The Hang Seng Index advanced on Monday, buoyed by China's latest industrial profits report, even as global markets faced pressure from rising crude oil prices. The index climbed to 24,665, slightly above its monthly low of 24,260, and technical indicators now point to a potential upward move.
China Industrial Profits Show Modest Growth
Data from China's statistics agency revealed that industrial profits increased by 4.2% in August, bringing the year-to-date gain to 15.7%. While the monthly figure was the weakest of the year, partly due to elevated energy costs, it still provided some support to investor sentiment.
The index's resilience came despite a jump in oil prices, with Brent crude rising to $98.54 per barrel and West Texas Intermediate (WTI) reaching $93.50. This spike followed President Donald Trump's rejection of Iran's proposals regarding the Strait of Hormuz. Iran had presented seven demands, including the release of frozen funds and an end to US threats, but talks are expected to continue this week, according to a statement to Axios.
Rising oil prices typically weigh on the Hang Seng Index because they increase costs for Chinese companies and can fuel inflation, potentially prompting the Federal Reserve to raise interest rates. However, the index managed to hold its ground on Monday.
Market Reactions and Key Movers
Most constituents in the index traded higher. Netease, a major gaming company, rose 4.42%, while PetroChina, China Resources Power, China Resources Land, and China Mengniu Dairy each gained over 2.7%. Other notable advancers included ICBC, BOC Hong Kong, and Nongfu Springs.
On the downside, Hua Hong Grace Semiconductor, Lenovo Group, Sunny Optical, Innovent Biologics, and SMIC were among the laggards.
Investors are now looking ahead to US economic data, including non-farm payrolls, the PCE price index, and consumer confidence figures, which could influence global markets.
Technical Outlook: Inverted Head-and-Shoulders Pattern
From a technical perspective, the Hang Seng Index appears poised for a rebound. It formed a dragonfly doji candlestick on Friday, characterized by a small body and a long lower shadow, indicating buying pressure. More importantly, the index has formed an inverted head-and-shoulders pattern, a classic bullish reversal signal. It also remains above the lower band of the Bollinger Bands indicator.
If the pattern plays out, the index could target the key resistance level of 25,000. A breakout above that level would bring the next resistance at 25,600 into focus.
This article is for informational purposes only and does not constitute financial advice.
