The Hang Seng index retreated today as investors reflected on the rising US treasury yields and the rising fears of inflation. The blue-chip Hong Kong index is trading at H$30,553, which is lower than this week’s high of HS31,775. Other Asian indices like the Nikkei 225 and Shanghai also fell.
Hang Seng news: Business and economic activity in Hong Kong has been relatively muted as investors focus on the upcoming vaccination drive that will kick-off next week.
Still, focus among investors has been in the United States, which released relatively weak jobless claims numbers yesterday. The data raised the possibility that Congress will fast-track the $1.9 trillion stimulus package. These expectations have fueled US treasury yields to rise as investors raise inflation expectations. In a note, analysts at Axi said:
“With improved vaccination roll-out, the world will be quick to normalise. With additional fiscal stimulus providing rocket fuel to the inflationary fire, it’s hard not to think more rates pain will hit many asset classes.”
Top movers in Hong Kong: The top gainers in the Hang Seng were China Mobile, China Unicom, CSPC Pharma, and CK Asset, among others. All these firms rose by more than 3%. On the other hand, the worst performers were China Petroleum & Chemicals, CNOOC, Galaxy Entertainment, and HSBC.
Hang Seng technical forecast
On the four-hour chart, we see that the Hang Seng index dropped to a low of H$30,195 and then pared back those gains to H$30,532. The index also formed a small hammer pattern, which is a bullish reversal. It remains above the ascending trendline that is shown in purple. Therefore, on Monday, I suspect that the index will rise. But a move below today’s low of H$30,195 will invalidate this trend.
Hang Seng chart