Asian Open: Sentiment lifted, AUD/JPY hints at bullish trend reversal

Tuesday US cash market close:

• The Dow Jones Industrial rose 371.65 points (1.06%) to close at 35,462.78
• The S&P 500 index rose 37.67 points (0.85%) to close at 4,521.54
• The Nasdaq 100 index rose 175.778 points (1.21%) to close at 14,747.03

Asian futures:

• Australia's ASX 200 futures are up 18 points (0.25%), the cash market is currently estimated to open at 7,204.70
• Japan's Nikkei 225 futures are up 120 points (0.44%), the cash market is currently estimated to open at 27,404.52
• Hong Kong's Hang Seng futures are up 380 points (1.56%), the cash market is currently estimated to open at 24,709.49
• China's A50 Index futures are up 116 points (0.78%), the cash market is currently estimated to open at 15,083.63

Sentiment was given a boost yesterday as tensions between Russia and Ukraine receded somewhat, allowing Wall Street and antipodean currencies to rally whilst also weighing on oil prices. Major US benchmarks all rose in tandem. Nasdaq banks were a top performer and rose 2.5% FANGs were up around 2%. The Nasdaq 100 and Dow rose over 1% and the S&P 500 was up 0.8%, with 8 of its 11 sectors posting gains.

Yen continued to weaken after poor domestic data

The yen continued to fall overnight after a set of weak trade data and household spending was released during the Asian session. USD/JPY closed above last week’s high and is close to testing our initial target around 115.68. GBP/JPY rose to a 3-week high and stopped just shy of our initial target near the weekly R1 pivot. As discussed in yesterday’s video, several timeframes are providing potential bullish signals which warrant keeping an eye on.

AUD/JPY hints at bullish trend reversal

The combination of Australia announcing a reopening of their international borders and a rebound of business confidence saw AUD/JPY as one of the strongest pairs yesterday. Price action also warns of a bullish trend reversal on the daily chart.

We can see on the daily chart that AUD/JPY opened at the session low and closed near its session high yesterday, clearing several technical resistance levels including the 200, 100 and 50-day eMA and a descending trendline. Whilst this is against our initial bias (which failed to be triggered with a break beneath 81.28) it does put the counter-bias into focus which was discussed yesterday.

ASX 200: Energy stock could face selling pressure

Strong iron ore and steel prices helped lift the ASX 200 to 7200 yesterday led by materials and financials sectors. The ASX closed over 1% higher but below the 7200 handle, a level which will clearly be in focus for traders today. Energy stocks are expected to come under pressure at the open as tensions between Russia and Ukraine receded. Oil prices fell as much as -3.5% to a 3-day low, dragging US listed energy stocks lower along the way.

ASX 200: 7186.7 (1.07%), 08 February 2022

• Materials (2.2%) was the strongest sector and Information Technology (-1.62%) was the weakest
• 9 out of the 11 sectors closed higher
• 2 out of the 11 sectors closed lower
• 2 out of the 11 sectors outperformed the index
• 67 (33.50%) stocks advanced, 124 (62.00%) stocks declined

Outperformers:

• +-3.02% - Judo Capital Holdings Ltd (JDO.AX)
• +-2.69% - Pilbara Minerals Ltd (PLS.AX)
• +-2.65% - PEXA Group Ltd (PXA.AX)

Underperformers:

• 7.18% - Magellan Financial Group Ltd (MFG.AX)
• 6.71% - Flight Centre Travel Group Ltd (FLT.AX)
• 5.92% - AVZ Minerals Ltd (AVZ.AX)

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