The mood during the Asian session was upbeat, linked in large part to gains in the Chinese stock market. The Hang Seng Index rose nearly 1.5% today, and CHN.cash is already up nearly 3%. Investors are hoping that better data from the country's services sector is one of the first signs of “working” stimulus packages injected by Beijing to the faltering economy. Yum China (YUMC.US) shares gained the most today, nearly 7%, where we can expect a lot of movement in the company's US-listed ADRs.
- China's Caixin services PMI for October came in at 52 versus 50.5 forecast and 50.3 previously, expanding at the fastest pace since July. Orders for exported goods rose. Chinese companies were more confident about future output growth, and service providers increased employment.
- Markets took the improvement in services as an early sign of an improving economy. Sentiments in China also improved after China's top legislature said it had reviewed another stimulus measure aimed at easing the financial problems of local, Chinese governments. The S&P PMI for Hong Kong also rose to 52.5, up from 50 in September. The better-than-forecast readings pleased markets.
CHN.cash (D1 interval)
Chinese indices are resuming their upward impulse, with CHN.cash breaking above the 38.2 Fibonacci retracement of the last upward wave and climbing to important resistance, at 7500 points. Markets expect Beijing to implement stimulus measures to significantly boost private consumption. However, it remains uncertain how much consumer demand will increase. Moreover, Trump, announced 60% tariffs on Chinese goods and in the scenario of his victory, a negative reaction of Chinese indices is not excluded.
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