ASX 200, Hang Seng May Plunge with S&P 500 As Vaccine Optimism Cools


  • ASX 200 Index, Hang Seng Index might face a short term rebound amid souring sentiment
  • US equity indices broadly closed lower as the markets reassessed the impact of the vaccine
  • Haven linked indices were on a bid as surging covid-19 cases threaten another lockdown restriction wave


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The US equity indices broadly ended lower yesterday, dragged by the cyclically associated material and energy sectors. The “risk-off” sentiment prevails at the Asia-Pacific open, as worldwide coronavirus infections continue rising at a quicker rate, posing the risk of more lockdown restrictions across the world. Across the globe, new covid-19 cases exceeded 7.3 million in the past 2 weeks, reaching a new record high. At the moment, covid-19 vaccine optimism seemed to have reduced as traders re-focused on the short-term headwinds. The Nasdaq index, S&P 500 and Dow Jones closed at -0.65%, -1.00% and -1.08% respectively.

The US 10 year Treasury yield dropped 80 bps to about 0.881% flagged souring risk demand as the capital fled into safe-havens. In the forex stock markets, the risk associated New Zealand Dollar was amongst the worst performing G-10 currencies, mirroring the fragile market sentiment. Gold and crude oil prices retreated.

Global New Coronavirus Cases

hang seng

The Asia-Pacific stocks seem set to open broadly lower, with Singapore’s Strait Times Index, Hong Kong Hang Seng Index (HIS) Australia’s ASX 200, and Japan’s Nikkei 225 equities point to retreat from the latest peaks. Profit-taking might be the primary theme on Friday as enthusiasm for the vaccine faded as pandemic risk is back on the center stage.

Essentially, the EU, Russia, and Hong Kong will post third-quarter GDP readings later on Friday. Several BoE and Fed officials will also deliver speeches eyed more stimulus as the covid-19 swept across the EU and the United States as Dow Jones Pushed By Hopes of A Vaccine.

Sector-wise – all 11 S&P 500 sectors finished in the red, with about 87.9% of the index components ending lower yesterday. Utilities (-1.73%), materials (-2.17%) and energy (-3.39%) were the worst hit, while healthcare (-0.40%) and consumer staples (-0.21%) posted small losses.

Technically speaking, the S&P 500 retreated to test the immediate support levels at 3,550 that was once the key resistance. Once breached, the support levels changed immediate levels. The profit-taking trends might continue after a strong rally last week. On the other hand, the MACD indicator seemed to have flattened, mirroring the weakened upside trend momentum. Holding over 3,550 might pave way for more upsides, whereas breaking below might result in a deeper rebound. The immediate resistance level may be found at 3,610.

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