DOW JONES, NIKKEI 225, ASX 200 INDEX OUTLOOK:
- Dow Jones, S&P 500 and Nasdaq 100 indexes closed +0.03%, +0.03% and +0.33% respectively
- A lab report showed that Moderna’s Covid-19 vaccine is effective against the Delta variant viral strain
- Asia-Pacific markets are positioned to trade slightly higher. China NBS manufacturing PMI in focus
Delta Variant, Moderna’ Vaccine, NBS PMI, OPEC+, Asia-Pacific at Open:
The Dow Jones Industrial Average traded modestly higher as concerns surrounding the Delta variant eased. Pharmaceutical company Moderna published a lab report on Tuesday, which showed its Covid-19 vaccine is effective in producing antibodies against the newly found viral strain from India. Moderna’s share price surged more than 5% on Tuesday, hitting an all-time high. Yet, questions remain on the production capacity and distribution of Moderna’s vaccine around the globe as new viral strains continue to spread and mutant.
The Delta variant was attributed to the recent surge in Covid-19 cases in the UK and Australia, and may threaten a new round of lockdowns and travel restrictions around the world. This may cast a shadow over a fragile and unbalanced recovery of the global economy, especially to countries that have relatively slow vaccination progress. A worsening pandemic situation may benefit the technology sector, which tends to outperform cyclical ones during the depth of the pandemic. Therefore, the Nasdaq 100 index may continue to outperform Dow Jones in the days to come.
Nasdaq 100 Outperforms Dow Jones
The US Dollar index rebounded to 92.07 overnight, exerting downward pressures on commodities and emerging market currencies. Gold prices pulled back to $1,761, breaking below the trending support of a “Bearish Pennant” and opening the door for further downside potential. Crude oil prices rebounded to $73.5 ahead of an OPEC+ meeting scheduled on July 1st, in which the oil cartel may decide a 550k bpd output hike in August to meet rising fuel demand.
Looking ahead, China’s NBS Manufacturing PMI reading dominates the economic docket today alongside the core Inflation rate in the Eurozone. Chinese manufacturing activity is expected to remain in the expansionary territory, but economists foresee the PMI gauge to retreat slightly from May’s level (chart below). A higher-than-expected reading may add strength to the Chinese Yuan, whereas a weaker one may result in the opposite. Find out more from DailyFX economic calendar.
China NBS Manufacturing PMI – Forecast
Source: Bloomberg, DailyFX
Asia-Pacific markets are positioned to rebound from yesterday’s losses. Futures in Japan, Australia, Hong Kong, Taiwan, Singapore, Malaysia, India and Thailand are in the green, whereas those in mainland China and South Korea in the red. The Hong Kong market will be shut on July 1st for the HK Special Administrative Region Establishment Day.
Looking back to Tuesday’s close, 4 out of 9 Dow Jones sectors ended higher, with 40% of the index’s constituents closing in the green. Consumer discretionary (+0.98%) and information technology (+0.60%) outperformed, whereas communication services (-1.28%) and industrials (-0.89%) trailed behind.
Dow Jones Sector Performance 29-06-2021
Source: Bloomberg, DailyFX
Dow Jones Index Technical Analysis
The Dow Jones index returned to the “Ascending Channel” after briefly breaching below it last week.
An immediate support level can be found at 33,320 – the 161.8% Fibonacci extension, whereas a key resistance can be found at 34,920 – the 200% Fibonacci extension. Bearish MACD divergence suggests that prices may be vulnerable to a technical correction as bullish momentum fades.
Dow Jones Index – Daily Chart
Hang Seng Index Technical Analysis:
The Hang Seng Index is attempting to breach the neckline (29,300) of the “Double Bottom” pattern for a second try. A successful attempt may open the door for further upside potential with an eye on 31,180 – the previous high. The MACD indicator is oscillating at around the neutral line, suggesting that the index may be lack of a clear direction in the near term.
Hang Seng Index – Daily Chart
ASX 200 Index Technical Analysis:
The ASX 200 index pulled back from its all-time highs this week and entered a technical correction. Prices have likely formed a “Bull Flag” pattern, which hints at further upside potential after a period of consolidation. Immediate support levels can be found at the 20-day SMA line (7,290) and then 7,200 – the 127.2% Fibonacci extension. The overall bullish trend remains intact as suggested by the upward-sloped SMA lines.
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
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