Chinese equities were top underperformers in the region during the final Asia-Pacific session of the week. HSCEI futures (CHN.cash) were dropping as much as 2.5% lower at one point earlier today and broke to the lowest level in 10 days. Recovery move on the Chinese equities that was launched at the end of January 2024 seems to be running out of steam.
Sentiment on the Chinese stock market is deteriorating amid lackluster corporate earnings. Chinese EV manufacturers disappointed with outlook, while insurer and investment holdings showed weaker-than-expected results this week. This raises concerns over next week's earnings reports from major Chinese financial institutions and property developers.
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Create account Try a demo Download mobile app Download mobile appAlso, Chinese authorities seem to be loosing grip on yuan, with PBoC lower the daily reference rate for yuan by the most since early-February. USDCNH was allowed to break above 7.20 mark and is trading at the highest level since mid-November 2023.
Taking a look at CHN.cash chart at H4 interval, we can see that the index pulled back to the 23.6% retracement of the upward move launched in late-January following a failure to break above the 5,950-6,000 zone earlier this month. Index threatened to break below the support zone near 23.6% retracement, but it looks like bulls have managed to defend the area. In case we see a recovery from this area, the first potential near-term resistance levels to watch are 5,840 pts swing area and 5,950-6,000 pts resistance zone.
Source: xStation5
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