Bearish sentiment is again looming over risky assets as US and China are moving closer to a massive trade war after President Trump announced US$50 billion tariffs in Chinese imports, which immediately received hard response from the counterpart over the weekend.

US indices opened lower on Friday and closed marginally lower. Asian future markets indicates mixed opening, with China, HK, Taiwan and Indonesia closed for holiday today.

Hang Seng Index and Shanghai Composite slumped last Friday as investors were disappointed by macro-readings, which showed signs of cooling down in world’s second largest economy. Concerns over trade war between US and China escalated further as President Trump approved US$50 billion tariffs in Chinese imports in several key sectors in an attempt to narrow down trade deficits. Market sentiment remained fragile in Asia as trade tension dominates, especially when the trade outlook is full of uncertainty.

Technically, Hang Seng Index has been trading in a wide range between 30,100 (23.6% Fibonacci Retracement) and 31,800 (61.8% Retracement) over the past four months. The upper and lower boundary proved to be strong resistance and support in the near term. SuperTrend (10,3) remains in bullish set up although 10-Day and 50-Day Simple Moving Average give little direction of market movement. Investors should watch carefully on support level 30,100 - breaking down of which could potentially lead to further downsides.

Singapore’s Straits Times Index lost over 40 points on Friday, with banking, off-shore & marine and property sectors getting hit the most. Weak sentiment across Asia and mounting concerns over Fed interest rate hike dampened investors’ confidence, resulting in profit-taking activities. Technically, the immediate support level can be found at 3,350 area, breaking down below which could lead to further downside towards the next support level at 3,200 area.

Hong Kong 50 - Cash

US dollar June contract surged to 94.9 area – a level not seen since October 2017, following Fed’s decision to raise rate last week. A strong US dollar is accompanied with nuted equity prices, with Dow, Nasdaq and S&P 500 indices closed -0.34 %, -0.19% and -0.1% respectively.

USD/JPY climbed to 110.8 area as dollar strengthened. Its immediate resistance could be found at 111.30 area, which is a key Fibonacci level. Its near-term trend remained bullish with 10-Day Simple Moving Average line and SuperTrend (10, 1.5) both sloping upward.

EUR/USD has found some support at 1.156 area after but immediate trend has turned bearish as indicated by bearish SuperTrend (10,1.5) and 10-Day Simple Moving Average. Momentum indicator MACD has formed a bearish crossover, suggesting more downside should it breakdown the key 1.156 level.

Crude oil price tumbled over 3% as OPEC members were clearly having dissent on production freeze in a debate in Vienna on Friday. Technically, crude oil price has entered into bearish trend with its SuperTrend (10,2) and 10-Day SMA both sloped downwards.

Crude Oil Brent - Cash

By Margaret Yang in Singapore

 

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