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Weak China CPI failed to dent risk-on optimism

US major benchmark stock indices continued its advance to fresh all-time highs after a day of consolidation on Monday. The US domestically-oriented Russell 2000 led the pack with a stellar gain of +1.4% (1,917) while S&P 500 added +0.3% (3,702) with similar gains seen in both Nasdaq 100 (+0.3% to 12,635) and the Dow Jones (+0.3% to 30,173).

Overall, the multi-week bullish impulsive structure remains intact for these US stock indices from a technical analysis perspective. Yesterday, two key positive news flow reinforced these rallies; a revival of US fiscal stimulus optimism as Senate majority Republican leader, Mitch McConnell, suggested the Senate should drop both liability protection and state/local government funding from the stimulus bill, due to disagreement on such issues. Secondly, the Lancet Journal had indicated that the AstraZeneca-Oxford Covid-19 vaccine is safe and effective.

The energy sector had taken back its leadership pole position with a gain of +1.6%, followed by healthcare (+0.7%) and materials (+0.6%). Underperformers were communication services (-0.1%), utilities (-0.3%) and real estate (-0.5%).

Tesla announced it wants to raise US$5 billion via a new shares offering, its third share sale so far this year, ahead of its impending inclusion into the S&P 500 on 21 December. The new shares offering news triggered a -3% drop in the Tesla share price, before it recovered with a gain of +1.3% and closed at a fresh all-time high of 649.88. Other major electric vehcile stocks also surged, including Nio (+3.2% to 46.56) and XPeng (+0.8% to 48.69), but their technical charts are not so bullish compared with Tesla's (see chart of the day).

In the foreign exchange market, the US Dollar Index has continued to inch higher modestly in the past three days, rising +0.2% (to 90.96) after it hit almost a two-year low of 90.47 on 4 December. From a technical analysis perspective, there is still no clear sign of a bullish reversal, hence the major downtrend of the US Dollar Index in place since 20 March remains intact.

China’s consumer inflation data for November missed consensus estimates; CPI fell -0.5% year-on-year versus a consensus rise of 0.8%, against a previous rise of 0.5% in October. The surprise fall in CPI is the first for China in 11 years. However, most Asian stock markets shrugged off this negative CPI data and advanced on the backdrop of a positive performance in the US stock indices.

Japan’s Nikkei 225 is up 1.0% (26,735), South Korea’s KOSPI 200 is +1.4% higher (to 368.68), China’s CSI 300 is down -0.08% (at 5,005), Hong Kong’s Hang Seng Index is up +1.3% (to 26,647) and Hang Seng TECH Index is +1.2% higher (to 8,188). Australia’s ASX 200 is up +0.7% (to 6,737) and Singapore’s Straits Times Index is up +0 5% (to 2,839).

Chart of the day – Nio

Is Nio's parabolic 'up' move running out of steam? 

Source: CMC Markets

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