The Hang Seng Index joined other global markets in a strong rally following the decisive Democrats’ victory in the US midterm elections. It jumped by over 3%, reaching a high of 24,660, its highest point since September 28. It has now soared by over 8% from its lowest point this year.
Hang Seng Index is rising after the US midterm elections
Global stocks are rallying after the Democrats won in the House of Representatives and the Senate. In the United States, the S&P 500 and Dow Jones rose to new record highs, with companies across several sectors rising.
The same is happening in Hong Kong, where the blue-chip Hang Seng Index is in a strong rally, with gains spread across several areas.
One reason behind the rally is that the Democrats will provide checks to President Trump, who has long embraced tariffs as a policy. While the Supreme Court ruled against his universal tariffs, he has used his authority to impose levies on countries.
Investors are also buying the dip after most indices plunged before the US midterm elections. These post-election gains are common. For example, US stocks entered into a major bull run after President Trump won the election in 2016.
Stocks are also rising as investors predict that Trump will try to find his way out of the Iran war that many blame for costing him Congress. That explains why crude oil prices are in a strong downward trend.
Laopu Gold was the best-performing stock in the Hang Seng Index as it jumped by 8%. This rally was driven by the ongoing gold rally that has pushed it to $4,130. Gold is rising as crude oil prices and bond yields fall. If this trend continues, it means that the Federal Reserve may decide to leave interest rates unchanged in the next meeting.
Li Auto was the other top gainer in the Hang Seng Index as it jumped by 8.2%. Like other Chinese electric vehicle companies, Li has come under pressure this year as competition in the country escalated, leading to a substantial price war.
Meituan, a top food delivery company, rose by over 8%. Other top gainers in the fund are companies like Netease, Alibaba, Trip.com, and Xiaomi Corporation.
On the other hand, the top laggards were companies like Lenovo Group, Weichai Power, Orient Overseas, and PetroChina.
Hang Seng technical analysis
Hang Seng Index chart
The daily chart shows that the Hang Seng Index has rebounded in the past few days. This rebound started when it bottomed at 22,786. It has now soared above the 50-day Exponential Moving Average (EMA).
The index has formed an inverted head-and-shoulders pattern, a common bullish reversal sign in technical analysis. It has continued rising and is now approaching the Major S/R pivot point of the Murrey Math Lines tool.
Therefore, the index will likely continue rising as traders eye the next key target of 25,000. A drop below the strong, pivot, reverse level of the Murrey Math Lines tool at 24,218 will invalidate the bullish outlook.
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