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Asia FX muted, dollar set for weekly drop on Fed rate cut bets By Investing.comAsia FX muted, dollar set for weekly drop on Fed rate cut bets By
Key Insights
  • The Hang Seng Index suffered significant losses, primarily due to a drop in Chinese tech stocks following U.S. chip export curbs.
  • ASX 200’s minor decline reflects caution as global markets assess the impact of the U.S. economic slowdown and earnings reports.
  • The Nikkei 225’s modest gain contrasts regional market trends, potentially setting up for further resistance tests.
  • Alibaba’s sharp decline after scrapping a spin-off hints at broader challenges for Asian tech stocks amid U.S. sanctions.
  • Expectations of a Fed rate cut and a weak U.S. labor market appear to influence Asian currency stability and stock performance.

Quick Fundamental Outlook

Asian markets experienced a downturn at the week’s close, with the Hang Seng Index, ASX 200, and Nikkei 225 all feeling the ripple effects. The retreat in stocks came as Chinese technology companies, particularly Alibaba, suffered losses due to new U.S. semiconductor restrictions.

This news, alongside subdued Wall Street cues from a disappointing earnings season and lukewarm U.S. jobless claims, signaled a broader economic deceleration, putting pressure on the markets.

The Hang Seng Index took the hardest hit, largely due to a sell-off in Chinese tech stocks as Alibaba plunged to a year-low, abandoning its cloud division’s IPO amid chip supply uncertainties spurred by tightened U.S. export controls.

This development poses significant challenges for Chinese tech firms in AI advancement without access to U.S. semiconductor technology, potentially impacting the broader Asian market sentiment.

Hang Seng Index Prices Forecast

Hang Seng Index Chart
The Hang Seng Index faces a challenging trading environment, with the latest session closing at 17,436, marking a 2.23% decline. This downturn aligns with a broader 4-hour chart analysis, which sets the pivot point at $17,787.

The index now contends with immediate resistance levels ascending from $18,057 to a more formidable $18,607. On the downside, immediate support begins at $17,391, with further cushions at $17,132 and $16,906, which could be tested if the decline deepens.

Technical indicators paint a somber picture; the RSI lingers at 42, denoting a bearish sentiment that is neither oversold nor signaling a reversal just yet. The MACD’s current stance above the signal line indicates potential for upward momentum, but the index remains below the 50 EMA of $17,549, suggesting that the bearish trend may persist.

In summary, while the Hang Seng Index is currently bearish, should it reclaim ground above $17,785, prospects could turn more favorable.

ASX 200 Chart
The ASX200 index, indicative of Australian equities, closed marginally lower at 7046.50, a subtle 0.09% drop in the latest 4-hour trading window. This slight downward tick situates the index just below a pivot point of $7,050.

Resistance levels await at $7,143, ascending to $7,275, which could restrain further upticks. Conversely, support forms at $6,956, with additional floors at $6,879 and $6,795 that might curtail any further slip.

The RSI hovers at a neutral 50, suggesting equilibrium in market sentiment, while the MACD indicates a nascent bearish trend as it dips below the signal line. Interestingly, the index trades above the 50-day EMA of $7,023, implying a short-term bullish bias.

Observing these indicators, the trend appears cautiously optimistic above the $7,035 level, with the index expected to challenge the immediate resistances shortly, barring any unforeseen market shifts.

Nikkei 225 Prices Forecast

NKY Chart
The Nikkei 225 exhibited a modest uptick in the latest session, ascending 0.28% to close at 33,519.20. The Japanese index is currently flirting with a pivot point at $32,730, and if bullish momentum sustains, it may challenge immediate resistance at $33,754. A break above could prompt a test of the loftier $34,682 level.

The technical stance is underpinned by an RSI of 64, indicating a tilt towards bullish sentiment without straying into overbought territory. The MACD also supports this optimism, hinting at potential upward momentum. Trading comfortably above the 50-day EMA of $32,276 reinforces the short-term bullish outlook.

Chart patterns reveal the index’s trajectory along an upward channel, suggesting continued bullish momentum if current levels hold. Overall, the Nikkei 225’s trend remains bullish above $32,730, with an eye towards testing higher resistances in the near term.

For a look at all of today’s economic events, check out our economic calendar.

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