Chinese equities rebounded sharply from recent lows as investors welcomed reports that Fitch Rating had revised upward its 2023 GDP forecasts for China to 5% from 4.1% previously, amid an acceleration in consumption and overall activity after the government eased COVID restrictions. Moreover China's CDC announced today that the chances of a new wave of infections in the coming months are relatively low. Earlier in the week, Chinese President Xi said Beijing will strive to achieve improvement in economic operations and stabilize expectations. Moreover, concerns about a flare-up in geopolitical tensions between China and the US started to fade. President Biden said relations with China have not taken a big hit, while US Treasury Secretary Yellen still plans to visit Beijing, however no details were provided.
At the end of January CHNCOMP pulled back from major resistance at 7765 pts, which was indicated by the Momentum indicator. This level is marked with 38.2% Fibonacci retracement of the downward wave started in February 2021 and as long as price sits below, main sentiment remains bearish. Nearest support to watch can be found at 6700 pts which coincides with 23.6% retracement and 200 SMA (red line).
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CHNComp, D1 interval. Source: xStation5
