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HANG SENG INCHES DOWN AFTER FED RATE CUT AND PMI - Capital Street FX

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    • HANG SENG INCHES DOWN AFTER FED RATE CUT AND PMI
04-Mar
18:50 IST

Hang Seng futures are currently trading at 26279-lower by 0.39% as compared to the previous closing price. The contract, however, closed in the positive territory in the last trading session.

In the Cash Markets, the Hang Seng index lost 0.24% to close at 26,222.07 on Wednesday.

The benchmark index inched down today as an emergency rate cut from the US central bank seemed to unnerve rather than soothe global markets. Although, losses were capped as weak data further raised hopes for even further policy support.

The retreat came after a sharp fall in US stock markets overnight after the Fed surprised market players with 50 basis points cut in interest rates, increasing fears about the magnitude of the China-linked virus impact.

The Hang Seng China Enterprises Index advanced 0.35% to close at 10,521.78 on Wednesday.

The Hong Kong Monetary Authority followed Fed, cutting its base rate charged through the overnight discount window by a half percentage point to 1.5%.

A private survey released earlier today showed that the pneumonia-causing virus epidemic dealt a severe blow to businesses in the Asian Financial hub in February. The adjusted IHS Markit headline Hong Kong PMI for February came in at 33.1, marking its steepest downturn since 1998. The PMI reading was also below the market expectation of 46.5.

Top losers in the index include- Hang Seng Bank Ltd (fell 4.0%), BOC Hong Kong Holdings Ltd (declined 2.4%) and HSBC Holdings PLC (dropped 2.3%) on Wednesday.

Top gainers in the index include- Link Real Estate Investment Trust (surged 3.1%), China Resources Land Ltd (rose 3.0%) and Shenzhou International Group Holdings Ltd (advanced 2.8%).

The Hang Seng index has added 0.35% so far this week.

On the technical front, the RSI is currently at 35.79% and suggests that the markets can continue trading sideways. The current price is above the MA5. The current price is below the middle line of the Bollinger bands but is heading upwards.

Overall Bias is Positive and short-term trades can be initiated with tight Stop Loss and Take Profit targets. This trade can remain valid until Thursday.

 

Trade Suggestion- Limit Buy At 26260 Take Profit At 26420 Stop Loss At 26180

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