US dollar index rebounded sharply overnight following an upbeat ADP private payroll report and Fed Chairman Powell’s comments that there is no bias to either tighten or ease in the near term.

This dampened expectations for a rate cut. The Fed also sees low inflation as a temporary situation, which could pave way for a more hawkish tone in the months to come if both jobs market and inflation heat up. The US 10-year treasury yield jumped as much as 6bps to 2.51% following the FOMC meeting, and US equity markets suffered broad selloff as investors re-adjusted their expectation for rate cuts.

EUR/USD has retraced back to 1.120 area from last night’s peak at 1.126 area. Mid-term remains bearish for euro as it has formed consecutive ‘lower highs’ and ‘lower lows’ against the greenback. Immediate support and resistance level can be found at 1.115 and 1.123 respectively. Later today, a string of PMI readings from France, Germany and the EU zone to be announced between 15:45-16:00 SGT will likely trigger higher volatility in euro pairs.

AUD/USD has fallen to 0.7018 this morning, trading just above a key support level at 0.700.

The S&P 500 Index fell 0.75% to 2923 points, with most selloff happening after 3:00am Singapore time. Ten out of the eleven major sectors were in red, with energy (-2.18%), materials (-1.84%), and consumer staples (-1.17%) among the worst performers whereas real estate (+0.04%), information technology (-0.27%) and healthcare were among the outperformers. Upbeat earnings from Apple (+4.8%) helped to underpin weakness in the technology sector. Qualcomm’s share price fell 3% in the after-hours due to lacklustre sales forecast, in particular due to weaker demand for smartphones in China.

Crude oil prices are also under pressure, as the DoE report shows US commercial inventory increase by 9.93 million barrels the week before, smashing forecast of 1.5 million barrels. US commercial stockpile has risen for two consecutive weeks, and has been climbing for five out of the past six weeks. Technically, Brent crude oil price is consolidating at around US$ 72.5 area, with immediate support and resistance level at US$ 70.0 and US$ 74.5 respectively. Its uptrend has broken down four days ago, when SuperTrend (10,2) flipped downwards.

Asian markets are looking to open lower on the first trading day of May, taking clues from a weak US session overnight. Stronger USD and a hawkish prospect from the Fed’s comment is likely to exert pressure over Asian’s emerging market assets, including equities, bonds and forex. Following a strong start at the beginning of the year, equity markets across the globe are seeing increasing likelihood for a technical correction.

Hang Seng Index failed to breakout a key resistance level at around 30,000 points and since entered into consolidation. A deeper pullback from here could see support levels at 29,000 and 28300 (38.2% Fibonacci Retracement) respectively.

China market is closed for ‘5.1 golden week’ and will only resume trading next Monday.

Hong Kong 50 - Cash

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.