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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Asia Day Ahead: HSI struggles, while selling pressures for Nikkei 225 abate

The Asian session looks set for a more subdued start, with Nikkei +0.18%, ASX -0.13% and KOSPI -0.02%.

HSI Source: Getty

Asia Open

The Asian session looks set for a more subdued start, with Nikkei +0.18%, ASX -0.13% and KOSPI -0.02%. While we have a positive handover from Wall Street, some gains were pared into the later half of the session, while the VIX ended the day up 5.3%, in what should generally be an inverse relationship with the indices. That may reflect some near-term caution amid the current risk rally.

The aftermath of the Donald Trump’s assassination attempt over the weekend saw the US dollar firming by 0.2% and longer-term Treasury yields higher, likely as a reaction to the increased odds of a Trump presidency. That may potentially cap some gains in the Asian session today, while sentiments continue to digest the slew of weaker economic data presented in China yesterday. You may read more on the details here: https://www.ig.com/sg/news-and-trade-ideas/mixed-front-in-chinas-economic-data--hsi-edging-lower-240715

Chinese equities were broadly lower yesterday, with downside surprises in recent data raising more doubts on its recovery. The Hang Seng Index (HSI) was down 1.5% in yesterday’s session, but one may still argue that a near-term downward trendline support may still be on watch. Its daily relative strength index (RSI) is back at its 50 level, which may have to see some defending ahead.

Hong Kong HS50 Cash Source: IG charts

Look-ahead: US retail sales

Economic data ahead may leave the US retail sales in focus. Current expectations are pointing to a more subdued state for US consumers, with June retail sales to turn in flat month-on-month, down from previous 0.1%. That may continue to reinforce market expectations for a September rate cut from the Federal Reserve (Fed).

Overnight, Fed Chair Jerome Powell continued to lay the groundwork for upcoming policy easing, acknowledging that recent inflation progress “add somewhat to confidence” that inflation is on track to return to target.

Recent dip in Nikkei 225 index on watch for some defending

Following a 3% retracement over the past week, the Nikkei index is attempting to stabilise around the 41,160 level, which will have to see some defending from buyers. This is because on the weekly chart, a bearish shooting star candlestick is being presented last week and any close below last week’s low may potentially draw technical sellers to weigh on the index further in the near term.

At least for now, selling pressures seem to be abating, marked by the smaller red candles. Its daily RSI has also eased from previous overbought conditions into more neutral territory. On the upside, the recent high at the 42,511 level will be on watch as resistance to overcome. Should the 41,160 level be broken down, the 39,500 level may be on watch for any formation of a new higher low, where an upward trendline support may stand.

Japan 225 Source: IG charts

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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