US equity markets retraced from record highs, spreading negative sentiment to Asian stocks at their open. 

The S&P, Dow and Nasdaq lost 0.4%, 0.23% and 0.64% respectively last night, despite upbeat corporate earnings. 

Several global issues such as Catalonia’s fight for independence, the selection of the new Fed Chair and change of key personnel in China’s National Congress are on top of the agenda this week. Traders and investors chose to stay on the sidelines, waiting for these uncertainties to be cleared up before coming back to the market. 

President Donald Trump plans to choose his nominee to chair the Federal Reserve before starting his Asia trip in early November. Five candidates were shortlisted, among whom the hawkish-biased Stanford University economist John Taylor and the dovish-biased Fed Governor Jerome Powell were carefully watched by market participants due to the divergence of their respective monetary policies. 

This could lead to higher volatility in the US dollar in the days to come. The dollar index is trading near a two-week high in the 93.6 area this morning. Its immediate support and resistance levels can be found at the 92.6 and 94.0 areas respectively. 

Technically, the S&P 500 index is still riding an uptrend with both its 10-Day Simple Moving Average line and SuperTrend (10,3) both sloping upwards. Its immediate support levels can be found at 2,560 and 2,537 respectively. The momentum indicator MACD is about to form a bearish cross over, suggesting the recent rally has shown signs of weakness and a technical pullback is possible. 

In Singapore, the Straits Times Index tested its three-month high of 3,359 points before closing slightly lower at 3,349.8 points yesterday. A sell-off in the Hong Kong market and external uncertainties discussed earlier are dragging local stocks down. The downside is likely to be cushioned, however, by cheap valuations and improvements in fundamentals. 

Technical Analysis:

US SPX 500 - Cash

  • 10-Day Simple Moving Average and SuperTrend both sloped upwards
  • Immediate support levels at the 2,560 and 2,537 areas respectively
  • Momentum indicator MACD is about to form a bearish crossover, which suggests weak momentum

 

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