The Hang Seng Index held steady on Monday as investors turned their attention to upcoming earnings from major Chinese companies. The index also gained after President Donald Trump ruled out attacks on Iran, which pushed oil prices lower. It was trading at 24,530, up 7.7% from its October low.
Trump rules out attacks against Iran
The Hang Seng rose a bit on Monday after President Trump said that the US would not launch more attacks against Iran. He, however, noted that the US could launch its strikes if talks fail to make any progress.
The statement was further evident that Trump was in a deep hole with no way out. Before the midterm elections, the president warned that he would launch new strikes to force the Iranians to capitulate.
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Iran, on the other, has maintained that it will not engage in any major talks unless the US implemented the memorandum of understanding (MoU). It wants the US to end the blockade, release billions of dollars in frozen cash, and recognize its control of the Strait of Hormuz.
Iran believes that it has achieved milestones during the war. Its actions led to “regime change” in Washington, where the Democrats won the midterm elections by a large margin. At the same time, its actions have prevented Trump from having a quick victory.
Brent and the West Texas Intermediate (WTI) were barely unchanged, and remain sharply lower than their October highs. These actions are beneficial to many Hong Kong-listed companies.
Top Hang Seng companies to publish their earnings
The next important catalyst for the Hang Seng Index is the upcoming earnings reports by some of its biggest constituents. Baidu, the biggest search engine company in China, will release its earnings on Monday next week. These results come at a time when its stock has plunged by over 50% from its peak.
Baidu, like Google, is facing the challenge of adapting their marketing features to the new AI era. In its earnings statement, Google said that monetizing AI search was more difficult than in the classic way.
Tencent Holdings will also publish its numbers on November 18. Like Baidu, Tencent’s stock has plunged this year. It has dropped by over 38% from its highest point last year as its growth has slowed and the cost of doing business has risen. In October, the company raised $5.7 billion to boost its investments. NetEase and Lenovo Group will then publish their results on Thursday next week.
Hang Seng Index technical analysis
Hang Seng Index chart | Source: TradingView
The daily chart shows that the Hang Seng Index has rebounded in the past few days. It moved from a low of 22,786 in October to the current 24,530.
The index has jumped above the 50-day Exponential Moving Average (EMA) and the Strong, Pivot, Reverse level of the Murrey Math Lines tool.
Therefore, the path of the least resistance for the index is upwards, with the next important target being at the Major S/R pivot point of 25,000. A drop below the Strong, Pivot, Reverse level of the Murrey Math Lines at 24,215 will invalidate the bullish outlook.
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