Hang Seng Index snaps three-day freefall ahead of weekend market
The index managed to put a halt to a three-day decline, rallying 1.2% to close out the week.
Hong Kong blue-chip stock benchmark Hang Seng Index (HSI) has managed to finish a mostly bearish week on a high.
The index snapped a three-day decline on Friday 12 June 2020, as it rallied roughly 1.2% to close regular trading hours at 24260 points.
Hang Seng Index declined over 1000 points amid global correction
This week, the HSI fell over 1100 points as global equity markets moved into correction mode, with fund managers and investors everywhere looking to consolidate their profits.
As IG Asia analyst Pan Jingyi noted, US indices S&P 500 index and Dow Jones Industrial Average had led the risk-off charge, as they both chalked up massive losses this week. Each lost 5.9% and 6.9% respectively on Thursday 11 June alone, amid fears of a second wave of Covid-19 infections.
For the Hang Seng Index, Friday’s session ‘was a clear evasion to safety with all but the utilities sector having sold off’, and energy stocks at the fore, Pan wrote.
This latest correction puts an end to the Hang Seng’s recent run of good form – a two-week run that had seen the index post over 6% of gains.
Moving into the weekend, Pan postulated that near-term bullish sentiment for the Hang Seng Index ‘has finally cooled’, and that ‘the market will likely scrutinise upcoming data more closely for indications of recovery’.
Hang Seng Index: technical analysis
On a technical basis, Pan noted that the Hang Seng Index had pared some of the bullish momentum into the end of the week, with prices moving back to the earlier trading range of between 23470 and the 50% retracement level at around 24675.
Some support, she added, had also been seen with the 50-day moving average. The 50% retracement level, in particular, had posed as a strong resistance for prices after having capped gains in the past couple of months, thus rendering the latest surge in prices a false breakout.
In view of the dip, Pan concluded that ‘prices look to be returning to the sideway trade, lacking impetus in either directions at present’.
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