South Korea, Japan and ASX have opened weaker. This is a strong signal that Hong Kong shares are likely to snap their eight straight days of gains of nearly 6%.
The rally by the Hang Seng Index was already showing signs of slowing down yesterday.
It spent most of the day largely in negative territory before being lifted by some late buys towards the end of the session, now up by just 0.10% at a fresh high of 24,756.85 points.
Gains in financial stocks helped offset the losses from shares in the energy sector.
There has been constant talk in the markets about a potential correction, leaving investors to be on the lookout for any good reason to take profit.
A slew of factors seem to have tipped sentiment over the edge for now, despite some relatively upbeat economic data out of the US this week. Jittery investors are looking for put protection, this pushed up the Volatility Index (VIX) which spiked 27% to 16.95.
The markets will be watching out on how the Argentina debt default situation develops, and if there will be any further downside from geopolitical risks in the Middle East and the Ukraine-Russia crisis. Any negative developments will be a further reason for profit taking and potential support for safe haven assets.
Another data event that could move sentiment today will be the release of China’s manufacturing PMI for July. The market forecast is for an uptick to 51.4 from 51.0 in the prior month.
Ahead of the Hong Kong, Singapore open