Hang Seng

Brief: Hang Seng Wavers, DAX Index Falls, S&P 500 Tesla Inclusion

The Hang Seng index is little changed today as traders reflect on the latest vaccine news and the recent trade deal signed between China and major economies in South East Asia. The blue-chip Hong Kong index is trading at h$26,377, which is in the same range it was yesterday.

The index is wavering as investors brace for big changes. In a statement, Hang Seng Indexes said that companies like Budweiser Brewing Company, sportswear maker Anta Sports, and delivery company, Meituan, will join the index. The new rebalancing will increase to 52 since Swire Pacific will exit the index. Swire is a leading company that is also the biggest owner of Cathay Pacific.

The biggest movers in the Hang Seng today are PetroChina, CK Hutchison, Geely Automobile, and CK Asset.

DAX Index and FTSE 100 futures fall

After a significant rally yesterday, DAX index and FTSE 100 futures have declined today. The two are down by 0.50% and 0.45%, respectively. This decline is mostly because of the rising number of Covid cases even as companies make strong progress on a vaccine.

In Germany, Angela Merkel urged people to limit public and private gatherings after meeting with leaders from all states. She however failed to pass the serious restrictions that she wanted, including making masks compulsory in German schools. Still, while the country’s curve is flattening, the number of new infections is still above the ideal levels.

In the United Kingdom, the FTSE 100 index is falling as the UK and European Union members start their Brexit deliberations. In a recent statement, David Frost said that UK’s red lines are still there, which means that the country could exit without a deal. Still, analysts believe that the two sides will reach an agreement in the next few weeks.

S&P 500 set to welcome Tesla

The S&P 500, Dow Jones, and Nasdaq 100 indices are down by more than 0.35% in the futures market, erasing some of their gains yesterday. The decline is mostly because of the lockdown measures that have been implemented in most states. That is after the country confirmed more than 135k new infections yesterday.

The biggest news in the S&P 500 is that Tesla, the fast-growing electric car company, will join the index in December. As a result, the company’s shares jumped by 14% yesterday, since the inclusion will lead to large buys by index funds.   The shares have jumped by more than 450% this year.

Hang Seng technical analysis

On the four-hour chart, we see that the Hang Seng index has been in a tight range recently. Ut is trading at h$26,377, which is slightly above the 61.8% Fibonacci retracement level. The index has also moved above the 25-day and 50-day moving average.

Therefore, I expect that the index will possibly break-out higher as bulls aim for the 78.6% Fibonacci retracement level at h$27,427. To do this, bulls will need to move above the important resistance at h$26,794. On the flip side, a move below the 50% retracement at h$25,107 will invalidate this trend.

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Hang Seng technical chart

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