Hang Seng Index

The Hang Seng has seen no fewer than six times already this year on the daily charts, and it looks like it wants to tally up a seventh.

Stability in US bond yields may offer AUD/USD rare respite this week. However, with strong ties to commodity prices and Hang Seng futures, the Aussie remains closely linked to China’s economic outlook. Here’s why both factors may need to align to fuel a recovery in the pair.

Hang Seng and China A50 futures delivered obvious bullish reversal patterns on Friday, hinting the unwind from the recent highs may have run its course. While some may say the rebound was driven by stronger-than-expected Chinese economic data released during the session, both moves started from known levels, suggesting it may have been technical in nature.

Hang Seng and China A50 stock futures continue to rip higher, benefitting not only from continued panic buying following last week’s monumental surge but also the fact they have resumed trade with mainland markets still closed for golden week holidays.

The Dow Jones produced a sharp reversal at its record high and the Hang Seng has stalled at a key resistance level. It may not take much of a beat for US data to prompt a pullback for risk.

We’ve seen plenty of short squeezes before that have quickly run out off puff. But with speculation swirling that policymakers may follow up Tuesday’s monetary policy easing with fiscal stimulus ahead of Golden Week holidays, that alone may be enough to promote further gains in the days ahead.

Chinese regulators will slash interest rates, free up cash for banks to lend and implement measures to support the stock market, designed to help address flagging economic activity and inflation. However, none of the moves directly boost demand, raising questions about just how effective they may be in delivering a sustainable improvement in sentiment.

For all the fundamental reasons put forward to explain their day-to-day movements, one look at price action suggests technical factors are arguably just as important in determining movements in the likes of Hong Kong’s Hang Seng, USD/CNH and crude oil. With each of these markets near important levels, we look at the price signals to evaluate where their directional risks lie.

Chinese stock futures have surged on the resumption of trade on Monday, finding buying support after hitting multi-week lows on Friday. If the gains stick, it points to a potential trend change in both the Hang Seng and China A50. The gains track similar moves across the Asian region and follow a late surge on Wall Street to end May.

It’s said the stock market isn’t the economy and based on the performance of Hang Seng futures on Wednesday, it’s hard to argue against. Because on the same day the International Monetary Fund upgraded its China economic growth forecast, stocks in Hong Kong are getting hammered.

Japan’s Nikki 225 and Hong Kong’s Hang Seng have been like chalk and cheese coming out of the pandemic. As one surged, the other floundered. But the tide looks to be turning, and fast.

Chinese economic data is beating expectations at rates not seen since reopening to the world in 2023. And with the government and People’s Bank of China playing an active role in supporting mainland markets, it’s not surprising to see Chinese assets performing comparatively better than others across Asia right now.

Bull markets are born on pessimism, grown on scepticism, mature on optimism, and die on euphoria. The stealth rally in China's A50 and Hong Kong's Hang Seng is keeping to the script.

The bear market in Chinese equities may be coming a state-endorsed end with A50 futures breaking the downtrend dating back to early 2021 earlier this week. The 200-day moving average may be the next bearish indicator to give way, bolstering the view that the lows may have already been seen.

China’s state-endorsed equity market recovery continues to go from strength to strength, building upon a lengthy and growing list of measures being rolled out by policymakers designed to coerce traders into buying. Perhaps the broader bear market trend may be coming to an end?

Hang Seng futures don’t look like they’re about to embark on a face-ripping rally, no matter how cheap valuations are and no matter how much government encouragement is doled out.

Declining population and accelerated house price falls combine with policy, geopolitical, earnings and credit risks to create the perfect bearish storm for Hong Kong's Hang Seng.