Market Surge: Hang Seng and AUD Rally

Explore market fervor: Hang Seng surges, AUD rally driven by China’s potent economic stimulus, shaping global trade dynamics.

In a surprising turn of events, the Hang Seng Index (HSI) in Hong Kong surged today, fueled by a flurry of policy announcements from Chinese authorities. In a bold move to invigorate the Chinese economy, Beijing revealed plans to elevate the fiscal debt ratio from approximately 3% to a substantial 3.8%. Furthermore, the market will receive a boost as authorities prepare to issue an additional 1 trillion Yuan (equivalent to USD 137 billion) in debt. Notably, President Xi Jinping made a rare appearance at the People’s Bank of China (PBOC), underscoring the significance of these developments.

The government strategically intervened, initiating official purchases of Chinese exchange-traded funds (ETFs) to enhance stock prices. While Chinese bourses reveled in this positive momentum, technical obstacles loom on the horizon for the HSI, indicating a challenging path ahead.

Meanwhile, the Australian 3Q Consumer Price Index (CPI) witnessed a remarkable acceleration, sparking speculations of an imminent rate hike by the Reserve Bank of Australia (RBA) in early November. Consequently, the Australian dollar (AUD/USD) experienced a surge, breaching the 64 cents mark amidst the market frenzy. In contrast, most other currency pairs embarked on a relatively subdued journey during Wednesday’s trading session.

Market Surge – Hang Seng and AUD Rally

Across the board, Asia-Pacific (APAC) equity indices made substantial gains, except Australia’s S&P ASX 200 index, which remained nearly stagnant. After the bell, notable corporate earnings were announced, with Microsoft exceeding expectations and Alphabet falling below projections. Later today, all eyes will be on Meta, the next tech giant slated to reveal its earnings performance.

The market eagerly anticipates the Bank of Canada’s rate decision, expecting the target cash rate to remain at 5.00%. After Germany’s IFO number, the U.S. will reveal vital economic indicators, including mortgage applications and new home sales.

Amidst this financial whirlwind, the crude oil market languishes, grappling with a decline of over 2% due to the looming prospect of increased oil supply from Russia. The ongoing Israel-Hamas conflict further complicates the situation, potentially decreasing oil prices if diplomatic efforts persist.

In technical analysis, the Hang Seng Index (HSI) faces a challenging scenario characterized by a bearish triple moving average (TMA) formation. For a TMA to manifest, the price must stay below the short-term SMA, lower than the medium-term SMA, and the medium-term SMA must be below the long-term SMA. Notably, all SMAs should exhibit a negative gradient, indicating a significant bearish momentum in the market.

Support for the HSI could materialize near the recent level of 16880 or potentially at the Fibonacci Retracement level of 16366. On the flip side, resistance might present around the prior peaks, close to the levels of 18400 or 18900, providing formidable barriers to the index’s upward movement.

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