In the article 'Hedging', reviewing September, the Hang Seng Index showed a volatile downward trend, falling 953 points for the month, and finally closed at 24,613 points. Entering October, mainland China took a National Day holiday break, with A-shares suspended until Thursday (8th) for resumption. Lacking support from northbound funds, the Hang Seng Index fell 640 points last Friday (2nd), dropping to a low not seen in over two months. On September 14, the author pointed out in this column that after the Hang Seng Index broke below 25,000 points, its technical trend had turned bearish, and according to measured decline calculations, it was expected to test 23,800 points. Indeed, last Friday the Hang Seng Index hit a low of 23,865 points, aligning with the author's forecast.
On the external front, the United States released several major economic data points last week. First, the U.S. Federal Reserve's most-watched core PCE inflation data for August rose 3% year-on-year, lower than the expected 3.4%, primarily due to the U.S. Bureau of Economic Analysis changing its calculation methodology and applying revisions retroactively to 2021, effectively lowering the historical comparison base. Additionally, the core PCE rose only 0.2% month-on-month; this figure was unaffected by base adjustments and was also milder than expected, indicating that monthly price pressures have not worsened.
On the other hand, signs of weakening emerged in the U.S. labor market in September, with the unemployment rate rising from 4.1% to 4.2%, and non-farm payroll gains totaling only 29,000, far below the expected 90,000. Moreover, July and August's non-farm payroll gains were revised downward by a combined 60,000. Overall, with inflation showing no signs of worsening and employment data weakening, the Fed is expected to pause rate hikes at the end of this month.
During the mainland holiday and lacking northbound fund support, the Hang Seng Index plunged 640 points last Friday, but the author believes the drop was excessive and slightly oversold. Looking ahead, the market is expected to see a corrective rebound early this week, but high U.S. bond yields will pressure Hong Kong stocks, especially financial and technology stocks. This week, the Hang Seng Index is expected to trade between 23,800 and 24,800 points. Simon Siu, Executive Director, Sun Hung Kai Securities Investment Services
*Articles published in 'Economic Link' under named and/or anonymous authorship reflect the authors' personal opinions and do not represent the stance of 'Economic Link'. 'Economic Link' serves as a platform providing free expression of views.
On the external front, the United States released several major economic data points last week. First, the U.S. Federal Reserve's most-watched core PCE inflation data for August rose 3% year-on-year, lower than the expected 3.4%, primarily due to the U.S. Bureau of Economic Analysis changing its calculation methodology and applying revisions retroactively to 2021, effectively lowering the historical comparison base. Additionally, the core PCE rose only 0.2% month-on-month; this figure was unaffected by base adjustments and was also milder than expected, indicating that monthly price pressures have not worsened.
On the other hand, signs of weakening emerged in the U.S. labor market in September, with the unemployment rate rising from 4.1% to 4.2%, and non-farm payroll gains totaling only 29,000, far below the expected 90,000. Moreover, July and August's non-farm payroll gains were revised downward by a combined 60,000. Overall, with inflation showing no signs of worsening and employment data weakening, the Fed is expected to pause rate hikes at the end of this month.
During the mainland holiday and lacking northbound fund support, the Hang Seng Index plunged 640 points last Friday, but the author believes the drop was excessive and slightly oversold. Looking ahead, the market is expected to see a corrective rebound early this week, but high U.S. bond yields will pressure Hong Kong stocks, especially financial and technology stocks. This week, the Hang Seng Index is expected to trade between 23,800 and 24,800 points. Simon Siu, Executive Director, Sun Hung Kai Securities Investment Services
*Articles published in 'Economic Link' under named and/or anonymous authorship reflect the authors' personal opinions and do not represent the stance of 'Economic Link'. 'Economic Link' serves as a platform providing free expression of views.
