Asian Open: China Data Dump at 13:00, Nikkei 225 Rallies From 29k

Asian Futures:

• Australia's ASX 200 futures are down -3 points (-0.04%), the cash market is currently estimated to open at 7,440.00
• Japan's Nikkei 225 futures are up 110 points (0.37%), the cash market is currently estimated to open at 29,719.97
• Hong Kong's Hang Seng futures are up 43 points (0.17%), the cash market is currently estimated to open at 25,370.97
• China's A50 Index futures are up 19 points (0.12%), the cash market is currently estimated to open at 15,574.16

UK and Europe:

• UK's FTSE 100 index fell -36.27 points (-0.49%) to close at 7,347.91
• Europe's Euro STOXX 50 index rose 12.33 points (0.28%) to close at 4,370.33
• Germany's DAX index rose 10.96 points (0.07%) to close at 16,094.07
• France's CAC 40 index rose 31.85 points (0.45%) to close at 7,091.40

Friday US Close:

• The Dow Jones Industrial rose 179.11 points (0.5%) to close at 36,100.31
• The S&P 500 index rose 33.58 points (0.73%) to close at 4,682.85
• The Nasdaq 100 index rose 167.412 points (1.04%) to close at 16,199.89

USD was the strongest major last week

The US dollar was easily the strongest major last week, as rising inflation once again bought forward expectations for an earlier Fed hike. Yet it gave back some gain on Friday as traders booked profits ahead of the weekend, with weak consumer confidence also knocking a little more wind out of dollar bullish sentiment.

And that allowed AUD/USD to print a bullish engulfing candle on Friday and recover back above 73c. It had fallen around -3.7% since its October high so likely needs to retrace anyway, and perhaps any refreshingly hawkish remarks from RBA Governor Philip Lowe on Tuesday during his speech could help it extends its bounce.

Wall Street finished the week on a brighter note, having fallen from their record highs following strong US inflation data on Wednesday. Futures markets for Asia are suggesting a firmer open.

China’s data dump set for 13:00 AEDT

China’s house prices are scheduled for 12:30 AEDT, and we suspect they’ll come in softer due to the crackdown on the property sector. They rose at a closer pace for a fourth consecutive month at 3.8%, after topping out at 4.9% in July. Then 30 minutes later data for urban investments, industrial output, retail sales, industrial production and unemployment are released.

The Nikkei rallies form 29k, GDP data up at 10:50

The Nikkei 225 managed to break a four-day losing streak on Thursday and printed a bullish engulfing candle on the daily chart, just above 29k. Perhaps the more interesting part of the corrective low is that it almost (but not quite) closed the post-election gap. 29k also coincides with a 61.8% Fibonacci retracement level and the bullish trendline from the October low.

We can see on the four-hour chart that a Morning Star Reversal pattern formed at 29k and prices are now accelerating from the trendline. Gap support resides around 29,380 so our bias remains  bullish above this level should data comer in better than expected and for bulls to target the 30k area. A break above 30k assumes opens up a run for the February high, whilst a break below 29k warns of a change in trend.

However, GDP data is scheduled for 10:50 and the consensus is for it to have contracted at an annualised rate of -0.8% in Q3, down from 1.9% in Q2. So a negative print may likely be priced into the market, and that the quarterly Q3 is expected to rise to help soften the blow. So a metric we will keep an eye on is capital expenditure, as this provides a forward look for future growth potential. Capex rose 2.3% in Q2 after being upwardly revised from 1.7%.

The ASX 200 closed 0.8% higher on Friday

The ASX 200 also snapped a four-day losing streak on Friday after finding support at the 100-day eMA on Thursday, and then printed a bullish engulfing candle on the daily chart. It saw a firm close above 7400 and also produced a three-bar bullish reversal (Morning Star). For today, we’d like to see prices hold above 7432, as below here stands a chance of prices trying to fill Friday’s gap from 7382. Resistance levels include 7476 and 7487.

ASX 200: 7443 (0.83%), 14 November 2021

• Materials (2.28%) was the strongest sector and Healthcare (-0.18%) was the weakest
• 10 out of the 11 sectors closed higher
• 3 out of the 11 sectors outperformed the index
• 137 (68.50%) stocks advanced, 47 (23.50%) stocks declined
• 62% of stocks closed above their 200-day average
• 55% of stocks closed above their 50-day average
• 49.5% of stocks closed above their 20-day average

Outperformers:

• + 5.16%-James Hardie Industries PLC(JHX.AX)
• + 4.78%-IGO Ltd(IGO.AX)
• + 4.71%-Champion Iron Ltd(CIA.AX)

Underperformers:

• ·-3.19%-Fisher & Paykel Healthcare Corporation Ltd(FPH.AX)
• ·-2.92%-Nearmap Ltd(NEA.AX)
• ·-2.89%-Monadelphous Group Ltd(MND.AX)

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