NFP Miss Buoys Stocks and ingots
DOW JONES, HANG SENG, ASX 200 INDEX OUTLOOK:
- The Dow Jones, S&P 500 and Nasdaq 100 indices closed at + 0.52%, + 0.88% and + 1.78% respectively
- Data on non-farm wages is below expectations, while robust wage growth points to inflationary pressures. The uthe unemployment rate has fallen to a pandemic low.
- A pgo back the US dollar and Treasury yields have pushed up gold prices
NFP, yields, gold, pandemic, China’s trade balance, Asia-Pacific coming week:
Wall Street shares closed broadly higher on Friday after failing slightly in May non-farm wages the data cooled fears about the weakening Fed stimulus. Some 599,000 jobs were added last month, compared to a baseline forecast of 650,000. Again wage growth climbed 2% year-on-year from a forecast of 1.6%, reflecting higher prices. the unemployment rate fell to 5.8% from 6.1% the month before, hitting a pandemic-era low.
The overall jobs report is decent, showing a robust recovery in the labor market, but not “too good” to stoke downside fears. Consequently, both the DXY US Dollar Index and 10-year Treasury yields fell on Friday, supporting stocks and bullion prices.
The rate sensitive technology sector led the rebound, with the Nasdaq 100 index up 1.78%. Goldprices rebounded 1.02% to $ 1,890 and WTI crude oil prices increased to $ 69.61. Risk sentiment seems to prevail, setting a positive tone for Asia-Pacific markets.
United States No Farm Payrolls
Source: Bloomberg, DailyFX
APAC scholarships seems ready to start the week in the spotlight. Futures in Japan, Mainland China, Australia, Hong Kong, Taiwan, Singapore and India are trading higher, while those in South Korea, Malaysia and Thailand are in the the Red.
Investtors will watch today’s release of Chinese trade balance data for indices on the health of the world’s second largest economy. Export and import growth are expected at 32.1% and 51.5% year-on-year respectively, partly due to a weak base effect. Chinese data tends to have a significant impact on the Australian and New Zealand dollars due to their close business relationship.
New Covid-19 epidemics in the Chinese province of Guangdong could weigh on Hang Seng Index (HSI) after local authorities tightened controls on Sunday. The province has detected more than 100 cases since the outbreak began on May 21st and the trend shows no signs of slowing down. Residents of the area have been asked to take Covid-19 tests and have been encouraged to stay in the province. Guangdong is one of the most developed provinces in China, so tightening Covid-related restrictions may have a wider negative economic impact.
New case of Covid-19 in Guangdong, China
For the coming week, Eurozone GDP data and the ECB’s interest rate decision dominate the economic agenda alongside US core inflation figures Learn more about theDailyFX Calendar.
Looking at Friday’s close, 7 of the 9 Dow Jones sectors ended higher, with 76.7% of the index constituents closing in the green. Information Technology (+ 1.83%) and Energy (+ 0.80%) outperformed, while Materials (-0.34%) and Healthcare (-0.12%) are lagging behind.
Dow jones Sector performance 04-06-2021
Source: Bloomberg, DailyFX
Technical analysis of the Dow Jones index
The Dow Jones Index could challenge the 200% Fibonacci extension level (34,920) for a second attempt to break higher. Prices remain in an “ascending channel” formed since early November, with the upper and lower levels serving as key support and resistance levels, respectively. The MACD indicator has formed a bullish cross, suggesting that bullish momentum may be building.
Dow jones Index – Daily Graphic
Technical analysis of the Hang Seng index:
The Hang Seng Index (HSI) formed a “Double bottomâOn the daily chart and can be positioned for further price gains (chart below). The index did not cross the neck line (29,350) last week, however, and has since entered a technical correction. 29,350 remains a key resistance level in the short term, as it coincides with the 50% Fibonacci retracement.
Hang Seng Index – Daily Graphic
Technical analysis of the ASX 200 index:
The ASX 200 index hit an all-time high on Friday after breaking a key resistance level of 7,194 – the 127.2% Fibonacci extension. Prices have since opened the door to further upside potential with an eye on 7,340 – the 161.8% extension. The MACD indicator has formed a bullish cross and trended higher, suggesting that bullish momentum is prevailing.
ASX 200 Index – Daily chart
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter