Dow Jones

Morning Brief: Dow Jones, Nikkei 225 Extends Rally as DAX, Hang Seng Retreats

US stocks jumped yesterday as investors remained hopeful in the recovery. The Dow Jones, S&P 500 and Nasdaq 100 gained by more than 1.50% as the US dollar index (DXY) declined. These gains are continuing today, with futures tied to the three indices rising by more than 0.25%.

Why the Dow Jones is rising

There are four main reasons why the Dow Jones and other US equities are rallying. First, analysts believe that Judge Amy Coney Barrett, if confirmed, will push the Supreme Court further to the right. As a result, they suspect that this court will issue some ruling that are favourable to businesses.

Second, the indices are rising because of the overall weaker dollar. Today, the dollar index has fallen by about 0.05%, adding to the losses made yesterday.

Third, the indices are rising mostly because of the financial sector. Yesterday, banks in the US and in Europe were among the best-performing assets, with companies like JP Morgan, Citigroup, and Goldman Sachs leading the gains.

Finally, the Dow Jones is gaining as investors buy the dips following several weeks of the index being in the red.

Hang Seng falls while Nikkei 225 rises

Asia is mixed today. In Hong Kong, the Hang Seng index has dropped by more than 0.70%. This decline is mostly because of the financial sector, with most banks being in the red. The Bank of Communications is the worst-performer in the Hang Seng, having fell by 3.40%. Hang Seng Bank, Bank of China, HSBC, and ICBC have all fallen by more than 1.70%.

Meanwhile, in Japan, the Nikkei 225 has gained by 0.15% with Hino Motors, CyberAgent, and Tokyo Electron being the best-performers. On the other hand, Alps Electric, KDDI, Toyobo, and Osaka Gas are the worst performers.

Europe rally cools down

Meanwhile, in Europe, the main indices have cooled-down in the futures market. The DAX index has dropped by 0.25% while the FTSE 100, CAC 40 have dropped by less than 0.05%. These indices have reversed after they had their best day since June yesterday. Investors are likely focusing on Brussels, where the talks between the European Union and the United Kingdom will resume.

Elsewhere in commodities, the West Texas Intermediate (WTI) and Brent have dropped by 0.70% while natural gas is down by 0.30%. Gold and silver prices are up by 0.20% while copper is down by more than 0.50%.

Dow Jones technical outlook

The daily chart shows that Dow Jones futures are in the fourth straight day in the green. They are trading at $27,655. The price has managed to move above the 25-day and 15-day exponential moving average. It has also moved above the important resistance at $27,170, which is the 9th September low.

Therefore, I suspect that the upward trend will resume as bulls attempt to test the next resistance at $28,000. On the flip side, a move below last week’s low of $26,470 will invalidate this trend.

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Dow Jones daily chart

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