Market Analysis Update | Hong Kong Stocks Rebound with First Target to Fill Gap and Repair 250-Day Moving Average

President Trump of the United States is once again TACO. Originally threatening to bomb Iran’s power plants, last night he suddenly announced that the attack would be delayed by five days. The conflict has somewhat eased, causing global stock markets, which had plummeted, to breathe a sigh of relief. U.S. stocks rebounded sharply on Monday. The Dow Jones Industrial Average rose more than 1,000 points at its peak, and international oil prices briefly dropped over 14%. However, Iran denied any negotiations with the U.S., and Islamic Revolutionary Guard Corps Aerospace Force Commander Mosa stated that the current fighting would continue. Iran’s Foreign Ministry spokesperson also said that in the past 24 hours of conflict, Iran had not engaged in any negotiations with the U.S., which significantly narrowed the U.S. stock market’s gains. After opening sharply up by 226 points, the Dow’s gains expanded to 1,135 points, reaching a high of 46,712, and closed up 631 points or 1.38% at 46,208; the S&P 500 rose 74 points or 1.15% to 6,581; the Nasdaq gained 299 points or 1.38% to 21,946.

Yesterday, Man already said to check whether the stocks in the portfolio hit stop-loss levels. All passed without needing to sell, but oil prices remain high, and Saudi Arabia and the UAE are close to joining Iran in the war. New York crude oil futures rose back above $90. Meanwhile, Asian stock markets plunged sharply, Hong Kong stocks opened lower and continued to decline, with the Hang Seng Index dropping over 1,000 points at one point, finally closing down 894 points or 3.54% at 24,382. However, the situation reversed during night trading. Trump indicated that in the past two days, there had been constructive dialogue with Iranian leaders, thus delaying military action against Iran. This TACO news triggered a rapid rebound in U.S. stocks. Hong Kong stocks, via ADRs and night futures, returned to the 25,000 level, and this morning during the black session, hovered around 24,900.

However, the Hang Seng Index opened up 377 points, but early profit-taking and selling pressure caused the gains to narrow to 173 points, with a half-day low of 24,555. Later, supported by the rise in A-shares, the index expanded its gains to a maximum of 455 points, reaching 24,837 at the half-day high. The midday close was at 24,829, up 447 points or 1.84%; the China Enterprises Index rose 118 points or 1.43% to 8,426; the Tech Index gained 67 points or 1.42% to 4,779. The total half-day turnover was 149.586 billion yuan, with net outflows from Northbound funds of 11.277 billion yuan. Looking at the trading volume, the market’s rebound momentum appears weak. It was expected to rise in the first half to recover yesterday’s gap and challenge the 250-day moving average around 25,100, but it didn’t even reach 25,000. Considering that yesterday’s decline exceeded 1,000 points, today’s rebound is quite disappointing.

Hong Kong stocks’ rebound strength is modest, mainly due to short-term Northbound fund inflows and high oil prices. Although the Middle East conflict has eased somewhat, the war is not over yet. New York crude oil remains near $90, nearly 50% higher than before the US-Iran war started, when it was around $60-65. If oil supply cannot return to normal, high oil prices will continue to threaten inflation and drag down the global economy, putting pressure on stocks. It is expected that until the US-Iran war officially ends, stock markets, oil prices, and gold will continue to be affected by related news, and Hong Kong stocks will remain volatile for a while.

In the short term, resistance is expected around 25,150-25,250, with the next resistance at 25,450/25,650. Unless the market can return above 26,000, break the downtrend, and repair all moving averages, the overall trend will remain weak. The first support is around yesterday’s gap top at approximately 24,750, with the next support at 24,550-24,600. Losing these levels could lead to a downward test of 25,350-25,400. Major support below is at 24,000-24,200. If it falls below 24,000, the decline will accelerate, with support at 23,600. Based on the monthly volatility, the range has already reached 2,200 points, suggesting the high and low for this month are likely in. The short-term technical rebound is due to oversold conditions; the key is whether the gap can be filled and whether the 25,100 level and the 250-day moving average can hold. Regarding individual stocks, pay attention to China General Nuclear Power (01816). Its weekly chart looks decent, with 3.4-3.5 as an entry point, 3.3 as a stop-loss, aiming for consolidation before breaking above 3.6 and stabilizing. The target is around 4 to 4.2, following major banks’ forecasts.

Maidivon

(Xu Diyi, licensed by the SFC)