Asian equities markets soared on the first trading day of August, led by strong performance in the Hong Kong market.

The Hang Seng Index rallied 216 points – or 0.79% – to 27,540 points for the first time in over two years. A string of positive earnings surprises from HSBC, AIA Group, Cathay Pacific and Hang Seng Bank fuelled strong upward momentum.
  
Technically, the Hang Seng index has broken above the 138% Fibonacci extension level and is about to challenge the next resistance level at 27,878 points. Momentum remained strong as improving fundamental elements and an ample liquidity environment continued to support the bull trend. 

HSBC extended gains for a second day after it announced upbeat earnings and a US$2bn share buyback plan. Standard Chartered Bank (2888 HK) soared 2.6% ahead of earnings releases as investors anticipate a large jump of its bottom-line earnings in the second quarter.

Stronger-than-expected corporate earnings sent US equities higher overnight, with the Dow Jones extending its six consecutive days of gains to a record level of 21,963 points. 

Apple

Apple’s second-quarter revenue and profit topped analyst’s forecasts, and its share price rose 3% after market hours. The company also expects its iPhone unit sales will increase by about 10% in the third quarter, suggesting a possible launch of its new iPhone in September. This will potentially drive favourable growth towards the end of the year. Apple’s earning results boosted investor confidence and US technology shares are likely to open higher tonight. 

The US dollar index rebounded mildly to 92.9 overnight, but the bearish trend remained intact. The fate of the dollar is largely dependent on the Trump administration’s ability to push through its policy agenda. 

Tonight, investors will closely watch the ADP private payroll number to access the health of the jobs market. The market expect some 185k new jobs to be created in July. A higher figure indicates rising employment and potential inflation pressure, which will increase the likelihood of rate hikes. 

Oil traders will monitor the weekly DoE crude inventory report at 22:30pm Singapore time tonight. This figure usually has a big impact on crude prices, and subsequently affects the energy sector’s performance. 

Market Calendar:

  
Technical analysis:

US Dollar Index Sep 2017

  • SuperTrend (10,2) sloped downwards along with the 10-Day simple moving average.
  • Price fell to the 161.8% Fibonacci extension level at 92.6 area.
  • Breaking down below this level suggests further downside towards the next 200% Fibonacci extension level in the 91.7 area. 
  • Immediate support and resistance levels could be found at 92.6 and 93.14 respectively.
  • The momentum indicator RSI remains below the 30% mark, suggesting it is oversold. 

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