Daily market analysis

December 21, 2021

Market Focus

US stock declined on Monday amid downbeat market sentiment, making its biggest three-day drop since September as the concerns about the rapid spread of the Omicron variant in Europe dragged down stocks. After the Netherlands announced a full lockdown on Sunday, the UK is rumored to be planning a lockdown from 27 December and other countries are expected to follow suit straight after Christmas. Investors now worry that the US could end up in a same result when it comes to the pandemic. On top of that, US Democrat Senator Joe Manchin rejected Biden administration’s $1.75T Build Back Better (BBB) social spending package, which has dented confidence in US growth prospects and weighed negatively on the market mood. Meanwhile, the hawkish signals Fed that it might end asset purchases sooner than planned also acted as a headwind for the stock markets.

The benchmarks, S&P 500, Nasdaq 100 and the Dow Jones Industrial Average both dropped on Monday amid concerns about President Joe Biden’s economic agenda and the surging cases of the Omicron variant. S&P 500 was down 1.1% on a daily basis and the Nasdaq 100 also declined with a 1.1% loss for the day. Nine out of eleven sectors stayed in negative territory as the financials and materials sectors are the worst performing among all groups, losing 1.90% and 1.82%, respectively. The the Dow Jones Industrial Average dropped the most with 1.2% loss on Monday and the MSCI World index fell 1.4%. Moreover, the S&P 500 CBOE Volatility Index climbed back and touched two-week highs above 25.00 for the day due to the surge in selling.

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自動產生的描述

In Asia, China’s economy is dragged down by the slowdown in the nation’s property sector , as well as the regulatory crackdown on private industries from Beijing. Therefore, the surprise rate cut by the People’s Bank of China (PBOC) failed to support the Asia-Pacific shares.

 

Main Pairs Movement:

The US dollar edged lower on Monday, staying in negative territory amid falling US 10-year Treasury yield. The DXY index dropped to a daily low under 96.36 level during American session, then rebounded back moderately to pare some of its intraday’s losses. Goldman Sachs Group Inc. economists reduced US economic growth forecasts after US Democrat Senator Joe Manchin rejected Biden’s roughly $2 trillion tax-and-spending package. But the hawkish Fed and prospects that the US central bank policymakers expect three rate hikes by the end of 2022 will both limit the downside for the greenback.

GBP/USD declined 0.21% on Monday amid global concerns on the Omicron variant, as the UK reported 82,886 new coronavirus cases. The resign from Brexit UK’s top negotiator David Frost also weigh on the pair. The cable touched a daily top in late European session, then retreated back to surrender most of its intraday’s gain. Meanwhile, EUR/USD climbed to a daily top above 1.13 level and gained 0.34% for the day, as the euro has been the best performing G10 currency on Monday.

Gold declined and touched a daily low under $1788 in late American session. The recent weakness for the precious metal was mainly due to fears over the Omicron covid variant. Meanwhile, WTI oil tumbled 1.01% for the day, as the pressure on European countries to announce a lockdown will restrict near-term crude oil demand.

  

Technical Analysis:

XAUUSD (4- Hour Chart)

Gold is trading below 1800, struggling to make use of risk- averse market condition as major indices are tumbling amid Omicron fears. From the technical analysis, gold’s bulls are fighting against the critical level above the 20 SMA on the four- hour chart. On intraday basis, gold has failed to defend its support at 1800(38.2% Fib. Retracement.) If the next level, the 20 SMA, goes, gold is likely to slip back to test mid- December highs and the support at 1782, leading to a bearis trend. The technical indicator, the RSI, seems to favor the downside momentum more as the RSI is still far away from the oversold territory, giving rooms for gold to extend further south. On the flip side, in order to reclaim the bullish trend, gold would need to hold steadily above 1800.

Resistance: 1800, 1815, 1829

Support: 1782, 1770, 1753

  

GBPUSD (4- Hour Chart)

GBPUSD fails to recover above the 50 SMA in the early American trading session, trading at 1.3222. GBPUSD’s upside seems to be capped amid the rapid surge of the new Omicron cases in December, more than 140,000 cases got reported in London. From the technical perspective, GBPUSD continues to trade within the lower bounce of Bollinger Band, suggesting that the outlook remains downside in the near- term. In intraday trading, the 50 SMA becomes a barrier, followed by the resistance at 1.3317. On the downside, it is suggesting that the bearish momentum might continue as the RSI is still away from oversold, meaning that there are rooms for the pair to extend further south before it becomes technically oversold on the 4- hour chart. And the next relevant support located at 1.3163. On the flip side, GBPUSD needs to climb at least above the 20 and 50 SMAs in order to reclaim positive move.

Resistance: 1.3321, 1.3419, 1.3499

Support: 1.3163

  

Nasdaq 100 (Daily Chart)

The major indices, including Nasdaq 100, tumble on Monday as the market continues to react the resurgence of the Covid from the new variant Omicron. From the technical perspective, the Nasdaq extends further south for a three successive day. As the time of writing, today’s decline would bring the Nasdaq below its immediate support level at 15706, suggesting a bullish- to- bearish trend in the near- term. Furthermore, today’s bearish move would officially make the Nasdaq break all four SMAs, including the 5 SMA, 10, SMA, 20 SMA, and 60 SMA, indicating a negative mode for the index. In the meantime, the downside momentum is also supported by the negative MACD. As of now, in order to overturn its current stance, the index needs to climb at least 15706 to reclaim upside trend, and climb above all four SMAs to re- confirm a bullish stance. Nonetheless, from a bigger perspective, the bullish trend of the Nasdaq seems to be not over yet until it hits the overall up- trend. In the past, the up- trend most of the time acts as a strong support for a rebound after a big tumble for the Nasdaq.

Resistance: 15706, 16487

Support: 14457

  

Economic Data

 

Currency

Data

Time (GMT + 8)

Forecast

AUD

Mid-Year Economic and Fiscal Outlook

07:30

N/A

AUD

RBA Meeting Minutes

08:30

N/A

CAD

Core Retail Sales (MoM) (Oct)

21:30

1.5%