S&P 500, HANG SENG INDEX, GOLD PRICE OUTLOOK:
- S&P 500 index climbed 0.78% to 3,169 as Nasdaq hit all-time high
- Hang Seng index aims to follow the US higher, trading at 26,400 pre-market
- Gold price breaks US$ 1,800 resistance. Dollar falls
S&P 500 Index Outlook:
US markets shrugged off climbing virus cases across the nation and focused on the upcoming Q2 earnings season. The number of confirmed Covid-19 infections in the US surpassed 3 million, with California and Texas reporting their largest daily increases in cases and deaths by far. In the next 3 weeks, nearly 70% of the S&P 500 companies will release their 2Q earnings, bringing a ‘reality check’ to the US stock markets.
Technology firms were again the biggest winners last night, with e-commerce Alibaba (+8.95%), social media Tencent (+6.60%) and semiconductor giant TSMC (+3.1%) among the top performers. The Nasdaq Composite hit its all-time-high at 10,492. Earnings uncertainty resulting from the Covid-19 pandemic perhaps has led to surging demand for technology firms, which were perceived to have benefited from the crisis as consumers are shifting to online services. E-commerce, gaming, steaming and communication services were among the top performers recently.
Sector-wise, information technology (+1.6%), consumer discretionary (+1.53%), financials (+1.06%) and communications (+0.93) were among the best performers whereas materials (-1.46%) was lagging behind (chart below).
The US Dollar index fell sharply overnight, sending gold prices higher to US$ 1,810. This is the highest level seen since Oct 2011. Technical analysis suggests there could be more upside for gold.
Source: Bloomberg, DailyFX
S&P 500 Index –Technical Analysis
The index is re-challenging a resistance zone at 3,180 – 3,200, which it failed to break in early June and has subsequently entered into consolidation. The index is riding an uptrend which is highlighted by the Ascending Channel below. Overall momentum remains bullish in the near term. A firm break above 3,200 will likely open room for more upside towards 3,360 – the 200% Fibonacci extension.
S&P 500 Index – Daily Chart
Hang Seng Index Forecast:
Hong Kong’s Hang Seng Index (HSI) stock market benchmark aims to follow the US higher, with futures markets pointing to open at around 26,400. Technically, the HSI has firmly broken an ‘Ascending Triangle’ and moved higher to challenge the resistances at 26,000 and then 27,250, which are the 61.8% and 76.4% Fibonacci retracement levels respectively. Tencent (+ 5.23%) was the best performing stock yesterday, which alone contributed to 90% of Hang Seng’s daily increase.
Mainland China stocks are still gaining momentum. The Shanghai Composite rose 1.74%, Shenzhen Composite up 1.84%. Total volume exceeded 1.5 trillion Yuan yesterday. The FTSE China A50 index traded at its 12-year high and could aim to climb alongside broader Asia-Pacific markets today.
Technically, the Hang Seng Index is riding a bull trend with an immediate resistance level found at 27,250 – the 76.4% Fibonacci retracement level. An immediate support level can be found at 26,000.
Hang Seng Index – Daily Chart
Gold Price Outlook:
Technically, gold prices are riding a bull trend and may soon challenge its all-time-high last seen in September 2011 (chart below). A firm breakout above US$ 1,800 resistance has opened room for further upside towards US$ 1,872 – the 161.8% Fibonacci extension level.
Gold – Monthly Chart
Recommended by Margaret Yang
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— Written by Margaret Yang, Strategist for DailyFX.com
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