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

• Dow Jones, S&P 500 and Nasdaq 100 close + 0.03%, + 0.19% and + 0.33% respectively
• Key US economic data will likely set the tone for trading. Small and mid-cap stocks surged.
• Nikkei 225 and ASX 200 indexes should open regularly following a positive advance in the United States

Wall Street, US data, inflation, gold, Asia-Pacific at the Open:

US stocks rebounded slightly on Wednesday as investors tried to strike a balance between robust economic momentum and rising prices. Federal Reserve officials reiterated that inflationary pressuress could be ‘transient ‘, cooling expectations about the Fed’s reduction in stimulus measures. The Dow Jones and S&P 500 indices are trading slightly below their all-time highs, while the Nasdaq 100 index continued to rebound after forming a “double bottom” chart pattern in May.

Sshopping center and mid-cap Stocks outperformed as another wave of short pressure tossed AMC Entertainment (19.2%) and GameStop (15.88%) up. The Russell 2000 Index climbed nearly 2%.

Traders will keep an eye on we Q1 GDP (2nd estimate), April durable goods orders as good as weekly unemployment claims numbers to measure the strength of an economic rebound. Unemployment claims are expected to fall further to a pandemic low of 425k as the labor market recovers from lockdowns. Stronger-than-expected readings could stimulate risk appetite and strengthen the US dollar.

Source: DailyFX

Asia-Pacific Markets are positioned to open slightly higher following a positive lead from Wall Street. Futures in Japan, Hong Kong, Mainland China, Australia, Taiwan, Singapore and India are in the green, while those in South Korea are in the red. The Singapore market resumes its activities after the Vesak Day holidays.

From Japan Nikkei Index 225 looks set to expand higher after breaking a five-day streak in a row. A weakening Japanese yen may provide additional support to Japanese equities, due to its favorable impact on exports. The Japanese government decided on Wednesday to extend the emergency state in Tokyo and several other major regions in June, as the number of Covid-19 cases remained consistently high. It will also help the country better prepare for the opening of the Summer Olympics scheduled for July 23.rd. The market reaction can be mitigated because the extension waswidely expected.

Australia ASX 200 The index is trying to regain its all-time high as investors shrugged off inflation concerns this week. A fresh confinement may be imposed on the state of Victoria today, due to the growing number of coronavirus cases. This may weigh on risk sentiment and traders will closely monitor the development of the pandemic situation. A decline overnight gold price could put downward pressure on gold miners, while stabilizing iron-ore and copper price may provide some support to other mining stocks.

Looking ahead, German consumer confidence data from GfK dominates the economic role alongside US GDP and durable goods orders. Learn more about theDailyFX Calendar.

Returning to Wednesday’s close, 8 of the 11 S&P 500 sectors ended higher, with 64.4% of index constituents closing in the green. Energy (+ 0.93%), consumer discretionary (+ 0.90%) and communication services (+ 0.58%) are among the best performers, while healthcare (-0.56%) is lagging behind.

S&P 500 Sector performance 05-18-2021

Source: Bloomberg, DailyFX

Technical analysis of the S&P 500 index

The S&P 500 Index has been trending upward in an “ascending channel” formed since November, suggesting that the overall trend remains on the upside. A Double Bottom chart pattern suggests that a minor technical correction may end and the index may continue to trend higher towards a major resistance level of 4,290 – the 127.2% extension of Fibonacci. The MACD indicator is about to form a bullish cross, suggesting that the bullish momentum is strengthening.

S&P 500 Index – Daily Graphic

Technical analysis of the Nikkei 225 index:

The Nikkei 225 Index formed a “downward channel” after price broke a threshold below a key support level at 28,357 – the 100% Fibonacci extension. The 20 and 50 day SMA lines are about to drop below the 100 day line, potentially forming a “death cross”. The MACD indicator tends to drop below the neutral midpoint, suggesting that further consolidation is likely.

Nikkei Index 225 – Daily Graphic

Chart by TradingView

Technical analysis of the ASX 200 index:

The ASX 200 Index is facing a key resistance level at 7,126 (261.8% Fibonacci extension). Breaking this level will likely intensify short-term buying pressure and open the door for further upside potential towards 7,200. The MACD indicator is about to form a bullish cross, suggesting that bullish momentum is building.

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