2 Reasons Why the Hang Seng Gapped Higher Today

The Hang Seng gapped higher today as traders predicted the normalisation of relations between the United States and China. The index soared to a high of $25,612, which is the highest it has been since 31st August.

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China and the US have had serious conflicts in the past few years that started with Trump’s tariffs. The tensions cooled early this year, when the two sides signed the first phase of their trade agreement. The two countries have also traded blame for the coronavirus pandemic.

Now, with the US headed for regime change, investors hope that the relationship between the two countries will improve. That will be a good thing for companies in the Hang Seng because of the close relationship between mainland China and Hong King.

The Hang Seng is also rallying as traders remain optimistic that China will allow the Ant Financial IPO. Early this week, HKEX and the Shanghai exchange suspended the IPO, the world’s biggest, as China retaliated against Jack Ma’s attacks on its regulators. Still, investors believe that Beijing will ultimately allow it. Indeed, Alibaba, which owns a third of the company is among the best-performers in the index. It is up by more than 5%.

Other best-performers in the Hang Seng are China Resources Land, CK Hutchison, Sunny Optical, and Geely Automobile. All these shares are up by more than 7%. CLP Holdings is the only company whose shares are in the red today.

Hang Seng technical outlook

On the daily chart, the Hang Seng has been on an uptrend after bottoming at $23,115 on September 25. It has gained more than 10% since then. Today, it managed to move above the 50% Fibonacci retracement level. This retracement connects the highest and lowest levels this year.

It has also moved above the 100-day and 200-day moving averages. This is an indication that bulls are in total control, which means that the index will continue rallying as bulls aim for the next resistance at $26,000.

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