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Trade talk and US tech ban in focus

With USD/CNH staying calm at 7.130 area, it suggests that the US tech ban overnight on several Chinese companies had little impact to market sentiment.

China mainland market resumes trading today after a week-long break, with loads of news to digest. It will be interesting to see how mainland investors react today.

With a rebound in the US dollar overnight, gold price retraced to US$ 1,490 area while crude oil prices edged marginally higher. Technically, gold price is ranging between US$ 1,466 to US$ 1,513 as part of its mid-term consolidation. Fresh catalysts such as a Fed rate cut, US-China trade breakdown or a non-deal Brexit are needed for gold to breakout its key resistance level at US$ 1,550.   

Among Asian markets, Hong Kong seemed to be on the weaker side with recent backlash on the mask ban being a clear drag of sentiment. Still, a relatively cheap valuation (10x P/E) will probably entertain some bargain hunting activities. Technically, the Hang Seng Index is attempting to find a bottom within a tight range of 25,600-26,160.

Investors are still focusing on the upcoming US-China trade talk to be held on 10th October, in which a narrow deal could be stuck but a broader agreement is unlikely. Meanwhile, whether this talk will lead to a delay of US tariffs being imposed on 250 billion Chinese goods, which was planned to take effect on 15th October, will be closely watched.

In Singapore, the Straits Times Index opened 0.4% higher today, lifted by relatively low valuation and optimism about Fed cuts and quantitative easing. The Straits Times Index is now trading at 10x trailing 12m P/E, which is 1 standard deviation below its 7-year average.

Hong Kong 50 – Cash


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