The three major US stock indexes fell about 1% on Monday, causing the Hang Seng Index to test the 26,000 mark at the bottom of the rising channel yesterday
Trump said that he does not mind trade talks with China after the next election, which may trigger the HSI to test the 26,000 mark today. If it falls below this, the short-term will turn into a dangerous red light.
The Dow fell 268 points on Monday to close at 27,783. Affected by the decline in U.S. stocks, after opening 128 points lower yesterday, the Hang Seng Index once fell 381 points to a low of 26063. Fortunately, the 26000 mark at the bottom of the rising channel was used to support the market, and the market was able to rebound in a V shape today. The Hang Seng Index finally fell by only 53 points to close at 26,391, with a turnover of 71.2 billion yuan.
The H-Share Index (Figure 2) also tested the 10250 area at the bottom of the rising channel last morning, with the lowest seen at 10247
The decline in the tailings narrowed to 7 points and closed at 10355. The H-Share Index still has the opportunity to test the 10250 area at the bottom of the rising channel today. Once closed, the short-term will turn into a dangerous red light.
There is new news in the China-US trade talks. Foreign media reported that during the NATO summit in the United Kingdom, US President Trump stated that it may be more appropriate to wait until the US presidential election in November next year to sign the China-US trade agreement.
Affected by news that the first-phase trade agreement may be further deferred, onshore and offshore RMB (Figure 3) both fell below the 7.06 mark yesterday. Onshore RMB reached 7.0622, the lowest since October 30; offshore RMB also Low at 7.0685, reflecting the pessimism of trade negotiations.
Trump acknowledges that signing the Hong Kong Bill of Rights and Democracy is not good for Sino-US trade talks. Trump’s language “pseudo” actually wants to say that signing the Hong Kong Bill of Rights and Democracy “disadvantages” China-US trade negotiations. As the trade talks deteriorate at any time, the United States has a great opportunity to levy tariffs on schedule on December 15th. The Sino-US trade agreement is far away, leading to a night-time decline of more than 320 points after the US stock market opened last night at 26058, which is back to yesterday’s low .
U.S. stocks fall below rising wedge
In addition to the possible collapse of Sino-US trade talks, the United States has also imposed new tariffs on France, Brazil, Argentina and other countries, triggering the risk of a global trade war. The United States announced on Monday the resumption of additional tariffs on steel and aluminum imports from Brazil and Argentina to punish the two countries for manipulating the devaluation of their currencies and harming the interests of American farmers. Imported goods are subject to tariffs, with a tax rate of up to 100%, in retaliation for the country’s digital taxation on US science and technology enterprises.
The French parliament passed earlier and imposed a 3% digital tax on science and technology enterprises with global revenues of more than 750 million euros and digital business income in France of more than 25 million euros. France imposes a digital service tax, and if other European countries such as Italy follow, it will not be conducive to the performance of large US leading technology companies such as Facebook and Google.
The country has also recently launched a trade war against Brazil and Argentina in South America and resumed tariffs on steel and aluminum. Some analysts believe that Brazil and Argentina benefited from the Sino-US trade war and seized the export share of American farmers. According to Bloomberg, Brazil exported 25.5 billion US dollars in soybeans, pork and other agricultural products to China in the first October of this year.
Affected by the “war” on all sides of the United States, the three major US stock indexes (Figures 4 to 6) continued to fall in the early part of last night after falling below the upward trajectory on Monday night. Technically, the Dow, S & P 500 and Nasdaq all seem to fall below the rising wedge and have the opportunity to return to their starting point in early October this year.
In summary, the trade war has turned into a breeze, and coupled with the US stocks falling below the rising wedge bottom, the short-term will be light for Hong Kong stocks. If the HSI and HSCEI close below the 26000 mark and the 10250 zone at the bottom of the rising channel, the short-term will be a dangerous red light.