Asian Open: Wall Street stumbles as Powel confirms 50bps Fed hike in May

Thursday US cash market close:

The Dow Jones Industrial rose 368.03 points (1.05%) to close at 34,792.76
The S&P 500 index rose -65.79 points (2.51%) to close at 34,058.75
The Nasdaq 100 index fell -278.076 points (-1.99%) to close at 13,720.45

Asian futures:

Australia's ASX 200 futures are down -13 points (-0.17%), the cash market is currently estimated to open at 7,579.80
Japan's Nikkei 225 futures are down -390 points (-1.42%), the cash market is currently estimated to open at 27,163.06
Hong Kong's Hang Seng futures are down -377 points (-1.82%), the cash market is currently estimated to open at 20,305.22
China's A50 Index futures are down -91 points (-0.68%), the cash market is currently estimated to open at 13,306.62

Speaking at an IMF meeting on the global economy, Jerome Powell said he thinks “it is appropriate to be moving a little more quickly” regarding rate hike and that “50 bps will be on the table” at their next meeting in May. Considering markets have all but fully priced this in anyway (along with further 50-bps hikes) then the bigger surprise is that markets reacted as if this was new news. But then finally hearing it from the big man himself seems to have been the confirmation markets sought.

Wall Street was broadly lower with the NYSE FNAG+TM index falling -2.8% and the SOX semiconductor index down-2.7%. Bearish engulfing candles formed on all three major indices, with the Nasdaq leading the way lower by -2% and closing below 14,000. The S&P 500 is back below its 200-day eMA and all of its sectors posted losses, led by energy stocks.

ASX 200:

We may not have seen the mean reversion we anticipated yet, but the case is now stronger given the weak lead from Wall Street. A small bullish candle formed yesterday which lacked the enthusiasm to have another crack at the record high, and a break below 7560.6 confirms Wednesday’s bearish pinbar. Given it formed below the record high then a cheeky pullback seems like the higher probability setup over the near-term.

ASX 200: 7592.8 (0.31%), 21 April 2022

Industrials (2.23%) was the strongest sector and Info Tech (-2.62%) was the weakest
8 out of the 11 sectors closed higher
3 out of the 11 sectors closed lower
7 out of the 11 sectors outperformed the index
139 (69.50%) stocks advanced, 52 (26.00%) stocks declined

Outperformers:

+9.81% - Challenger Ltd (CGF.AX)
+7.98% - Brambles Ltd (BXB.AX)
+5.05% - LendLease Group (LLC.AX)

Underperformers:

-6.94% - Block Inc (SQ2.AX)
-5.93% - AVZ Minerals Ltd (AVZ.AX)
-5.78% - Core Lithium Ltd (CXO.AX)

USD index rebounds from 100

Powell’s comments bolstered the US dollar, but only after it reached (and exceeded) our 100 target then rebounding to 100.63. Perhaps we have seen the swing low already. USD/CHF hit a 22-month high, EUR/USD met resistance at 1.0986 and printed a bearish hammer. AUD/USD formed a large bearish outside day and is now less than a day’s ATR away from trend support, making 0.7350 an area to watch heading into the weekend.

Up Next (Times in AEST)

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.