Daily analysis

Novox 2.5 Reference of Fx market

KUAISHOU IPO, US STIMULUS, NONFARM PAYROLLS, ASIA-PACIFIC STOCKS OUTLOOK:
Wall Street equity indices closed broadly higher as Democrats are moving closer to pass the US$ 1.9 trillion stimulus package without Republican support. US stock benchmarks recovered all losses incurred in last week’s retail trading frenzy and have likely resumed their upward trajectory towards higher highs.

A rapid decline in the coronavirus infections around the globe and renewed stimulus hopes led markets to price in reflation expectations, with the longer-dated Treasury yields rising alongside the US Dollar. While this has largely undermined the precious metal prices, stock markets have shrugged off a stronger Greenback due to upbeat earnings and positive guidance. Gold prices tumbled 2.2% and broke below a key support level at US$ 1,870, opening the door for further downside potential.

A popular short video start-up, Kuaishou, will be listed on HKEX today. This will mark the world’s largest tech IPO since Uber’s debut in May 2019, raising as much as US$ 5.4 billion. Kuaishou received overwhelming demand from investors, with the retail trench over 1200 times oversubscribed. The stock traded at above HK$ 310 in the grey market, up more than 170% from the IPO price of HK$ 115. Kuaishou and its rival TikTok represent China’s fast growing new economy, with the “live-streaming e-commerce” concept potentially reshaping consumer behavior and lifestyle of shopping online.

On the macro front, US nonfarm payrollsnumber will be closely watched by investors for clues about the health of the labor market as well as the Fed’s future policy guidance. The ADP private payrolls data released earlier this week unexpectedly beat market expectations, with 174k jobs added in January. The latest weekly jobless claims also came better-than-expected, with actual reading at 779k and previous week’s figure revising down to 812k from 847k. This may hint at a positive surprise in the nonfarm figure, which is forecasted to be around 60-100k from various sources.


A potentially stronger jobs report could underpin the Greenback as it might shed pressure on the Fed to ease further, whereas a disappointing one may unwind the currency’s strength. A rapid decline in daily Covid-19 cases around the globe following the vaccine rollout painted a brighter picture of recovery, sending the DXY US Dollarindex to its highest level since December 1st. The index crossed above its 50-Day Simple Moving Average (SMA) line and appears to have entered a bullish trend with the formation of “Golden Cross”



Sector-wise, 10 out of 11 S&P 500 sectors climbed on Thursday, with 76.6% of the index’s constituents closing in the green. Financials (+2.27%), information technology (+1.55%) and industrials (+1.10%) were among the best performing sectors, while materials (-0.54%) lagged.


S&P 500 Sector Performance 04-02-2021



Asia-Pacific marketsrebounded following a strong US lead overnight, with futures pointing to a higher start across Japan, Australia, Taiwan, Singapore, Malaysia and India. Australia’s ASX 200 index advanced over 1% in early trading, led by information technology (+2.02%), consumer discretionary (+1.92%) and communication services (+1.47%). RBA Governor Philip Lowe delivered a speech on Friday morning, painting an improved economic outlook and the development of vaccines. He also highlighted that “very significant monetary support will need to be maintained” in Australia for some time to come. The central bank’s dovish stance may continue to underpin equity prices.

S&P 500 Index Technical Analysis:


Technically, the S&P 500 index resumed its upward trajectory after returning to the “Ascending Channel” this week, ending a brief technical correction. The MACD indicator has formed a bullish crossover, suggesting that near-term momentum has turned upwards. An immediate support level can be found at 3,804, where the 20-Day Simple Moving Average (SMA) and 76.4% Fibonacci extension level intercept. An immediate resistance level can be found at 3,893 (100% Fibonacci extension).

S&P 500 Index – Daily Chart



Hang Seng Index Technical Analysis:

The Hang Seng Index rebounded from the 50% Fibonacci retracement level (28,060) and is about to challenge an immediate resistance at 29,160 (23.6% Fibonacci extension). Breaking above this level may open the door to re-challenge the previous high at 30,140, whereas a pullback from here may lead to a brief consolidation with an eye on 28,550 for support.


Hang Seng Index – Daily Chart



ASX 200 Index Technical Analysis:


The ASX 200 index is attempting to breach the upper ceiling of the range between 6,570 and 6,810, which is also the 200% Fibonacci extension and thus serves as a strong resistance. A successful attempt may lead to further strength towards 6,900. The overall trend remains bullish-biased, as suggested by upward-sloped simple moving average lines.


ASX 200 Index – Daily Chart
Back