China A50

A potential bearish reversal pattern suggests a drop to 7900 for the ASX, but only if it clears a support cluster first. China's A50 still looks solid above 13k to my eyes, despite yesterday's selloff.

Hang Seng and China A50 futures delivered obvious bullish reversal patterns on Friday, hinting the unwind from the recent highs may have run its course. While some may say the rebound was driven by stronger-than-expected Chinese economic data released during the session, both moves started from known levels, suggesting it may have been technical in nature.

China’s markets shot out the gates in reverse on Tuesday, with traders seemingly disappointed that Beijing had not unveiled another round of stimulus. Not only did that see China's equity markets plunge in the double digits, but oil prices were also falling on lower production forecasts and easing of Middle East concerns.

China A50 has broken a multi-year downtrend amid new efforts by China to achieve a 5% rate of growth for 2024. Battle lines drawn on the weekly technical chart.

China’s A50 index is mirroring the 2014-2015 surge, the last time policymakers enacted coordinated fiscal/monetary/macroprudential stimulus measures - what does that mean moving forward?

Hang Seng and China A50 stock futures continue to rip higher, benefitting not only from continued panic buying following last week’s monumental surge but also the fact they have resumed trade with mainland markets still closed for golden week holidays.

The China A50 is up an impressive 16% this week already thanks to the latest round of stimulus from China. While this helped the ASX to a degree, it likely needs a soft US inflation report to break and hold above record high.

Chinese regulators will slash interest rates, free up cash for banks to lend and implement measures to support the stock market, designed to help address flagging economic activity and inflation. However, none of the moves directly boost demand, raising questions about just how effective they may be in delivering a sustainable improvement in sentiment.

USD/CNH is pushing higher on Monday while China A50 futures are sliding, reversing moves seen on Friday. Now, as was the case then, fundamentals underpinning the moves continue to link back to China’s spluttering property sector.

Chinese industrial profits accelerated on an annualised basis in the first seven months of the year, led by high-end manufacturing firms. However, it’s not been enough to deliver meaningful upside to the China A50 index which continue to struggle amidst poor investor sentiment, weak domestic demand and threat of increased trade barriers abroad.

The composite economic indicators are critical components of an analytic system meant to identify business cycle peaks and troughs. The indexes, which combine numerous independent data, provide a better and more persuasive summary of economic trends than individual components.