Jump to content

Some attempts for US indices to stabilise after recent sell-off: Brent crude, Straits Times Index, EUR/JPY

Recommended Posts

The largely quiet economic calendar in the US left market sentiments to continue digesting the hawkish Fed message from Jackson Hole to end last week, leaving equity markets in the red for the second straight session.

USSource: Bloomberg
 Yeap Jun Rong | Market Strategist, Singapore | Publication date: Tuesday 30 August 2022 

Market Recap

The largely quiet economic calendar in the US left market sentiments to continue digesting the hawkish Federal Reserve (Fed) message from Jackson Hole to end last week, leaving equity markets in the red for the second straight session. Sector performance for the S&P 500 showed the energy sector being the outlier, pulling ahead from the rest with a 1.5% gain on higher oil prices. Defensive sectors such as utilities and consumer staples held up as well, as a reflection of the cautious lean in market sentiments. Shifts in Treasury yields continued to take the driving seat for market performance, with the US two-year yield moving higher to 3.42%, its highest level in 15 years. The US 10-year yields also ticked higher to 3.12%, leaving rate-sensitive growth sectors on the back foot. Overall, this comes on the back of shifting market expectations for a more aggressive Fed in its September meeting, with a 70% likelihood of a 75 basis-point (bp) hike being priced for now.

Comments from Fed members will continue to be in focus to drive expectations of rate outlook. Non-voting Fed member, Neel Kashkari, mentioned yesterday that he saw the recent market sell-off as evidence that the market is taking the central bank’s inflation fight seriously. His words came in line with the message that a dovish pivot is not being considered and rates could remain higher-for-longer.

Oil prices continued to make a new higher high overnight, with Brent crude prices hanging firmly above the key psychological US$100 level. This suggests an overall upward bias, coming after a break above a descending channel pattern last week. The Organization of the Petroleum Exporting Countries Plus (OPEC+) meeting will be on watch next week, with some expectations being priced for potential production cuts to restore market balance in light of any pass-through of the Iran’s nuclear deal. Adding to further tailwind for prices is the potential production outages in Libya, which could restrict some energy supplies into the market. Further up-move for Brent crude could leave the US$109.65 level on watch next.


Brent crudeSource: IG charts


Asia Open

Asian stocks look set for a positive open, with Nikkei +0.45%, ASX +0.36% and KOSPI +0.67% at the time of writing. The US equity futures this morning revealed market sentiments taking a breather after the recent sell-off, which could drive some attempts to stabilise for the Asia session today as well. That said, overall upside could remain limited with the lack of positive catalysts to cheer for now. The Asian economic calendar once again points to a quiet schedule and all eyes will fall on inflation figures out of the Eurozone later tonight, along with US consumer confidence data. Despite a firm start overnight, the Nasdaq Golden Dragon China Index eventually pared back on its gains to closed 0.8% lower. Pinduoduo’s earnings release may be the eye-catching headline, with its second-quarter profit more than tripled from a year ago, while revenue surpassed expectations as well. Its share price was up 15% overnight.

For the Straits Times Index (STI), recent downside has left the index to trade below the 3,250 level, which marks a confluence of support in line with an upward trendline resistance since December last year. The relief may be that downside could be more limited compared to the rest of the region, considering the index’s ‘more defensive’ status, while net institutional inflows continued to take place last week, although of a lesser scale. For now, the lower high provides a near-term bearish bias, with the index having to overcome the 3,250 level for a more sustained upside.


STISource: IG charts


On the watchlist: EUR/JPY broke above ascending triangle pattern

The upward move in global bond yields tapping on the hawkish lean out of Jackson Hole seems to be driving markets to revisit some of the yield differential narrative, putting the EUR/JPY on watch. Near-term, the currency pair has broken above its ascending triangle pattern, with the formation of a new higher high giving the pair an upward bias. This will leave the 139.60 level in focus next, where a 23.6% Fibonacci retracement level stands in place. Economic data this week includes inflation data out of the Eurozone, which is likely to show headline pricing pressures inching closer towards a double-digit inflation. This will translate to increasing pressure for the European Central Bank (ECB) to tighten, at least in the near term, before the trade-off for growth kicks in to limit its rate increases.


EUR/JPYSource: IG charts


Monday: DJIA -0.57%; S&P 500 -0.67%; Nasdaq -1.02%, DAX -0.61%, FTSE -0.70%

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Bitcoin: Anticipated target lies within the 58-60 range before an impending correction. The upward trajectory is displaying signs of softening, prompting short-term traders to elevate their stop-loss levels. Bond Yields: The 10-year yields are poised to conclude wave v) of C of (B). This development is pivotal as it will uphold the strength of the Dollar DXY. Consequently, positions in gold or silver should be refrained from until yields and the Dollar reach their peaks. China's Influence: An intriguing facet of the market landscape revolves around China. I've been meticulously observing a substantial Elliott Wave Triangle pattern dating back to 2008, which now seems to have reached its culmination. This event is forecasted to bolster base metal prices, particularly once the Dollar and yields reach their zeniths. Crude Oil: Progressing steadily on its upward trajectory, crude oil is set for further ascension. Natural Gas: The recent uptick in natural gas prices is construed as a corrective rally, indicative of an impending shorting opportunity in the near future. Video Chapters 00:00 Bitcoin (BTC) 07:41 US Dollar Index, DXY / TLT Bonds. US Gov Bonds 10 Yr Yields 12:58 Precious Metals: Spot Gold XAU /GDX ETF / US Spot Silver XAG  16:37 Base Metals: Iron Ore, Copper XCU/USD. Uranium URA ETF / China 24:07 Energy: Crude Oil WTIOIL / Natural Gas NG 27:57 End Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge. com  Join & Learn Elliott Wave from Experts Stay ahead of market movements and make informed decisions with our comprehensive analysis.  
    • The emergence of ICO and NFTs ushered in tokens as speculative assets. These were really attached with no use-cases beyond defi and collectibles. The next wave of tokenization seeks to bring forth experiences and token applications. These are set to be programmable and filled with user centric integration points. Smart tokens are set to usher in digital transformation, by bringing a paradigm shift from websites, to apps and to tokens. Tokenized services are set to transform user experience by rendering services where and when a consumer needs them. The core intent of the smart layer network is to bring real life use-cases to Web3, the project’s team firmly believes that, by infusing useable features into Web3 it will undoubtedly usher it mainstream. Critically looking at Smart Layer would expose that, after carefully and critically analyzing the existence of different token models, it is found that, there is truly no worthwhile use-case, thus the project seeks to curb the conundrum. In a bid to get a grasp of what smart tokens are, view it through the lens of how websites firstly started rendering digital services, then slowly evolving to apps. With Smart Layer, the focus is to empower tokens to do what websites and apps had hitherto done. The erstwhile services offered are set to be tokenized thus allowing them to be delivered when and where the consumer needs them and without requiring direct integrations. The Smart Layer Network native token $SLN is slated to be listed on bitget upon the satisfaction of certain criterion and prerequisite, deposit is however is currently opened. By depositing it on the CEX, the listing will be enabled and the token cast into further spotlight.  
  • Create New...