Market Brief: Asian Stocks and ASX 200 Retreat After Fed’s Powell Warning

Summary:
• ASX 200 and Asian markets declined mirroring Wall Street after the warning from Federal Reserve Chairman Jerome Powell that the outlook is uncertain and subject to significant downside risks,

ASX 200 and Asian markets declined mirroring Wall Street after the warning from Federal Reserve Chairman Jerome Powell that the outlook is uncertain and subject to significant downside risks, and warned that the recession could be worse than the WWII. Powell also noted that negative interest rates are not in the Fed’s plan. International Monetary Fund (IMF) economists warned that Asia and Europe risk a COVID-19 outbreak relapse if they ease lockdowns prematurely and without measures to identify and contain new infections fast.

Investors also follow an escalation on the U.S. and China trade relations, while China banned some meat imports from Australia as retaliation for Australia’s call to investigate the origins of COVID-19. Meanwhile, the U.K. is planning to cut some tariffs on U.S. agricultural products as PM Johnson plans to make a trade deal with the U.S. before the presidential election.

Nikkei 225 finished 1.32% lower at 19,992 as Japan plans to reopen some businesses. The Hang Seng Index is 1.46% lower at 23,836. The Shanghai Composite index is 0.75% lower at 2,876. The FTSE Straits Times index in Singapore is 1.71% lower at 2,527.

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ASX 200 Retreat After Mixed Employment Data

ASX 200 is 1.47% lower at 5,342 as bears push to take the control below the 50-day moving average. Australian mixed unemployment data failed to impress investors. The Australia Unemployment Rate seasonally adjusted came in at 6.2% below the forecasts of 8.3% in April. The Participation Rate dropped to 63.5% below the expectations of 65.2%. Fulltime Employment dropped to -220.5K in April from -0.4K in March. 

On the technical side, initial support for ASX 200 index stands at 5,341 – 5,331 the daily low and the 50-day moving average. Bears might test the next support area at 5,306 the low from yesterday trading session. Next support zone to watch on the downside will be met at 5,173 the low from May 4. 

On the other side, the first resistance for ASX 200 stands at 5,421 the daily top. The next hurdle is at 5,468 the high from May 12. On a bullish breakout, bulls will be looking for an extension to the high from May 1 at 5,530.