Hang Seng Index Rebounds, Silver Consolidates. Crude Oil May Fall

HANG SENG INDEX, SILVER, CRUDE OIL OUTLOOK:

• Hang Seng Index edged higher to 24,800 in mid-day trading, 25,000 remains key resistance
• Silver prices entered consolidation after seeing a 15% intra-day swing on Tuesday
• WTI crude oil prices face a key resistance at US$ 42.0

HANG SENG INDEX OUTLOOK:

The Hang Seng Index (HSI) opened lower and subsequently erased earlier losses and moved 0.2% higher during mid-day trading, lifted by favorable sentiment in the mainland markets. The property sector was outperforming the benchmark index, with CK Asset Holdings (+2.28%), Link REIT (+2.23%) and Hang Lung Properties (+2.24%) leading the gains in HSI.

The Shanghai Composite surged 1.17% before the lunch break to 3,265 – a three day high. Sector-wise, the Shanghai stock market was led by biopharmaceutical (+7.25%), home electrics (+4.84%), chemicals (+3.5%) and securities (+3.32%) sectors. Consumer names seems to have done the heavy-lifting in mainland stock markets this week.

Earnings reporting has kicked off on Hong Kong this week, with the peak of earnings season coming in August. As Hong Kong’s GDP entered in to sharp contraction this year due to Covid-19 headwinds, many local companies are likely to suffer from a plunge in travel, tourism business and a broad slowdown in economic activities. Those include Sands China, Cathay Pacific, HSBC and some commercial real estate investment trusts (REITs).

Technically, the HSI is still in a consolidation phase, with its 50-Day Simple Moving Average (SMA) line becoming its immediate resistance. The 50-Day SMA is now at 24,938. The HSI has tested a support at 24,500 and attempted to consolidate above this level.

Hang Seng Index – Daily Chart

SILVER PRICE OUTLOOK:

Silver prices were severely overbought on Monday and Tuesday before dramatically entering into a correction. The 15% intra-day swing observed yesterday may have forced out a lot of speculative positions, as leveraged positions could hardly withstand such a big move. In the mid- to long-term view, however, precious metal prices may still have room to climb against the backdrop of ultra-low interest rate and accommodative monetary policy glboally. Rising geopolitical tensions and Covid-19 uncertainties may also drive up demand for safety.

Technically, silver was severely overbought as suggested by the RSI indicator. A pullback seems to be underway. US$ 26.0 is a key resistance level – the 38.2% Fibonacci retracement. Immediate support could be found at

US$ 22.7.

Silver Price – Daily Chart

CRUDE OIL OUTLOOK:

The WTI crude oil prices are facing strong resistance at around US$ 42.0, which is the upper bound of a major ‘gap down’ seen in early March. WTI remains in an upward trend, but its bullish momentum seems to have diminished these weeks. A pullback could bring it to US$ 39.5 – the 50-Day SMA.

Crude Oil – Daily Chart