Markets in Asia shrugged off the dark newsflow coming out of China, its various bond defaults by developers and the impact on its beleagured property sector, as a more positive mood engulfed Japanese, European and US markets.
The Hang Seng Index ended the week 493 points higher at 25,330, and is now testing its declining 50-day moving average at 25,423. Quarterly momentum is rising, and this is positive for the index, suggesting it may whipsaw its 50-day moving average. Overall, ADX is falling, and the DIs are neutral. In addition, volume hasn’t expanded noticeably during the minor rally.
A move above 25,423 would enable the HSI to nudge higher, towards the 26,000 psychological resistance.
See also: STI falls below 200-day moving average as HSI hangs by a thread
The Straits Times Index rose a further 61 points in the week of Oct 11-15 to end at 3,178. The STI has gained 122 points in the first two weeks of Oct. In the process, it has regained its 50-, 100- and 200-day moving averages. Its immediate resistance is at current levels, at 3,180. It may need to get above this level accompanied by volume expansion to indicate an upside objective.
Inflation - which is usually positive for asset prices including equities - may be the reason why global markets headed higher. The STI itself was spurred higher by Jardine group companies such as Jardine Matheson Holdings and Hongkong Land Holdings, and Keppel Corp. As a result, the STI managed to close at the highest level since early August.