Nasdaq 100 soars as FOMC signals strong economy. Hang Seng Index sees ‘policy bottom’

Nasdaq 100, FOMC, Hang Seng Index, Asia-Pacific at open.

The Nasdaq 100 index soared 3.7% on Wednesday as Jerome Powell painted a clearer picture about the Fed’s tightening trajectory at the FOMC meeting. The central bank raised the interest rate by 25bps and signalled six more hikes in the forthcoming gatherings to tame inflation, in line with market expectations. It also anticipates to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting, likely in May. Powell also pointed to a 'strong economy' that is able to withstand the Fed’s tightening policy.

Meanwhile, Chinese policymakers made an unusual announcement to support the stock and property market on Wednesday, sparking an astonishing rally in both mainland and Hong Kong shares. The Hang Seng Index jumped the most since 2008 after China's state council pledged to support stock markets. The Hang Seng Tech Index rallied 22%and marked its largest single day gain. Chinese tech ADRs listed on US exchanges extended the rally overnight, led by Alibaba (+36.7%), JD.COM (+39.4%) and Tencent (+33.4%).

The Financial Stability and Development Committee of the State Council held a special meeting to study the current economic situation and capital market issues on Wednesday. The authorities pledged to support overseas stock listings and to keep Chinese capital markets stable. They also promised to implement measures to help handle risks for property developers. Regarding Chinese companies listed in the US, the Chinese and US regulators have maintained good communications and have made positive progress.

Positive signals sent by the state council marks a 'policy bottom' for the Hong Kong stock market after a year-long selloff. The technology sector has lost 68% of its market value over the last 12 months due to Beijing’s anti-monopoly crackdown, US delisting threats and a slowing economy. As the state council made a “U-turn” in its attitude towards the platform companies such as Meituan and Alibaba, investors finally see lights at the end of the tunnel.

Hang Seng Tech Index – daily

Asia-Pacific stock markets look set to open higher on Thursday. Futures in Japan, mainland China, Australia, Hong Kong, Taiwan, South Korea, Taiwan, Singapore, Malaysia, India, Thailand and Indonesia are all in the green.

Looking ahead, the Australian jobs report dominates the economic docket alongside the BoE interest rate decision.

Looking back to Wednesday’s close, 9 out of 11 S&P 500 sectors ended higher, with 82.6% of the index’s constituents closing in the green. Consumer discretionary (+3.35%), information technology (+3.32%) and communication services (+2.92%) were among the best performers, whereas energy (-0.43%) and utilities (-0.17%) trailed behind.

S&P 500 sector performance 16 March 2022

Nasdaq 100 technical analysis

The Nasdaq 100 index is attempting to breach the ceiling of a ’Descending Channel’ as highlighted on the chart below. A successful attempt may signal a bullish trend reversal. An immediate support level can be found at 13,110 – the 200% Fibonacci extension. The MACD indicator has formed a bullish crossover, suggesting that buying pressure may be building.

Nasdaq 100 Index – daily chart

Hang Seng Index technical analysis

The Hang Seng Index rebounded sharply, forming a 'bullish engulfing' candlestick pattern. It signals a strong bullish trend reversal and may pave the way for more upside potential. An immediate support level can be found at 17,580, whereas an immediate resistance level can be found at 20,950. The MACD indicator is about to form a bullish crossover beneath the neutral midpoint, suggesting that buying pressure may be building.

ASX 200 index technical analysis

The ASX 200 index breached above a trendline support as shown on the chart below. Prices are hitting an immediate resistance level at 7,290, breaching which may open the door for further upside potential with an eye on 7,435. The MACD indicator is trending higher, underscoring upward momentum.

ASX 200 Index – daily chart

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