S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

S&P 500, STRAITS TIMES, CHINA A50, ASX 200 INDEX OUTLOOK:

  • US equity futures erased some gains after a “risk-on” session, the S&P 500 closed at record high
  • Congress is bringing stimulus talks back on the table, boosting risk
  • Straits Times and ASX 200 indexes look set to open higher, China A50 index at 12-year high

US Stimulus Talks, Herd Immunity, Asia-Pacific at Open:

The S&P 500 index surged 1.1% and finished at its record high, buoyed by renewed stimulus hopes as Congress restarted talks on relief packages. 10 out of 11 S&P 500 sectors ended in the green, with 76% of the index’s constituents closing higher on Tuesday. A top US infectious disease doctor forecasted that most Americans could be vaccinated by the second quarter of next year, which could lead to herd immunity in the summer. A vaccine-led rally appears to have revitalized after a brief consolidation, setting a positive tone for Asia-Pacific stocks at open.

Asia-Pacific markets look set to follow a strong US lead, with equity futures pointing to a positive start in Japan, mainland China, Australia, Hong Kong, South Korea, India and Singapore. The China A50 index has reached its highest level seen since 2008, driven by a strong rally in financial stocks. Singapore’s Straits Times Index (STI) experienced a technical pullback and has likely found a strong support at 2,800.

Equities Forecast

Equities Forecast

Recommended by Margaret Yang, CFA

What is the road ahead for equities this quarter?

Macro data were largely mixed overnight, with Germany registering a lower-than-expected unemployment rate while Italy’s Q3 GDP reading came below expectations. Canada saw a slower-than-expected pace of economic recovery in the third quarter. The US ISM manufacturing PMI came in at 57.5, failing to meet economists’ forecasts of 58.0 and marked a decline from previous months’ reading of 59.3. Find out more on the DailyFX economic calendar.

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

Source: Bloomberg, DailyFX

Sector-wise, 10 out of 11 S&P 500 sectors ended higher, with about 76.0% of the index’s constituents closing in the green. Communication services (+1.96%), financials (+1.57%) and information technology (+1.41%) were among the best performers, while industrials (-0.18%) and energy (+0.44%) were lagging behind.

S&P 500 Sector Performance 01-12-2020

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

Source: Bloomberg, DailyFX

Forex for Beginners

Forex for Beginners

Recommended by Margaret Yang, CFA

Why do interest rates matter for currencies?

Straits Times Index Outlook:

The Singaporean stock market saw institutional money inflow for 4 weeks in a row, with S$329.4 million pumping in last week (chart below). Fund managers’ top picks include banks, real estate, aviation, transportation and entertainment stocks. Strong and consistent institutional buy reflects perhaps a brighter economic outlook for the island country, as stock markets usually lead economic cycles by 3-6 months.

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

Source: SGX

Technically, the STI appears to have entered a consolidative period after a strong rally in November. A healthy pullback should not derail the index from its recovery path in the medium term. An immediate support level can be found at 2,800, breaking which may lead to a deeper correction with an eye on 2,728 – the 23.6% Fibonacci retracement.

Straits Times Index Daily Chart

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

China A50 Index Technical Analysis:

The China A50 index is riding a strong upward trend, forming an “Ascending Channel” over the past two months. The index has reached its highest level seen since 2008. The overall trend remains bullish-biased, as suggested by its 20-, 50- and 100-Day Simple Moving Average (SMA) lines. An immediate support level can be found at 16,880- the 100% Fibonacci extension.

China A50 IndexDaily Chart

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

ASX 200 Index Technical Analysis:

Technically, the ASX 200 index appears to have entered a brief consolidative period since last week, but the overall trend remains bullish biased. An immediate support level can be found at 6,640 – the 20-Day SMA line. Immediate resistance level can be found at 6,640 – the 38.2% Fibonacci extension.

ASX 200 Index – Daily Chart

S&P 500 Hits Record High on Stimulus Hopes, Straits Times Index May Rise

How to Use IG Client Sentiment in Your Trading

How to Use IG Client Sentiment in Your Trading

Recommended by Margaret Yang, CFA

Improve your trading with IG Client Sentiment Data

— Written by Margaret Yang, Strategist for DailyFX.com

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




Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like