The Hang Seng Index Futures (HKEX: HSI) have opened the new month as they closed the previous, slumping over 0.4% during the session to add to the 8.08% slump achieved in the previous month as concerns of China’s recovery continue to weigh on the index futures.
The Caixin manufacturing PMI data, which showed that the manufacturing activity for May expanded to 50.9 against the expectations of a flat 49.5, and the US debt ceiling progress helped to cap the massive selloff triggered by the NBS manufacturing PMI data, which showed that the manufacturing activity declined 48.8 from 49.2, against the expectation of a slight expansion to 49.4. The focus now shifts to the US economic calendar, which includes the manufacturing PMIs today and the significant Nonfarm Payrolls tomorrow. The data could help gauge the potential direction of the Fed’s monetary policy path.
The moving averages suggest that the market is currently bearish towards the index futures, with both the 50-day (50-EMA) and 20-day (20-EMA) moving averages firmly above the price action. With the price action’s pullback towards the descending channel faltering at the 20-EMA (orange line), the bears could be confident to continue their trend lower, with the 17948 support level acting as a significant level. The fall of the level could trigger another selloff towards the 14th of November 2022 low of 17544.
The bulls’ charge higher could be a bumpy ride, with the 20-EMA and the support of the channel acting as immediate barriers to the charge higher. A sustained break above the barriers would bring the 50-EMA (blue line), which could be a level of interest for the market. A break above the 50-EMA could trigger a run towards the 18847 and 19362 resistance levels.
The market’s focus now shifts to the economic calendar of the world’s largest economy, with the world’s second-largest economy’s equities firmly on the back foot. The index futures could be hoping the economic data could help the decline, with the bears hoping the data release would help boost the push towards the 17948 support level.
Sources: TradingView, Reuters, CNBC.
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