DOW JONES, NIKKEI 225, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 indexes closed -0.24%, -0.47% and -1.12% respectively
- Alphabet climbed whereas Apple and Microsoft fell after earnings release
- Asia-Pacific markets are positioned for a cautious start after China market turmoil
US Earnings, China Stocks Turmoil, FOMC Meeting Asia-Pacific at Open:
Wall Street stocks retreated from record highs on Tuesday as traders awaited the FOMC meeting and Powell’s press conference. Chinese stock market turmoil and lingering pandemic concerns are weighing on sentiment across Asia-Pacific markets. The technology sector retreated the most, as investors digested decent Q2 earnings results and relatively tepid forward guidance.
US benchmarks futures extended lower during early APAC hours after Apple, Microsoft and Alphabet posted their results. Here is a quick update:
- EPS of $1.296 vs. $1.013 estimate (27% higher)
- Revenue at $81.4 billion vs. $73.8 billion estimate (10% higher)
- iPhone sales increased nearly 50% YoY, product lines grew over 12% YoY
- Despite strong quarterly results, Apple warned about chip supply constraints impacting iPhone and iPad sales in the coming quarter
- EPS of $2.17 vs. $1.92 estimate (13% higher)
- Revenue at $46.1 billion vs. $44.2 billion estimate (4% higher)
- Strong Azure revenue growth boosted earnings, and forward guidance beat expectations
- EPS of $23.8 vs. $22.1 estimate (7% higher)
- Revenue at $50.9 billion vs. $46.0 billion estimate (10% higher)
- Earnings were boosted by strong advertising growth amid the pandemic bounce-back
- YouTube revenue surged 83% YoY to $7 billion
- Share price rose 3% in after-hours trade
Stay tuned for more earnings update from DailyFX. Click HERE to download out quarterly equity forecasts.
Source: Bloomberg, DailyFX
Looking ahead, the Australian inflation rate dominates the economic docket today alongside German GfK consumer confidence figure and the Federal Reserve’s interest rate decision. Find out more from the DailyFX economic calendar.
Asia-Pacific markets are positioned for a cautious start of the day. Futures in Japan, mainland China, Australia, Malaysia, India and Thailand are in the red, whereas those in Hong Kong, South Korea, Taiwan and Singapore are in the green.
Hong Kong and mainland markets tumbled for a third day after Beijing tightened regulatory rules for the technology, education and real estate sectors. The Hang Seng Index plunged 4.22% on Tuesday, marking a 3-day decline of 9.6%. Chinese tech stocks listed in US exchanges also plummeted, exerting downward pressure to Asian stocks at open. Extreme volatile market conditions may entice some “buy the dip” activity however, as the HSI appears to be temporarily oversold according to several technical indicators.
Looking back to Tuesday’s close, 6 out of 9 Dow Jones sectors ended lower, with 56.7% of the index’s constituents closing in the red. Information technology (-0.80%), industrials (-0.55%) and energy (-0.34%) were among the worst performer, whereas communication services (+0.50%) outperformed.
Dow Jones Sector Performance 20-07-2021
Source: Bloomberg, DailyFX
Dow Jones Index Technical Analysis
The Dow Jones index is challenging a key resistance level at 34,920 for another time. A successful attempt may invalidate the “Triple Top” chart pattern and open the door for further upside potential. A “Triple Top” chart pattern flags the risk of a major trend reversal if prices break the supporting trendline as shown on the chart below. Bearish MACD indicator suggests that upward momentum may be fading.
Dow Jones Index – Daily Chart
Nikkei 225 Index Technical Analysis:
The Nikkei 225 index remains in a “Descending Channel” formed since February. The floor and ceiling of the channel may be viewed as immediate support and resistance levels respectively. The overall trend remains bearish-biased as suggested by the downward-sloped SMA lines. The MACD indicator is trending below the neutral line, suggesting that upward momentum may be weak.
Nikkei 225 Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index breached the ceiling of the range-bound zone, as highlighted on the chart below. Breaking this level may open the door for further upside potential with an eye on 7,500. The overall trend remains bullish-biased, as suggested by the consecutive higher highs and higher lows formed over the past few months. The MACD indicator formed a bullish crossover and trended higher, suggesting that upward momentum is gaining traction.
ASX 200 Index – Daily Chart
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter