Asian equities rallied on the first trading day of 2018 with significant higher trading volume as money managers are back to the market from their long holiday break.
Hang Seng Index soared 596 points or 1.99%, breaking out psychological resistance of 30,000 mark with no hesitation. The upward momentum was strong and backed by broad rebound in the China A shares.
Shanghai market had a robust start of the year, the rally was mainly driven by raw materials, petrochemical and property sector and the trading volume has picked up significantly as money managers are back from their three-day holiday break. In Hong Kong, Hang Seng China Enterprise index (+3.0%) outperformed Hang Seng Index (1.99%) also suggests mainland shares are leading the rally in HK market. Technically, the Shanghai Composite seemed to have finished a year-end correction and is about to rebound.
Separately, the US dollar weakness has fuelled the gain in both CNY and CNH, which are trading at around a three-month high of 6.490 area. Strong RMB has probably attracted fund flows into the A-share market and tapered capital outflows.
In Singapore, strong advanced GDP figures have fuelled the rally in Singapore stock market and set a positive start of year 2018. The 4Q GDP figure smashed market expectation from the upside again, primarily driven by strong output expansion in the electronics and precision engineering clusters due to strong overseas demand. The island state has registered a full year growth rate of 3.5% in 2017. Manufacturing sector continued to outperform while construction sector remained sluggish. Singapore stock market had a fruitful year in 2017, and the upward momentum could carry on in 2018 should the crude oil price continue to go up and fundamental elements stay robust.
Technology shares led a strong rebound in US equities last night. NASDAQ, Dow and S&P 500 soared 1.5%, 0.42% and 0.83% respectively, approaching all-time highs. The rally set a positive start of the year 2018 despite the fact that a much weaker US dollar may erode foreign investors’ profits in the US dollar denominated assets. China Technology giant Alibaba (ADR) jumped 6.5% last night on a WSJ report saying that it’s UC Browser for mobile beats Google in emerging markets including populous India and Indonesia. This could potentially mark a game changer for the company’s valuation.
The US dollar index tumbled to 91.5 area – a level not seen since end Sep 17. Soft dollar continued to drive the rally of precious metal, with gold and silver prices advancing further to US$1,320 and US$17.23 respectively. Silver price has broken out above a key 76.8% Fibonacci retracement level of US$17.0 and its next resistance level is US$17.4 area. Gold is riding a smooth uptrend too, clearing a psychological resistance lf US$1,300 mark. Its next major resistance level at US$1,356 area.
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