Asian markets likely to be under pressure

Most Asian stock markets fell on Friday after statements from US regulators attempting to reassure investors of the stability of the banking system failed to assuage financial crisis concerns, including worries about slowing economic growth, resulting in a sell-off of US banking equities.

China's Shanghai Shenzhen CSI 300 and Shanghai Composite fell 0.3% and 0.5%, respectively, after investors lost faith in real estate equities following China Evergrande Group's (HK:3333) debt restructuring plan.

Hong Kong's Hang Seng Index dipped 0.2% last week due to losses in property companies but gained 3% this week due to gains in technology firms, helping Hang Seng outperform other regional indices.

South Korea's KOSPI fell 0.6%, while Australia's ASX 200 fell 0.2%, with Indian stocks closing lower. The Nifty 50 fell 0.77% to a new three-month low, while the BSE Sensex 30 shed 0.69%.

The Nikkei 225 in Japan dipped 0.2% on losses in the insurance, pharmaceutical, and energy sectors, but remained limited by February's softened consumer pricing data. The increase was only 3.1% from the previous year, in line with market expectations, and slowed sharply from a 41-year high of 4.2% in January, implying that Japan's inflation could, as expected, fall below the BOJ's 2% target by the end of the year, as global commodity prices cool and the yen recovers, lowering import costs.

On Monday morning, Asian equities were marginally higher, with the MSCI index up 0.1% on optimism that actions taken by governments and central banks around the world may help to alleviate the present banking crisis. But the market remains focused on the steep increase in the cost of default risk insurance at Deutsche Bank on Friday, as well as many other banks' Credit Default Swap (CDS) contracts.

Analysts, however, have reduced earnings forecasts for Asian companies due to concerns about a global economic slowdown, including a lack of support from China's recovery following its opening, which is expected to be insufficient to offset weak global demand.

Regional trade data demonstrate that China's economic reopening has had little impact on Asian exporters. Taiwan's exports plummeted to their lowest level in over two years in February, while South Korea reported a fifth consecutive monthly loss in exports.

In addition, while the Federal Reserve signaled a slowdown in rate hikes last week to alleviate economic pressure, which caused most indices to rebound, concerns about the impact of the collapse on the banking sector have also been raised, while emergency liquidity measures contrast with the US Federal Reserve's strict monetary policy in the past. The Fed has also slightly reduced its GDP prediction for this year, pointing to rising economic barriers created by high inflation and interest rates, which would put pressure on Asian stock markets from investors who lose their appetite for risk during this period.

Data for Technical Analysis (1H)

Resistance : 27122.0, 27140.9, 27171.7

Support : 27060.4, 27041.5, 27010.7         

1H Outlook          

Source: Investing.com                        

Buy/Long 1 If the support at the price range 27050.4 - 27060.4 is touched, but the support at 27060.4 cannot be broken, the TP may be set around 27140.0 and the SL around 27045.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 27122.0 - 27132.0, TP may be set around 27155.0 and SL around 27057.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 27122.0 - 27132.0 is touched, but the resistance 27122.0 cannot be broken, the TP may be set around 27061.0 and the SL around 27137.0, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 27050.4 - 27060.4, TP may be set around 27028.0 and SL around 27125.0, or up to the risk appetite.       

Pivot Points Mar 24, 2023 09:25PM GMT

Sources: Investing 1, Investing 2