Hong Kong: HANG SENG INDEX (.HSI), China stocks lead Asia gains as risk-on sentiment returns on coronavirus progress and on hopes oil deal will be reached
Hong Kong and China stocks led gains in major Asia markets on Tuesday, as investors bet on signs the world’s lockdowns are slowing the spread of the coronavirus pandemic.
The Hang Seng Index advanced 2.1 per cent, running up its first back-to-back of gains in nearly two weeks.
Macau casinos, Chinese airlines and sports retailers were among outperformers. Meanwhile, HSBC advanced 3.1 per cent, in its second day of gains. It tumbled three straight sessions last week after announcing it was cancelling its dividends.
Meanwhile, the Shanghai Composite rose 2.1 per cent.
China, which reported no new deaths for the first time since January, was the epicentre of the respiratory ailment’s outbreak. Now, after its lockdowns, its factories have been resuming operations, and analysts expect Chinese stocks will lead global markets out of virus-created troughs. More than half of the market capitalisation of the Hang Seng Index is of China-based companies.
Meanwhile, sentiment was boosted by expectations OPEC and other top producers will reach a deal this week to reduce production, after a Saudi-Russia price war began right when the virus was already hammering demand.
“Sentiment is further improving, as people are expecting new infection cases are peaking out and that a deal to reduce oil production will be reached Thursday,” said Alan Li, portfolio manager at Atta Capital.
“Market risk is on. And funds are flowing into those sectors that may recover when lockdown policies are released, like retail, travelling and gambling,” he said.
US futures rose on signs deaths and infections are slowing in the hotspots of US, France, Spain and Germany.
The respiratory pandemic has sickened 1.3 million people – including UK Prime Minister Boris Johnson – killed more than 74,000, and led to half of the world’s population being put under lockdown. It has also sent the global economy into a recession, as it upends supply chains, closes businesses and throws workers out of jobs.
mind-boggling 10 million Americans filed jobless claims over the past two weeks as the world’s largest economy prepares to throw another huge stimulus bill at the economic problems caused by the virus. But New York Gov. Andrew Cuomo said deaths in the hotspot state may be hitting a plateau, boosting US market sentiment and sending the three major benchmarks up at least 7 per cent.
“In this environment, the Covid-19 curve flattening scenario is one of these critical signals that keep investors not only hovering over but pressing the buy button continuously,” said Stephen Innes, chief global strategist at AxiCorp.
In the Asia-Pacific region, most benchmarks extended big rallies seen Monday.
Japan’s Nikkei 225 rose 2 per cent, after going up 4.2 per cent on Monday, as the government took strong steps to fight the virus.
Prime Minister Shinzo Abe declared a state of emergency in Tokyo and six other prefectures to contain the spread of the coronavirus. Abe said the government will roll out a record near-US$1 trillion stimulus package for families and business. That is equivalent to 20 per cent of Japan’s GDP.
South Korea’s Kospi rose 1.8 per cent, boosted by index heavyweight Samsung Electronics, which said it expects US$5.2 billion in first-quarter operating profit, beating estimates slightly. On Monday, the benchmark surged 3.9 per cent, technically entering a bull market as it closed 23 per cent above its March 19 low. South Korea’s tech-heavy Kosdaq went up 1.6 per cent, after advancing 4.2 per cent on Monday.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 25,725.54.
The projected lower bound is: 22,633.18.
The projected closing price is: 24,179.36.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 85.9890. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 51.28. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 10 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 137.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 8 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 504.170 at 24,253.289. Volume was 20% above average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 23,474.68 25,443.53 26,742.40
Volatility: 33 41 26
Volume: 2,543,493,632 2,615,284,992 1,815,865,216
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
HANG SENG INDEX is currently 9.3% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .HSI (mildly bearish). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 49 periods.
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