Asia-Pacific equity markets are reacting to the US 10-year note breaking above the 4.6% barrier, with the Hang Seng Index and HK.cash futures experiencing losses. The benchmark is breaking below the 23.6% Fibo elimination of a significant downtrend channel initiated during the internal Covid turmoil in China.
The surge in US yields is attributed to the hawkish stance of the US Federal Reserve, delaying the market’s expectations of interest rate cuts this year. The market’s response to US GDP data and the upcoming PCE report will be crucial, potentially influencing the possibility of an interest rate cut in September.
The challenging global environment is impacting the Chinese market, with previous supportive elements fading into the background. Internal regulations and positive sector-specific data that bolstered the market are now less influential.
Examining the chart of HK.cash on the weekly interval, the current decline mirrors the index’s behavior in early 2023. The market’s reaction to the 50-week EMA will be key in determining whether the trend continues or if a correction occurs.
This analysis is provided by XTB S.A., a financial service company based in Warsaw, Poland.
