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S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

By on January 10, 2022 0

WEEKLY OUTLOOK S&P 500, NIKKEI 225, ASX 200:

  • The Dow Jones, S&P 500 and Nasdaq 100 indices closed at -0.01%, -0.41% and -0.96% respectively
  • The increase in the non-farm payroll in the United States has been lower than expected, but the unemployment rate and wage growth have shown strong evidence of a tight labor market
  • Asia-Pacific futures point to a bitter start to the week. Japanese stock exchanges are closed

Jobs report, rate hikes, Treasury yields – Asia-Pacific coming week:

Wall Street stocks ended the week on a sour note, with the Nasdaq, the S&P 500 and the Dow jones clues down -4.53%, -1.87% and -0.29% respectively last week. Technological values were the hardest hit because relatively risk1st growth stocks are more sensitive to expectations of rising interest rates than other sectors.

Some market participants may still see this pullback as another healthy correction and potentially an opportunity to buy more as the economy has shown. good signs of improvement. Friday United States Employment Report have shown that the the unemployment rate fell to 3.9% – Which one is get closer to the pre-pandemic levels. salarysgrew up 0.6% to the month of December, accelerating from the 0.4% reading in November. The non-farm wage bill rose to 199,000, in line with the upward revisions of the previous two months.

This suggests that the labor market faces pent-up demand and can fuel inflationary pressure, prompting the Fed to raise interest rates in March. Meanwhile, heavy consumer spending canSupport corporate profits and this positive feedback loop can help the economy resist the the gradual take-off of interest rates this year. In addition, this week’s US core inflation data will also be in the projectors.

Source: Bloomberg, DailyFX

the we10-year Treasury yield climb at the highest level since Januaryuary 2020, as the Fed’s rate hike expectations raised the yield curve. The rate on 10 years we treasureies is an important reference and is referenced by many other bonds and assets. Therefore, higher yields can put downward pressure on companies, rate sensitive basic products and emerging market assets.

10-year US Treasury yield

S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

Graphic created with TradingView

APAC Markets seems ready to start the week on the right foot. Futures were lower in US, Australia, South Korea, Taiwan, Singapore and Thailand. Those in Mainland China, Hong Kong, Malaysia, India and Indonesia are in green on the other hand.

The rapid spread of Omicron variant may also raise concerns about wider reopenness among investors. On Friday, the total number of Covid-19 cases worldwide surpassed 300 million. The emergence of highly contagious viral variants such as Delta and Omicron means the fight against the pandemic may be far from over.

For the coming week, the Core inflation rate in the United States and retail sales data dominates the economic agenda alongside the German fullGDP year report. Learn more about the DailyFX Calendar.

Thinking back to Friday’s close, 4 of 11 S&P 500 sectors finished higher, with 47.1% of index constituents closed during the green. Energy (+1.45%), finance (+1.15%) and utilities (+ 0.75%) were among the best performers, while consumer discretionary (-1.65%) and information technology (-1.01%) followed.

S&P 500 Sector performance 01-07-2022

S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

Source: Bloomberg, DailyFX

Technical analysis of the S&P 500 index

The S&P 500 Index pull off all-time highs, which may be another healthy correction alongside its upward trajectory. The overall uptrend remains intact, as suggested by a “Ascending chain” training. The next level of resistance can be found at 4,882 – the 161.8% Fibonacci extension. The MACD indicator, however, hit a low, suggesting that near-term momentum may weaken.

S&P 500 Index – Daily chart

S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

Graphic created with TradingView

Technical analysis of the Hang Seng index:

The Hang Seng Index (HSI) has tended to decline within a “Fall Wedge” diagram, as highlighted in the table below. Prices are testing an immediate support level at 22,800 – the 200% Fibonacci extension. Maintaining above this level could pave the way for a technical rebound. The MACD indicator follows an uptrend below the neutral midpoint, suggesting that bullish momentum may strengthen.

Hang Seng Index – Daily chart

S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

Graphic created with TradingView

Technical analysis of the ASX 200 index:

The ASX 200 index has returned to a limited area between 7,200 and 7,500 after a “false break” last week. The bottom and top of the range can be seen as immediate support and resistance levels, respectively. The overall trend remains bullish as the MACD indicator broke through the neutral midpoint and moved higher. A significant breach above 7,500 may intensify buying pressure and expose the next resistance level of 7,760.

ASX 200 Index – Daily chart

S&P 500 pulls out amid rate hike fears, Hang Seng and ASX 200 could follow lower

Graphic created with TradingView

— Written by Margaret Yang, Strategist for DailyFX.com

To contact Margaret, use the Comments section below or @margaretyjy on Twitterr

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