Hang Seng Index Bounces on Improved Industrial Profits, Ongoing US-China Talks

The Hang Seng Index rose on Monday morning as investors reacted to improved Chinese industrial profits data and ongoing US-China talks. The index gained a few points above its month-low of 24,260 points, reaching 24,665. This increase came despite the global stock market pullback due to rising oil prices.

The monthly industrial profits increase was 4.2% in August, bringing year-to-date gains to 15.7%. However, this growth is partly offset by rising energy costs. The index's rebound may be attributed to reduced Strait of Hormuz risk and ongoing US-China talks, including tariff cuts on $30 billion worth of goods.

The Hang Seng Index has formed a highly bullish chart pattern, consisting of an inverted head-and-shoulders pattern and a dragonfly doji candlestick pattern. This suggests that the index may bounce back as bulls target the important resistance level of 25,000. A move above this level would bring the resistance point of 25,600 into view.

Most companies in the index were in the green, with Netease rising by 4.42% and PetroChina, China Resources Power, China Resources Land, and China Mengniu Dairy rising over 2.7%. However, some key companies like Hua Hong Grace Semiconductor, Lenovo Group, Sunny Optical, Innovent Biologics, and SMIC were among the top laggards in the index.

The Hang Seng Index will react to upcoming macro numbers from the US, including the NFP, PCE, and consumer confidence. A shock to these numbers could lead to higher interest rates and drag risk assets globally, breaking chart support for the Hang Seng Index.