S&P 500, Nasdaq 100 Sink on Omicron and Fed Dangers. ASX 200 Reversal Sign in Focus

S&P 500, Nasdaq 100, Dow Jones, ASX 200, Omicron Variant, Powell – Asia Pacific Indices Briefing

  • S&P 500, Nasdaq 100, and Dow Jones sink as Omicron variant emerges within the US
  • Comply with-through could rely upon if governments impose lockdowns, eyes on Asia
  • ASX 200 displaying a Head and Shoulders chart formation, assist stays in play

Wednesday’s Wall Avenue Buying and selling Session Recap

Shares on Wall Avenue bought off aggressively on Wednesday, pressuring the S&P 500, Nasdaq 100 and Dow Jones. S&P 500 futures suffered a 3.06% loss over the previous 2 buying and selling periods, the worst 2-day loss since October 2020. Traders fled to the protection of Treasuries, pushing up longer-term charges at the price of yields. The VIX market ‘worry gauge’ closed at its highest since early February.

The selloff on Wall Avenue could possibly be attributed to 2 key elements. The primary has been the comparatively hawkish pivot from the Federal Reserve. At this time, Chair Jerome Powell reiterated that it could possibly be applicable to contemplate quicker tapering. This follows the central financial institution’s pivot on inflation, the place earlier this week, Mr. Powell retired the word ‘transitory’ in explaining countrywide common value progress.

The second element was the primary discovery of the emerging Omicron Covid-19 variant in the United States. This might danger undermining the gradual international reopening. Understandably, a few of the worst-performing shares could possibly be present in journey industries. The Russell 2000 Index, which consists of small-cap equities, closed at its lowest since August after slumping 2.34%.

S&P 500 Technical Evaluation

Having a look on the 4-hour chart of S&P 500 futures, we are able to see that the current drop paused proper on the midpoint of the Fibonacci retracement at 4500. This additionally follows constructive RSI divergence, displaying that draw back momentum is fading. However, the index has confirmed a breakout below the 200-period Easy Transferring Common (SMA). That would spell broader weak point, inserting the give attention to October lows. Within the occasion of a flip increased, maintain a detailed eye on the 20-period SMA. The latter may keep the downtrend.

S&P 500 4-Hour Chart

S&P 500, Nasdaq 100 Sink on Omicron and Fed Risks. ASX 200 Reversal Signal in Focus

Chart Created in TradingView

Thursday’s Asia Pacific Buying and selling Session

Futures monitoring Wall Avenue have barely recovered heading into Thursday’s Asia-Pacific buying and selling session. This will trim a few of the anticipated draw back gaps throughout APAC benchmark inventory indices. The regional financial docket is gentle, inserting inventory markets below the mercy of danger urge for food. As extra data crosses the wires concerning the Omicron variant, maintain a detailed eye on how governments selected to reply.

An absence of strict lockdowns may maintain market temper intact. Australia’s Chief Medical Officer, Paul Kelly, famous that there’s ‘no indication’ that the brand new variant could possibly be extra lethal than different strains. The nation has reported 7 instances of Omicron, with 6 of these in New South Wales. A scarcity of fast lockdowns may maintain the ASX 200 from extending losses. Nonetheless, the state of affairs stays fluid.

ASX 200 Technical Evaluation

The ASX 200 could possibly be forming a bearish Head and Shoulders chart formation. A proper shoulder appears to have been confirmed with resistance round 7480. Now, the index is dealing with the neckline of the H&S, making for a zone of assist between 7096 and 7207. The 200-day SMA can be in focus, which can keep the broader uptrend. Optimistic RSI divergence can be current right here. Clearing assist exposes the Could low at 6837.

ASX 200 – Each day Chart

S&P 500, Nasdaq 100 Sink on Omicron and Fed Risks. ASX 200 Reversal Signal in Focus

Chart Created in TradingView

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part under or @ddubrovskyFX on Twitter

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