In the recent days, the A-shares market has been experiencing volatility, fluctuating near crucial resistance levels. The Shanghai Composite Index appears to be forming a descending triangle, having just reached its upper resistance point. Should it successfully break through this level, there is potential for an upward trend reversal. However, in the past couple of days, market forces on both sides have been engaged in a tug-of-war, failing to decisively pick a direction. Meanwhile, the STAR Market 50 Index has developed a sideways trading pattern, facing obstacles beneath the box’s upper boundary in the past two days.
Looking more broadly at the Hong Kong market, the Hang Seng Index, alongside the Hang Seng Tech and Hang Seng Finance indices, had previously been moving sideways but has recently seen a push upward, breaking through significant resistance levels. This shift suggests a possible reversal in the market trend. Currently, these indices are testing previous high resistance levels; if they succeed in breaking through, it could indicate a significant change in medium to long-term trends, potentially leading to more extensive market movements.
In related healthcare and real estate sectors, the Hang Seng Medical Index and the Hang Seng Properties Index have both shown signs of recovery from recent lows, marking a breakout above downtrend lines, suggesting an upward trend reversal. However, the Hang Seng Medical Index is still encountering resistance near previous high levels, and only a breakthrough will enable it to ascend further towards earlier peak points. The Hang Seng Properties Index has just managed to break past its bottom resistance level but quickly fell back below it, indicating ongoing uncertainty in that sector.
Additionally, the Hong Kong stocks have developed a symmetrical triangle pattern of late, recently breaking through an upper resistance level. As of now, they remain within this pressure area. If they can successfully escape this resistance zone, a shift towards higher price points could be on the horizon, possibly returning to earlier highs.
Meanwhile, in Japan, the Nikkei Index and its weighted equivalents have been experiencing sideways fluctuations, indicating a balance between bullish and bearish forces. In the last few days, the Nikkei Index has touched bottom and started to recover, whereas the weighted index has struggled beneath substantial pressure points.
In India, the index recently faced a pullback, descending to a crucial rising trend line, only to rebound but ultimately fail to sustain its elevation, falling back to critical support levels. If these supports crumble, the market could face a more considerable correction ahead.
The Vietnamese market has also stopped its downward trajectory, forming a symmetrical triangle. Just days ago, it managed to break through the pressure points only to remain shackled by persistent resistance, lingering around pivotal pressure areas, leaving its future trajectory in question.
In a broader context, the Asian stock markets have recently seen upward trends, significantly driven by delayed tariffs which have boosted investor sentiment. On a notable Friday, markets across Asia responded positively to the United States' decision to postpone the imposition of retaliatory tariffs, a move seen as encouraging for ongoing negotiations.
For instance, in Australia, stock exchanges rallied alongside futures in Japan and Hong Kong, indicating a potential third consecutive day of increases across the board. Notably, in New York trading, indices representing Chinese companies surged over 1%, as global stock markets closed at historic highs.
The S&P 500 saw a lift of 1%, while the Nasdaq 100 climbed 1.4%, showcasing strong performances from significant technology firms. Companies like Tesla and Nvidia reported over 3% gains, with Meta Platforms Inc. achieving its 19th consecutive day of stock price increases.
Additionally, early trading on Friday saw bond yields in Australia and New Zealand dip, mirroring trends in U.S. Treasury yields. The yield on the benchmark 10-year U.S. Treasury note dropped by nine basis points, reversing the previous day’s ascent.
In currency markets, a gauge tracking the U.S. dollar against other developed market currencies declined by 0.7%. The Japanese yen remained stable while experiencing a notable 1.1% appreciation against the dollar in Thursday's trades, and the Canadian dollar reached new highs this year.
The United States is also contemplating imposing reciprocal tariffs on numerous trading partners, particularly singling out Japan and South Korea as nations that may be taking advantage of U.S. concessions. However, investors seem somewhat reassured regarding the timeline of this process, which involves proposed tariffs for each nation—work that may not be finalized until April.
José Torres of Interactive Brokers noted earlier this week, “The U.S. is seeking to level the global playing field by implementing reciprocal tariffs on nations sustaining taxes on American goods. But investors are gradually recognizing that as these statements increasingly resemble negotiation tactics, the likelihood of substantial outcomes from most negotiations remains low.”
Moreover, discussions are anticipated between the United States and India regarding India's purchase of U.S. oil and gas. Nonetheless, plans to impose reciprocal tariffs cast a cloud over these upcoming talks.
In Asia, American private equity firm KKR & Co. is considering investing in the troubled Japanese automaker Nissan following the company's failed merger discussions with competitor Honda.
On another note, Friday’s economic data release includes statistics pertinent to South Korea's unemployment rate, Malaysia’s GDP figures, and wholesale price indices from India.
Meanwhile, oil prices ended almost flat on Thursday after rebounding from their lowest points since December, as ambiguous timelines surrounding U.S. tariff plans offset potential supply relief from Russia.
Early indications suggest that a key inflation measure favored by the Federal Reserve may end up weaker than expected, resulting in Wall Street traders sidelining popular inflation data. The Producer Price Index for January rose more than analysts had anticipated.
Nonetheless, several components of the Fed’s preferred inflation metric—the Personal Consumption Expenditures (PCE) price index—showed improved performance last month, including many healthcare items and airfare prices, which all saw declines. The next release of PCE data is scheduled for February 28, and analysts are keenly watching this development. Andrew Brenner from NatAlliance Securities remarked, “Even though the PPI vastly exceeded estimates, with revisions on top, the actual data contributing to the PCE shows a weaker picture. Thus, despite the initial signs, the numbers look better to Powell and the Fed.”
In commodities, gold prices rose for the second consecutive day on Thursday, climbing back towards record highs reached earlier in the week.
Boosted by increasing demand for safe-haven assets, gold prices have been on the rise this year and are testing towards the $3,000 per ounce mark.