Hong Kong: HANG SENG INDEX (.HSI) Shares Post Solid Weekly Gains Amid Trade Deal Signing, China GDP Growth
The major Asia Pacific stock indexes closed mostly higher last week. Surprisingly, stocks were lower in China. That move was unexpected since most of the stories dominating the news last week were positive economic developments involving the world’s second-largest economy. The rising yuan may have been behind the weakness.
Market sentiment in the region improved last week with the signing of the Phase one trade deal between the United States on January 15. Ahead of the inking of the deal, the U.S. on Monday removed China from its currency manipulator list.
Late in the week, markets in Asia rose after China announced its economy grew by 6.1% in 2019, meeting expectations even amid a trade dispute with the U.S. Following the release of the GDP data, the Chinese yuan, which has been appreciating amid trade optimism, strengthened further.
To round-out the week, Japan and South Korean shares jumped to 15-month highs, while the benchmark Australian index reached an all-time high, piercing the 7000-point level in the process.
Last week, Japan’s Nikkei 225 Index settled at 24041.26, up 190.69 or +0.80%. South Korea’s KOSPI Index finished at 2250.57, up 44.18 or +2.00% and Hong Kong’s Hang Seng Index closed at 29056.42, up 418.22 or +1.46%.
China’s Shanghai Index settled at 3075.50, down 16.79 or -0.54%. Australia’s S&P/ASX 200 Index finished the week at 7064.10, up 135.10 or +1.95%.
US Removes China from Currency Manipulator List Ahead of Trade Deal Signing
The United States removed China from a list of countries considered currency manipulators just two days before top trade negotiators for Washington and Beijing signed a key “Phase One” trade deal, the Treasury Department announced on January 13.
The decision to strike China from the currency manipulator list comes more than five months after the Treasury Department formally made the designation. China is now on a “monitoring list” for currency practices along with nine other countries, including Germany, Italy and Japan.
“The Treasury Department has helped secure a significant Phase One agreement with China that will lead to greater economic growth and opportunity for American workers and businesses,” Treasury Secretary Steven Mnuchin said in a statement. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability.”
Trump signs ‘Phase One’ Trade Deal with China in Push to Stop Economic Conflict
President Trump signed a “phase one” trade agreement with China as the world’s two biggest economies try to rein in a more that 18-month trade war.
The deal includes provisions to root out intellectual property theft and forced technology transfers and increase Chinese purchases of U.S. goods, though it leaves open questions about enforcement.
The Trump administration aims to start negotiating the next piece of the trade agreement before the November 2020 election.
China Said Its Economy Grew 6.1% in 2019, In Line with Expectations
China said Friday its economy grew by 6.1% in 2019, meeting expectations even amid a trade dispute with the United States. Analysts polled by Reuters had expected China’s economy to have grown 6.1% in 2019, compared with 6.6% in 2018. Still, China’s GDP growth last year was the slowest since 1990, according to Reuters records.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 27,621.60.
The projected upper bound is: 29,900.68.
The projected lower bound is: 28,267.08.
The projected closing price is: 29,083.88.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
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 63.2113. This is not an overbought or oversold reading. The last signal was a sell 2 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 68.88. 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 sell 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 115.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 4 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 173.381 at 29,056.420. Volume was 2% above average (neutral) and Bollinger Bands were 17% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 28,638.85 27,457.95 27,538.84
Volatility: 15 19 19
Volume: 1,576,123,136 1,483,943,936 1,680,592,384
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 5.5% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .HSI (mildly bullish). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 21 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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