Interesting movements were seen in the overnight US session where the major US stock indices have managed to trim their respective earlier steep intraday losses. The S&P 500 ended with a modest gain of +0.13% to 3,881 after it recorded a loss of -1.8% to print an intraday low of 3,805.
In addition, the technology heavy weighted Nasdaq 100 that is more sensitive to the movements seen in longer dated US Treasuries yields have managed to reverse up from an earlier loss of -3.5% that breached below the 13,190 key medium-term pivotal support and its 50-day moving average to print an intraday low of 12,758. Thereafter, the Nasdaq 100 ended with a loss of -0.22% to close at 13,194 which reintegrated back above the its key medium-term pivotal support and 50-day moving average. Hence, its medium-term uptrend in place since 2 November 2020 low of 10957 remains intact. Also, the US Treasury 10-year yield has declined by -2 basis points to 1.34% after it challenged the 1.38% major resistance in the prior session which may put a halt to the current downside momentum inherent in the Nasdaq 100 seem in the past five days.
Overall, it is still a cyclical/value stocks outperformance theme play as markets are looking forward for global economy growth to gain more traction in the second half of 2021 with more Covid-19 vaccines inoculation and a significant reduction in the virus infection rates seen in the hardest hit countries such as the US, India and UK. Yesterday’s performance seen in the 11 S&P US sectors saw the usual cyclical/value names such as Energy (+1.61%) and Financials (+0.50%) took leadership position. Federal Reserve Chairman Jerome Powell signalled during his semi-annual testimony before the Senate Banking Committee yesterday that the Fed was nowhere close to pulling back its liquidity support for the pandemic damaged US economy, hence providing assurance to the markets that tapering of its current pace of bond buying programme is not on the cards in the near-term horizon.
Over to Asia, a mix bag of performances; the Singapore’s Straits Times Index (STI) outperformed so far with a gain of +1.43% assisted by Oversea-Chinese Banking Corp (OCBC), a key component stock in the STI after its share price reacted positively with a current rally of +2.73% despite its latest Q4 earnings release missed expectations; Q4 net profit declined to 9% year-on-year to S$1.13 billion below consensus forecast of S$1.24 billion. Japan’s Nikkei 225 resumed trading after a public holiday yesterday, down -0.20% to 29,945 as it is now trying to recoup back the 30,000 psychological level that was broken above on 15 February.
China’s big tech stocks are now facing a negative feedback loop that has been triggered by the global reflation theme play into cyclical/value stocks despite its outperformance over US big techs stocks at the start of the year. The Hang Seng Tech Index is now recording a loss of -4% at this time of the writing, its fifth consecutive day of losing streak with an accumulated decline of -14% from its 18 February all-time high, its worst performance since September 2020. Dragged down by key China tech stocks such as JD.com Inc (-4.06%) and Meituan (-5.1%).