The Hang Seng index is up by almost three percent today as investors remain optimistic about the new wave of coronavirus in China. The index is trading at $24,426, with all companies being in the green. Other indices in Asia, including the Nikkei 225 and Shanghai have jumped by 4.8% and 1.48% respectively.
The Hang Seng rose today because investors believe that China will repeat its “magic” in Wuhan and beat the virus. This is after a new cluster of coronavirus illness was discovered in Beijing.
In response, Beijing has started a large scale testing process for all people who visited the Xinfadi market and their families. The test that is being administered is a nucleic acid testing, which is known for its effectiveness. Also, the city has announced that it would restrict people with high risk of contacting the virus from leaving the city. In addition, the government agreed to provide market supplies and maintain stability in the market.
Analysts believe that these strict measures will help prevent the disease from spreading and boost confidence in the market. In total, 106 people have been confirmed.
The rally of Hang Seng also happened on a day in which Carrie Lam moved to assure people in Hong Kong that the security law was in their interest. She also cited a recent survey that showed that the law is protected by more than 3 million people in the city.
Meanwhile, all companies in the index are in the green today. The best performer is Want Want China, whose shares rose by more than 8%. It was followed by Sunny Optical, Citic Pacific, PetroChina, AAC Technologies, and Wharf Real Estate.
On the other hand, the laggards were CLP Holdings, Ping An Insurance, Bank of China, and HK & China Gas.
Download our Q2 Market Global Market Outlook
On the four-hour chart, the Hang Seng moved above the 50-day and 100-day exponential moving average and above the 38.2% Fibonacci retracement level at $24,223. At this point, the outlook of the Hang Seng is neutral. A sustained move above the 38.2% Fib, will see the index continue to rally as bulls attempt to test the 50% retracement at $25,168.
On the other hand, another move below the 38.2% retracement will mean that bears are in control. As such, they will attempt to move to the next support at $23,683.