China A50 Index (Intraday) Rallied After Trump's Speech and PMI Data
Medion Jim June 1, 2020 12:15 PM
In response to China imposing a controversial national security law on Hong Kong, U.S. President Donald Trump announced that preferential trade treatment for Hong Kong would be ended.....
In response to China imposing a controversial national security law on Hong Kong, U.S. President Donald Trump announced that preferential trade treatment for Hong Kong would be ended. He also said sanctions would be imposed on Chinese and Hong Kong officials involved in eroding the city's autonomy. However, after Trump's speech, U.S.'s S&P index returned to positive territory and closed higher with a 0.5% gain. The price reaction would mean that Trump's speech is in line with the market's expectation.
On the economic front, China's official Manufacturing PMI fell to 50.6 in May (51.1 expected) from 50.8 in April, while Non-manufacturing PMI climbed to 53.6 (53.5 expected) from 53.2. Meanwhile, Caixin China Manufacturing PMI rose to 50.7 in May (49.6 expected) from 49.4 in April. Above data shows that China's economic activities returned to moderate expansion as all PMI data are above 50. Investors would expect the continuation of economic recovery after the outbreak of COVID-19.
On the 1-hour chart, the index jumped and broke above the declining trend line drawn from March top. Besides, the prices stand above the 61.8% retracement level. Both signals would suggest that the correction wave from March top is possibly ended.
Bullish readers could set the support level at 13410 (the previous high) and resistance levels at 13700 (the March top) and 13890 (127.2% retracement level).
Sources: GAIN Capital, TradingView.
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