Dow Jones, Crude Oil, Energy Stocks, Corporate Taxes, Nikkei 225, US CPI, Technical Analysis – Asia Pacific Indices Briefing
- Dow Jones wins with energy stocks as OPEC monthly report raises crude oil prices
- Nasdaq 100 drops as Democrats release updated Biden tax plan, eyes on corporate rate
- Nikkei 225 could follow Wall Street’s rather rosy lead ahead of US CPI data later today
Recap of Monday’s Wall Street trading session
The Dow Jones outperformed the S&P 500 and the Nasdaq 100 to start the new trading week, with the indices closing at + 0.76%, + 0.23% and -0.03% respectively. A rise in energy stocks propelled the Dow Jones relatively sensitive to the cycle. As a sector of the S&P 500, Energy stocks were the best, gaining nearly 3%. The health care sector was the worst, collapsing 0.61%.
A 1.48% rise in WTI crude oil prices, which closed at their highest since early August, likely benefited energy stocks. Earlier today, OPEC released its monthly oil outlook report. The cartel has increased OPEC’s crude consumption outlook by 260,000 barrels per day for 2021. This follows supply disruptions outside the oil-producing cartel.
Meanwhile, tech stocks were hit when Democrats released an updated tax plan that would raise the corporate tax rate to 26.5%, from the current 21%. The proposal also increases the maximum capital gains tax rate from 20% to 25%. As this would be a form of restrictive fiscal policy, investors likely ditched assets that looked most relatively overvalued in anticipation of the potential impact on corporate earnings.
Dow Jones Technical Analysis
The rise in the Dow Jones on Monday reversed some of the recent losses seen in a bearish environment Rising corner chart template on the daily chart below. This likely strengthened key support point 34494, which is the August low. Another hike near here could open the door to a new test of the old local soil. Otherwise, closing below 34494 would expose the 200-day simple moving average.
Dow Jones Futures – Daily Chart
Chart created in TradingView
Tuesday Asia-Pacific negotiating session
Wall Street equity futures are cautiously trending higher as Tuesday’s Asia-Pacific trading session approaches. This could give a rosy tone to the general feeling of the market. Aside from a speech by Reserve Bank of Australia Governor Philip Lowe for the ASX 200, the economic record is fairly calm. Markets could also stall until the much anticipated US CPI report crosses threads in Tuesday’s US session. A higher than expected result may lead to reduction bets from the Fed, inducing market volatility.
Nikkei 225 technical analysis
The Nikkei 225 futures may be heading for another record close, but prices could still be limited to key resistance between 30345 and 30725. This area contains the upper wick that was left on February 16.e. A bullish cross between the 20- and 50-day Simple Moving Averages (SMA) offers a short-term bullish technical bias.
Nikkei 225 Futures – Daily Chart
Chart created in TradingView
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter