HKG33 drops into bear market, with CHN50 also showing signs of weakness
FXCM's CHN50 and HKG33 CFDs have charted a lower peak followed by a lower trough. This puts the indexes into downtrend. In addition, their RSIs have dropped below 50 (green rectangles), suggesting an underlying bearish momentum.
HKG33's session low for today was 18,030, putting it 20.5% below its January peak. This suggests that the index has entered bear market territory i.e., prices have fallen 20% below current peaks. CHN50's low for today was 12,261, which is a 13.5% drop from its January peak.
Initially, analysts expected that China's economy would experience a rapid and early recovery following its reopening. However, this optimistic perspective rapidly waned as the nation consistently produced underwhelming economic figures.
China's manufacturing PMI printed today at 48.8, which missed the expected 49.5. A reading below 50 indicates contraction. According to the data released by the National Bureau of Statistics, the PMI for large manufacturers was recorded at 50, while smaller manufacturers were in contraction territory.
On a positive note, the services activity index remained in the expansionary zone at 54.5, but it experienced a consecutive second month of decline.
There is little doubt that the reopening boom is losing momentum and is weighing on the major indexes.
Image by Clker-Free-Vector-Images from Pixabay
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
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