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

• Dow Jones, S&P 500 and Nasdaq 100 closed +0.70%, +0.27%, and -0.48% respectively
• ISM manufacturing PMI fell short of expectations, cooling tapering fears alongside Fed’s dovish stance
• The Nikkei 225 and ASX 200 indexes look set to open mixed. Chinese markets remain shut

US PMI, Pandemic, Fed, Gold, Asia-Pacific at Open:

Stocks on Wall Street traded mixed on Monday, the S&P 500 index climbed modestly while the Nasdaq 100 fell. The ISM manufacturing PMI print fell short of market expectations, cooling Fed tapering fears and boosting precious metal prices. The reading came in at 60.5, far below the baseline forecast of 65 and also marked a drastic pullback from the previous month’s print of 64.7.

A poorer-than-expected manufacturing reading echoed Fed Chair Jerome Powell’s dovish stance, as he reiterated that the progress of recovery has been uneven. New York Fed President John Williams also said current conditions are “not nearly enough” for a shift in monetary policy stance. Their comments helped to alleviate market fears about tapering. The DXY US Dollar index pulled back alongside 10-year Treasury yield, boosting the price of precious metals. Gold surged 1.35%. Silver advanced 3.73% to a two-month high.

US ISM Manufacturing PMI – April 2021

Source: Bloomberg, DailyFX

Sentiment across Asia remains subdued as new Covid-19 waves are hitting India and some Southeast Asian countries, threatening millions of lives and an economic recovery in the region. Significant surges in infections have been reported in India’s neighboring countries Bhutan, Sri Lanka, and Nepal, as well as Southeast Asia nations Thailand and Laos. New Covid-19 strains appear to be more contagious and deadly, rendering developing countries more vulnerable due to a lack of vaccines and healthcare resources. A spokesperson at the World Health Organization (WHO) said “the situation in India can happen anywhere”, warning that things could get worse before they get better.

Source: Google

Asia-Pacific markets are positioned to open mixed. Futures in Hong Kong, Australia and Singapore are slightly higher. Those in Japan, South Korea, Taiwan, Malaysia and Thailand are in the red however. Australian trade balance and the RBA interest rate decision will be on top of today’s agenda. Canadian and US trade data will be focused tonight. 

Japan’s Nikkei 225 index continued to consolidate beneath the 30,000 mark as the country is in a third state of emergency amid viral resurgence. Meanwhile, a global shortage of semiconductors also put constrains on its manufacturing sector, especially in the auto industry.

Looking back to Monday’s close, 6 out of 11 S&P 500 sectors ended higher, with 65.9% of the index’s constituents closing in the green. Energy (+2.91%), materials (+1.53%) and healthcare (+1.17%) were among the best performers, whereas consumer discretionary (-0.66%) and real estate (-0.48%) trailed behind.

S&P 500 Sector Performance 03-05-2021

Source: Bloomberg, DailyFX

S&P 500 Index Technical Analysis

The S&P 500 index extended higher after rebounding from the 161.8% Fibonacci extension level (4,125). The width of the Bollinger Band is narrowing however, pointing to weak upward momentum. An immediate resistance level can be found at 4,214 – the upper Bollinger Band. Breaking above it may expose the key resistance level of 4,268 – the 200% Fibonacci extension. The MACD indicator formed a bearish crossover and trended lower, suggesting that upward momentum may be fading.

S&P 500 Index – Daily Chart

Nikkei 225 Index Technical Analysis:

The Nikkei 225 index entered a consolidative phase after it failed to breach the 30,214 resistance (the 127.2% Fibonacci extension) for a third attempt. Immediate support levels can be found at 28,357 (100% Fibonacci extension). The MACD indicator is trending lower, suggesting that further consolidation is likely.

Nikkei 225 Index – Daily Chart

Chart by TradingView

ASX 200 Index Technical Analysis:

The ASX 200 index is challenging an immediate resistance level at 7,071 (the 100% Fibonacci extension) for a third attempt. Breaching this level may expose the next key resistance of 7,260 – the 127.2% Fibonacci extension. A pullback from here may lead to a test of the ceiling of the “Ascending Channel” that it broke previously. The MACD indicator formed a bearish crossover and trended lower, suggesting that bullish momentum is fading.

ASX 200 Index – Daily Chart