ASX 200 Hang Seng Analysis: Bears Shaken Out From Wall Street Surge

 

Wall Street’s epic rally on Wednesday sparked a strong rebound across Australasian futures markets. With the Nasdaq logging its fourth-best day in history—and its second most volatile—the Nikkei was able to reverse mid-week losses of nearly 15% and now sits almost 2% higher from Friday’s close.

 

ASX 200 futures (SPI 200) have also recouped all early-week losses and are now approximately flat for the week—a win, considering the index’s 10% weekly range puts it on track for its most volatile week in five years.

 

  

The Hang Seng hasn’t fared quite as well, still nursing weekly losses of around 15% heading into today’s open. However, it had clawed back roughly a quarter of those losses, with a high-to-low range of 20%.

 

Overall, it has been a stunning turnaround for sentiment, and one that matches the surprise of Trump’s own U-turn.

 

 

ASX 200 futures (SPI 200) technical analysis

While the ASX 200 sits flat for the week, investors who weathered the volatility may be breathing a sigh of relief. The index is on track to form a bullish pinbar, and assuming volatility remains contained through the week’s close, it seems likely we’ll finish with that pattern intact. The fact that price action held above the December low suggests demand is present at that level, while the recovery above both the 200-week SMA and January low adds conviction that a meaningful bottom may be forming. A bullish divergence is also appearing on the weekly RSI (2).

 

The daily chart shows the ASX 200 also rallied from the December 2023 VPOC (volume point of control). Yet the rally stalled near the 20-day SMA before closing back below the March low. And since volumes peaked on Monday—the final bearish candle of the recent selloff—and have since declined, the move higher appears to be driven by short-covering.

 

• I suspect we may see a further retracement before bulls attempt to push toward the 8,000 handle near a weekly VPOC.
• The 7,600 level could offer support ahead of the next leg higher.

 

 

Hang Seng futures technical analysis

Like the ASX 200, Hang Seng futures staged a solid rebound from support levels. In this case, the Hang Seng rallied from the 2024 trendline and now trades back above both its 50- and 200-day SMAs. It also managed to close the day above the 20,000 handle, and the market is finding bids again just after the open.

 

Traders likely have the 21,000 level in their sights now, near the 61.8% Fibonacci retracement. A break above that would bring 21,500 into focus, just beneath the November high.

 

However, similar to the ASX, daily volumes are declining as prices rise—suggesting the move may be driven by short covering rather than fresh bullish conviction. And with the Hang Seng still the regional underperformer (not helped by Trump’s move to hike tariffs on China to 125%), its upside may remain capped unless Beijing announces fresh stimulus or counters Washington’s latest trade measures.

 

 

 

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge