Hong Kong stocks rose as the market reacted to higher crude oil prices. The blue-chip Hang Seng index, which tracks the biggest companies in the city, rose by more than 30 basis points.
Hang Seng index soars amid higher oil prices
Oil related stocks were the biggest movers in Hang Seng today. China National Offshore Oil Corporation (CNOOC) was the biggest mover today, gaining by more than 7.50 per cent. It was followed by PetroChina, whose shares rose by more than 5.7 per cent.
Another big mover in the Hang Seng was China Petrol and Chemical, whose shares rose by more than 3 per cent. Other big movers in the index were China Overseas, Geely Automobile, CK Asset, and WH Group among others.
There were about 14 laggards in the index. The biggest loser was Sunny Optical, whose shares dropped by more than 10%. Other big laggards were AAC technologies, Power Assets, and CK Infrastructure.
The Hang Seng index rose even as hostilities between the US and China increased during the weekend. The two countries are battling one another for supremacy, with the US being worried about China’s historic growth. Over the weekend, the Trump administration announced new measures to curtail Huawei’s growth.
At the same time, the Hong Kong economy is not doing well. The housing market, especially the retail sector has continued to lag because no one is traveling to the city. Also, a recent report showed that job vacancies have dropped by 55% because very few companies are hiring. Another big problem is that gambling in Macau has almost stopped. This gambling is important for Hong Kong economy because most gamblers spend their money there.
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Hang Seng technical outlook
On the daily chart, we see that the Hang Seng index declined below the important ascending trendline last week. Since then, the price has remained below as traders ponder the next move. The price is still below the 38.2 per cent and the 50-day EMA. It is also below the important psychological level of 24,000. Therefore, even with the today’s gain, I expect the Hang Seng to remain under pressure as bears target the next support at 23,500.
On the flip side, a move above 24,246 will invalidate this thesis because it will send a signal that there are still more buyers in the market. This price is along the 38.6% Fibonacci retracement level. It will also be above the ascending pink trendline.
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