The Nasdaq index dropped as much as 1.8% last night before it recovered much of its losses and closed 0.52% down.
The Dow and the S&P 500 index also retraced from their recent highs. Investors are finding excuses to realise gains from the world’s best-performing markets this year, ahead of meetings of central banks later this week. A technical pullback has been long awaited, and is needed to unload some of the hidden political and regulatory risks, as highlighted by Goldman Sachs.
Asian equities closed broadly lower yesterday, following the unexpected slump in US technology stocks. Tencent and Samsung – Asia’s technology giants – led the sell-off in Asian equities.
The Hang Seng Index was down 1.24%, with 48 out of 50 index components closing lower. Technically, the Hang Seng Index has broken down its 10-Day Simple Moving Average, and Parabolic – a trend-reversing indicator – has flipped downside for the first time in nearly two months.
The SuperTrend, however, remains in bullish set-up, suggesting that the Hang Seng’s mid-term bullish trend is intact. The Fibonacci extension suggests the immediate support level could be found around the 25,450 area.
Precious metals including gold and silver have entered into consolidation phase, with the flipping of SuperTrend into a bearish set-up confirming this assumption.
As market focus has shifted away from last week’s political events to central banks’ decisions later this week, the demand for safety is shrinking. Compared to UK voters, the Fed, BoJ and BoE appear more predictable now.
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