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Negative feedback loop in global equities halted for now

The major US benchmark stock indices have managed to halt three days of consecutive decline and staged decent modest returns between 0.8% to 1.68% right above their respective key technical support levels at 4,045/4,000 for the S&P 500; 12,780 on the Nasdaq 100; 33,340/32,980 on the Dow Jones Industrial Average and 2,070 on the Russell 2000.  

The small-cap Russell 2000 outperformed the pack with a gain of +1.68% to 2,170 followed by the cyclical oriented Dow Jones which rallied by +1.29% to 34,021. Big tech and semiconductor stocks managed to save the technology/growth space despite disruptive technology and electric vehicles related stocks continued to exhibit downside pressure; Ark Innovation ETF and Tesla plummeted by -2.6% and -3.09% respectively. The Nasdaq 100 ended with a gain of +0.83% to 13,109.

Performances from the 11 S&P sectors ended yesterday’s US session on a positive footing with 10 sectors in the green; outperformers were Industrials +1.90%, Financials +1.87% and Utilities +1.79%. At the other end, Energy underperformed with a loss of -1.35% in line with a loss of -3.4% seen in WTI crude oil futures to US$63.82 per barrel, its worst single decline since 5 April.

Most key benchmark Asian stock markets have recovered as well and looking to end the week with a positive note at this time of the writing; Japan’s Nikkei 225 +2.05% (28,000) Hong Kong’s Hang Seng Index +0.97% (27.985) China’s CSI 300 +1.73% (5,079), South Korea’s KOSPI 200 +1.00% (420.12), Australia’s ASX 200 +1.00% (7,053). Except for Hang Seng TECH Index that has shed -0.75% so far to 7,542 led by a heavy intraday loss in Alibaba that plummeted by -4.5% after its fiscal Q4 earnings missed consensus estimates. Also, Singapore’s Strait Times Index that is heavily weighted towards the cyclical banks has failed to inch back into positive territory with a marginal intraday loss of -0.16% due to an increase in Covid-19 infection cases in the local community that may lead to more stringent lockdown measures being imposed in the near future.  

Overall, the negative feedback loop seen in the risk assets and global equities triggered by the heightened risk of global inflationary pressure seems to have subsided the on-going major uptrend phase for global equities in place since March 2020 remains intact for now.