Jump to content

Hang Seng tumbled hard due to headwinds from US and China


Recommended Posts

The Hang Seng index slumped significantly this week due to the concern over China's economy and renewed inflation fears from the US.

1657697145433.jpgSource: Bloomberg
 
Hebe Chen | Market Analyst, Melbourne | Publication date: Wednesday 13 July 2022 

Why is the Hang Seng index falling?

The Hang Seng index crashed for multiple reasons, the first being due to investors staying cautious in preparation for a deluge of economic data and corporate earnings that is about to be unveiled this week.

As traders are preparing to respond to the renewed inflation concern sparked by the US’s June CPI on Wednesday, the CPI is expected to rise 8.8% on the annual rate, which would be a four-decade high. That being, the market and the central bank are also focusing on the core inflation which excludes the food and energy price component as that print is expected to show some ease from 6% to 5.8%.

If inflation turns out to still be hot, the Federal Reserve will continue hiking interest rates in the coming months. The baseline is that the Fed will hike rates by 0.75% in July, followed by 0.50% in September.

The Hang Seng index continues to fall as investors react to China’s top authority sending a warning of 'very high' risk after Shanghai reported a sub-variant covid virus, its first case on Sunday. The message has sparked fears of a return to its previous lockdown and continues to further damper China’s beleaguered economy.

China’s economic outlook

This week we will have the opportunity to get more insight into China’s economic health which will come from the official 2Q GDP print due on July 15th. On paper, it’s expected to be a number just above the water, around 0.7% increase.

On the positive side, it has increased from the -1.6% in the first quarter which could keep its economy from recession. The most recent data from China pointed to a recovery in June when the two largest cities, Shanghai and Beijing, exited their lockdown.

For the more pessimistic viewers, that means a great downsize from the previous 1.9% expectation. For a long-term view, the growth outlook is bleak as long as China sticks to a zero Covid policy and tight restrictions. As a result, most economists expect China's yearly GDP growth to be only half the level of 2021, at around four percent.

Hang Seng Index technical analysis

The daily chart highlights a bear-biased sign that this recent decline has broken through the months long trendline formed since mid-May. This decline has taken us back into a support zone that is coming from the lowest level in June and a break below 20677 would enhance the risk of further downside to the next support around 20460.

On the flip side, should the price attempt to bounce from the support, the imminent challenge will be the 100-day moving average near 21164.

Hang Seng daily chart

1657697636810.JPGSource: IG

Take your position on over 13,000 local and international shares via CFDs or share trading – and trade it all seamlessly from the one account. Learn more about share CFDs or shares trading with us, or open an account to get started today.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,595
    • Total Posts
      96,947
    • Total Members
      44,162
    • Most Online
      7,522
      10/06/21 12:53

    Newest Member
    RobertMa
    Joined 01/12/23 20:28
  • Posts

    • Well, everyone is entitled to his opinion and has his yardstick for conclusion on his GOAT. Considering awards and personal glory Messi and CR7 top the list but we cannot write off players like Eusebio, Alfredo Di Stefano, Baggio, and George Weah (African GOAT).
    • Crypto Asset Governance Alliance Token Is a unique and community driven project that operates as a Decentralized Autonomous Organization (DAO) governed by its dedicated token holders, $CAGA. The project is focused on profitability and fostering collaboration among like-minded individuals by allowing members to stake tokens, and actively participate in decision-making processes. As a community-driven project CAGA believe its community ideas will bring the desired change in the world as such the platform prioritize transparency. All decisions, proposals, and voting results are publicly accessible on the platform and reports are publish regularly in order to maintain clarity with the community.  The native token $CAGA was recently listed on several exchanges as such this double the exposure for the project and makes it the top trending token on CMC as traders and analyst try to see a good entry to grab the token due to its bullish potential and the need to add it to their portfolio. As usual DCA should be employed in grabbing this type of token and always DYOR. What do you think about CAGA?
×
×
  • Create New...
us