Asian Open Markets Take JJ Vaccine Halt Within Stride

Asian Futures:

• Australia's ASX 200 futures are up 14 points (0.2%), the cash market is currently estimated to open at 6,990.90
• Japan's Nikkei 225 futures are up 40 points (0.13%), the cash market is currently estimated to open at 29,791.61
• Hong Kong's Hang Seng futures are up 95 points (0.33%), the cash market is currently estimated to open at 28,592.25

UK and Europe:

• Euro STOXX 50 futures are up 11 points (0.28%)
• Germany's DAX futures are up 16 points (0.1%)

Tuesday US Close:

• The Dow Jones Industrial fell -68.13 points (-0.2%) to close at 33,677.27
• The S&P 500 index rose 13.6 points (0.33%) to close at 4,141.59
• The Nasdaq 100 index rose 167.143 points (1.21%) to close at 13,986.49

Vaccination Rollouts Hit a Roadblock

The US FDA (Food and Drug Administration) sent out a recommendation to halt the use of J&J (Johnson and Johnson) vaccines due to six recipients of it, all women aged between 18 and 48, experienced a rare form of blood clot. The headline almost mirrors that of the AstraZeneca setback, and does bring into question if the US can maintain top spot on the vaccine rollout. That said, the FDA acknowledge the halt is only likely to last “a matter of days” although that hinges upon “what we learn over the next few days”.

Over the past few months there have been several occasions where the distribution of vaccinations has been halted, only to resume. The US is also using the Pfizer-BioNTech and Moderna vaccines, and it’s also not impossible for J&J’s vaccines to return to the needles as quickly as they were withdrawn. So perhaps this is why markets are taking in it their stride. But, it could spell bad news for Europe which is already behind on its vaccination programme.

US CPI came in slightly above expectations. Yet as the Fed have made it crystal clear on numerous occasions that they won’t tighten policy on higher inflation, it was a downside surprise that was always more likely to provoke a market reaction.  

Indices: So much for the ‘great rotation” out of tech stocks

The Nasdaq 100 joined the S&P 500 at a record high after a two-month hiatus. There had been a lot of market chatter about the great rotation out of tech stock, primarily due to the rise in yields. But it appears markets can sustain higher yields (so long as they rise in an orderly manner).  

• The Nasdaq 100 (+1.21%) gapped higher, just beneath its prior 13879 high, then didn’t look back as it touched 14,000 before settling at 13,986.95. The S&P 500 continued its low volatility ascent whilst the Dow Jones closed back above 33,600, just beneath its highs.
• The Hang Seng continues to suggest it has topped out with a bearish pinbar and third closed beneath its 50-day eMA. A break above 29,150 invalidates the bearish bias on the daily chart.
• The ASX 200 remains in a potential full-flag formation, which would be confirmed with a break above 7013 and bring 7100 into focus (ahead of its 7198 record high). If it retraces further, we’d still be keen to explore bullish opportunities above the 7900 – 7938 zone.

ASX 200 Market Internals

ASX 200: 6976.9 (0.04%), 13 April 2021

• Information Technology (2.16%) was the strongest sector and Consumer Staples (-1.15%) was the weakest
• 3 out of the 11 sectors outperformed the index
• 97 (48.50%) stocks advanced and 85 (42.50%) declined
• 0 hit a new 52-week high, 0 hit a new 52-week low
• 74.5% of stocks closed above their 200-day average
• 71% of stocks closed above their 50-day average
• 76.5% of stocks closed above their 20-day average

Outperformers

• + 16.95%   -  Zip Co Ltd  (Z1P.AX) 
• + 10.53%   -  Bingo Industries Ltd  (BIN.AX) 
• + 6.36%   -  Eagers Automotive Ltd  (APE.AX) 

Underperformers:

• -4.05%   -  Perenti Global Ltd  (PRN.AX) 
• -3.12%   -  CIMIC Group Ltd  (CIM.AX) 
• -2.63%   -  Beach Energy Ltd  (BPT.AX) 

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Forex: DXY breaks below 92.0

The US dollar index (DXY) finally broke out of range to close firmly beneath 92.00 support. The break of its bullish trendline remains intact and next key support levels reside around 91.30/40. Still, the 50-day eMA is now acting as support whilst the 20-day caps as resistance, but momentum currently favours a bearish continuation whilst prices remains below 93.33.

Switching to the four-hour chart shows price action is now beneath the 20, 50 and 200-bar eMA’s, and we would favour fading into minor rallies below resistance at this stage.

• If volatility remains low during any retracement, bears could seek to fade into moves below 92.00.
• Alternatively, seek bearish reversal patterns below the 93.33 high.
• The trendline break targets the lows all the way down at 89.68. But over the near-term 91.70 and 91.30 could provide interim support.

Elsewhere for currencies NZD/USD, EUR/USD and AUD/USD were the strongest pairs whilst GBP/NZD and USD/JPY were the weakest.

• USD/CAD again failed to break above its 50-day eMA and close the day with a bearish hammer, near its two-week lows.
• USD/JPY fell to a three-day low and looks like it wants to break back beneath 109 to target 108.40.
• CHF/JPY printed an bearish outside hammer around 118.60 resistance. Considering this level triggered a -2.5% decline in February, we’d take note of a break back below 118.00.
• GBP/AUD: A 2-bar bearish reversal respected the 200-day eMA yesterday and momentum is trying to turn lower. A break below 1.7930 assumes bearish continuation and invalidates it bullish channel.

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Commodities: Gold bugs defend 1720

Gold printed a bullish engulfing day after bulls successfully defended 1720 support. Still, we’d want to see prices break above 1765 before confirming the bullish breakout on the daily chart, but the weaker US dollar suggests this could now be on the cards. On the four-hour chart a small bullish pennant is forming for a possible breakout towards 1755 and 1760 resistance.

Oil prices closed to a seven-day high, yet volatility or general direction is sorely lacking as both WTI and brent essentially move sideways inside a range.

 

Up Next (Times in AEST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

RBNZ meeting is the main event in Asia today, although no change is expected. Given the unexpected fall of GDP in Q4, its even less likely (starting from a low base) that there will be any hawkish rhetoric in today’s statement.