Hong Kong: HANG SENG INDEX (.HSI) Trade war breakthrough

Hong Kong: HANG SENG INDEX (.HSI) Trade war breakthrough

Hong Kong: HANG SENG INDEX (.HSI) Trade war breakthrough

China and the US have made a breakthrough in trade negotiations, with a consensus agreement reached for a phase-one deal that will halt further tariff increases and lower some already in place, Vice-Minister of Commerce Wang Shouwen announced on Friday.

Speaking in a late-night press conference in Beijing, Wang said the agreement covered a wide range of issues, including intellectual property protection, technology transfer, purchase of agricultural products and expanding trade.

The Office of the United States Trade Representative confirmed the agreement on Friday, saying in a statement: “The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.”

Both countries will proceed to detailed translations and legal review of the text and discuss arrangements for signing the agreement. US President Donald Trump’s chief economic adviser, Larry Kudlow, said that process should take “inside of a few weeks”, and that the final signing would be between US Trade Representative Robert Lighthizer and Chinese Vice-Premier Liu He.

“The deal can help expanding economic and trade cooperation between the two nations and effectively manage the trade disputes,” Wang said.

Liao Min, deputy director of the office of the Central Commission for Financial and Economic Affairs, said that since the US agreed to reduce parts of tariffs imposed on Chinese products, China would consider not introducing tariffs on US products scheduled for Sunday.

“China hopes the US will fulfil its commitment,” he said. “Removing tariffs is the core concern of China”.

The implementation of the deal will expand agricultural cooperation between China and the US

Agricultural Vice-Minister Han Jun

Wang said the nations have had in-depth discussions about intellectual property protections, including protecting IP in the pharmaceutical industry, and about cracking down on counterfeiting on e-commerce platforms.

“These measures are in line with our reforms to strengthen IP protection, and this will also help China promote its economic development,” Wang said.

Ning Jizhe, vice-chairman of National Development and Reform Commission, did not specify the value of US agricultural products China would purchase, saying that the text of the agreement was still being examined and that concrete details would be released later.

He also said China would expand imports in energy and services from the US.

“The reported agreement is noteworthy both for its modesty and for how long it took to achieve,” said Stephen Olson, a former US trade negotiator, now a senior fellow at the Hong Kong-based Hinrich Foundation.

“These represent some of the lowest-hanging fruits in the negotiation, and some of which would have been discussed earlier in the year,” said Tai Hui, chief Asia market strategist at JP Morgan Asset Management. “The future stages of negotiation is going to be much more challenging when it starts to involve China’s industrial policy and technological development.”

John Gong, a professor of economics at the University of International Business and Economics in Beijing, said that a deal would “relieve pressure on China’s economic slowdown”.

Analysis of a phase-one deal, conducted before all the details had been confirmed, suggested that it could lift US economic growth in 2020 by 0.1 per cent, as well as lowering inflation.

“The positive impact on China’s economy is likely to be a little more than the US, but the largest positive impacts will be on the smaller and more open Asian economies of South Korea, Taiwan and Singapore,” Nomura analysts wrote.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 28,553.47.

The projected lower bound is: 26,885.14.

The projected closing price is: 27,719.31.

Candlesticks

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.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 97.3289. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 65.24. 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 25 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 201.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed up 693.619 at 27,687.760. Volume was 38% above average (neutral) and Bollinger Bands were 31% narrower than normal.

Open     High      Low     Close     Volume___
27,494.51027,687.76027,405.26027,687.7602,212,195,584
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 26,587.27 26,718.01 27,601.04
Volatility: 19 20 19
Volume: 1,485,054,848 1,519,412,736 1,734,701,440

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.

Summary

HANG SENG INDEX gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 0.3% above 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 volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 16 periods.

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