among CHF and JPY pairs.

Whilst the yen was broadly higher against its peers, USD/JPY and EUR/JPY appear overextended to the downside which make them less appealing for shorts over the near-term. And we may need a fresh catalyst to promote further JPY or CHF buying.

The US dollar index (DXY) posted a minor gain of 0.12% yet remained within the lower quartile of Friday’s bearish range. This allowed EUR/USD to pullback from 1.1800 but we are now looking for signs of a higher low forming on the intraday chart for potential longs.

GBP/AUD broke above the retracement line yesterday but failed to reach the initial 1.9000 target. Whilst we remain bullish above 1.8757, the fact that over half of yesterday’s range is upper wick is a slight concern, even if the daily trend structure remains firm overall.

AUD/NZD is currently within its 10th consecutive bearish week, although prices are trying to find support above the December 2021 low at 1.0418. With RBNZ fully expected to hike rates by 25 bps tomorrow it could take a surprise +50 bps hike for support to break. Alternatively, if RBNZ do not hike then we’d expect AUD/NZD to rally from the December low.

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Commodities: Platinum pauses at resistance

Weak economic data from China weighed on oil prices yesterday, which saw early losses reach around -4% before closing the session around -1.5% lower. WTI trades around the midway point between 65 and 70 so we have no directional bias until prices reach the extremes of the range (for potential range trading strategies) or break beyond the key levels to suggest trend continuation.

Gold traded higher for a 5th consecutive session as the Delta variant provided demand for the precious metal. It has now erased most of its losses from NFP and last Monday’s subsequent sell-off. However, take note of the 200-day eMA just below 1800 and that RSI (2) is now overbought at 93 to suggest near-term overextension to the upside.

Platinum appears to be attempting to carve out a swing high. The daily chart shows it remains in an established downtrend, and it corrective move has found resistance at the 20-day eMA. RSI (2) reached overbought before crossing back below 90 with yesterday’s inverted hammer. A break below 1,000 will confirm the inverted hammer and also see prices below the weekly pivot point and monthly S1 pivot.


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