Jump to content

Attempt for a breather after recent sell-off in US indices: Brent crude, China A50, Natural gas

Recommended Posts

Major US indices managed to break their five-day losing streak yesterday, but for now, it could still seem to be more of an attempt to stabilise after its recent sell-off rather than a clear recovery in risk sentiments.

USSource: Bloomberg

 Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 09 December 2022 

Market Recap

Major US indices managed to break their five-day losing streak yesterday, but for now, it could still seem to be more of an attempt to stabilise after its recent sell-off rather than a clear recovery in risk sentiments. Treasury yields were higher, somewhat taking a breather from recent recession talks, but the trend remains tilted to the downside with the series of lower highs and lower lows since November. The US dollar pushed back below the key 105.00 level after briefly hanging above it at the start of the week. The economic calendar saw higher-than-expected US jobless claims, which are looked upon for the overnight recovery as being supportive of slower rate hikes. That said, one may argue that reaction to the claims data could eventually be short-lived, considering that the US Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC) meeting outcome next week could be more significant drivers in determining market trends ahead. Nevertheless, rate-sensitive sectors drove the outperformance overnight on easing rate hike bets.

Despite some brewing optimism around China’s potential reopening, oil prices have not been able to move higher, as overriding concerns of a global cyclical downturn ahead left investors shunning. Reaction to the Russian price cap has been largely muted thus far, with the lack of clarity of its impact on dampening Russia’s supplies driving some unwinding of previous bullish bets. Overnight headlines of the Keystone pipeline closure have also failed to prompt a sustained upside move, reflecting expectations that short-term outages may be short-lived. That kept Brent crude prices at its year-to-date low, which could soon trigger talks of when Organization of the Petroleum Exporting Countries Plus (OPEC+) may jump in with more production cuts. But for now, while there could be some attempt to tap on oversold technical conditions for some recovery after its heavy sell-off, a break below its key Fibonacci support at US$82.50 still provides an overall bearish bias.


BrentSource: IG charts


Asia Open

Asian stocks look set for a positive open, with Nikkei +0.96%, ASX +0.22% and KOSPI +0.18% at the time of writing. The attempt for some breather to end the week could be at play, but mostly wait-and-see sentiments could prevail. The lead-up to several key risk events next week may refrain market participants from taking on too much exposure. Nevertheless, constant stream of headlines pointing towards economic reopening in China and Hong Kong drove inflows back into Chinese equities, with the Nasdaq Golden Dragon China Index closing higher by 5.6% overnight.

The day ahead will leave China’s inflation data in focus. Downside risks to China’s growth picture in the near term suggest that consumer pricing pressures will likely stay muted around 2% while Producer Price Index (PPI) could contract further, pointing to an overall lower-for-longer growth outlook. That said, current market focus on reopening instead of backward-looking data could lead to shrugging off for lower-than-expected readings.

After some profit-taking upon hitting its 200-day moving average (MA), the Hang Seng Index seems to be on its way to retest the line once more, leaving the 19,760 level on watch. Validation from the broader risk environment will be needed as well, considering that oversold technical conditions leave it susceptible to greater profit-taking pressure. Any retracement will leave the Fibonacci confluence zone at the 18,550 level in focus as potential support.


China A50Source: IG charts


On the watchlist: Natural gas prices attempting to bounce from previous bottoms

After retracing 34% over the past two weeks, Natural Gas prices are attempting for a bounce after hitting the US$5.284 level, where its previous bottoms in July and October 2022 resided. The current cold spell in Europe has driven expectations of increased gas demand through January, which could also drain the previous excess build in European gas storage facilities. Greater conviction may be a close above the US$6 level, considering that yesterday’s attempt to move above the US$6-mark was met with some bearish pressure. Key support will remain at the US$5.284 level and failure to hold could leave the US$4.593 level on watch next.


Natural gasSource: IG charts

Thursday: DJIA +0.55%; S&P 500 +0.75%; Nasdaq +1.13%, DAX +0.02%, FTSE -0.23%

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
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 03/02/23 00:46
  • Posts

    • US stock market is currently showing a bullish trend with several companies, such as Apple (AAPL), Tesla (TSLA), Amazon (AMZN), Nvidia (NVDA), Microsoft (MSFT) being very bullish. Stock Market: SP500, Apple (AAPL),Tesla (TSLA), Amazon (AMZN), Nvidia (NVDA), Microsoft MSFT, Berkshire Hathaway (BRK/B), Block, Inc (SQ), Meta Platforms, Netflix (NFLX), Enphase (ENPH), Alphabet GOOGL. XFL Finance Sector ETF, JPMorgan JPM & Bank of America BAC, Goldman Sachs Group Inc (GS) Stock Market Summary Earnings for large tech stock creates Elliott wave three's  Elliott Wave Analysis: Lows in for the stock market as the market Impulses higher Trading Strategies:Continue to hold Long Trades Video Chapters 00:00 SP500 / RUT 07:00 Apple (AAPL) 13:30 Amazon (AMZN) 16:15 NVIDIA (NVDA) 19:38 Meta Platforms (META) 20:23 Netflix (NFLX)  23:23 Enphase (ENPH) 28:28 Tesla (TSLA) 30:52 Alphabet (GOOGL)  33:02 Microsoft (MSFT) 36:49 Berkshire Hathaway (BRK.B) 38:40 Block Inc. (SQ)  42:59 Bank of America BAC 48:31 TRIAL Buy 1 Month Get 3 Months  Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com  
    • Look Ahead to 03/02/23: US jobs; Caixin; US ISM non-manufacturing PMI; SASY earnings After the Fed, ECB and the Bank of England all raised interest rates, traders turn their attention to the keenly watched US jobs report. We’ll get live coverage and reaction to the NFPs from IG’s Angeline Ong and Joshua Mahony. Plus, look out for ISM non-manufacturing PMI data for more hints on the health of the US economy, and earnings from French healthcare company Sanofi (SASY).   Angeline Ong | Presenter, Analyst and Content Editor, London | Publication date: Thursday 02 February 2023        
    • Special Coverage of the European Central Bank Interest Rate Decision.  
  • Create New...