China indices come under fresh pressure
The positive outlook for US stock indices is not being matched by their Chinese peers, which face headwinds on the fundamental and technical fronts.
Chinese indices struggle
While US markets sit close to recent highs, and look to be well-positioned for more gains into the end of the year, the same cannot be said of Chinese indices.
The limited rally in the Hang Seng and the China A50 indices has now mostly fizzled out. Hopes of more proactive stimulus measures from the People’s Bank of China have yet to materialise in a concrete fashion. In addition, while earnings in the US have struck a positive tone, the outlook for Chinese companies remains less promising.
Hang Seng technical analysis
While the index rallied from the lows of October, in common with other equity markets, it was unable to clear the highs of September and October around 18,300. The bounce faltered in mid-November and has now dropped back below the 50-day simple moving average (SMA).
The price is now testing support from the October lows. A close below this level would change the picture and suggest a move back to the lows of late October down towards 16,800.
The October low also aligns with the November 2022 bottom, and a close below this would amplify the bearish view, and would then see the price push towards the October 2021 lows.
China A50 technical analysis
This index has seen a weaker performance than the Hang Seng. The sharp rally from the October low lasted into the first week of November, but has given back almost all the gains since then.
The 50-day SMA acted as a barrier to any further upside, as it has done since September. A move back to the October low around 11,580 seems likely, and then below this the 11,120 lows from 2022 would be the next potential support level.
Lower highs since the end of July continue to maintain the medium-term bearish view.
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