Hang Seng Index (HSI) Rallies on China Stimulus While AUD Finds Support on CPI Data

Hang Seng Index, China, HSI, PBOC, AUD/USD, AU CPI, Crude Oil – Talking Points

• Chinese bourses have been underpinned today by policy annoucements
• Australian 3Q CPI reaccelerated, lifting the prospect of an RBA rate hike
• The Hang Seng index rallied but some technical hurdles lie ahead

Hong Kong’s Hang Seng index rallied today after a series of measures were announced in an effort to stimulate the Chinese economy.

Beijing said that the fiscal debt ratio will be lifted from around 3% to nearly 3.8% and an extra 1 trillion Yuan (USD 137) of debt will be issued. At the same time, President Xi Jinping made a rare visit to the People’s Bank of China (PBOC).

The moves come on top of official buying of Chinese exchange-traded funds (ETF) to bolster stock prices.

The rest of the APAC equity indices have made ground with the exception of Australia’s S&P ASX 200 index.

It traded almost flat on the day after a red-hot CPI print there put an RBA rate hike on the radar for early November.

AUD/USD nudged 64 cents in the melee while other currency pairs have had a quiet start to Wednesday’s trading session.

Treasury yields are steady across the curve after dipping yesterday and gold has had a lacklustre day, oscillating around US$ 1,970 an ounce.

Microsoft and Alphabet had their earnings announcements after the bell and the former had a solid beat while the latter underperformed. Meta will be the next tech titan off the earnings rack later today.

Grabbing some attention later today will be the Bank of Canada rate decision and the market is anticipating them to keep its target cash rate at 5.00%.

Also today, after the German IFO number, the US will see data on mortgage applications and new home sales.

Crude is languishing after tumbling over 2% yesterday on the prospect of more supply from Russia. Oil prices could remain modestly lower if diplomatic efforts to contain the Israel-Hamas conflict continue.

The full economic calendar can be viewed here.

HANG SENG (HSI)TECHNICAL ANALYSIS

A bearish triple moving average (TMA) formation requires the price to be below the short-term simple moving average (SMA), the latter to be below the medium-term SMA and the medium-term SMA to be below the long-term SMA. All SMAs also need to have a negative gradient.

When looking at any combination of the 21-, 34-, 55- 100- and 200-day SMAs, the criteria for a TMA have been met and might suggest that bearish momentum is evolving.

Support could be at the recent near 16880 or the Fibonacci Retracement level at 16366. On the topside, resistance might be offered at the prior peaks close to 18400 or 18900.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCarthyFX on Twitter