The Asian markets are expected to have a mixed opening, with the Nikkei down by 0.80%, the ASX up by 0.18%, and the KOSPI declining by 0.70%. This is influenced by a robust US jobs report that typically fosters economic optimism, but risk sentiment appears to be waning on Wall Street.
Seasonal volatility and geopolitical uncertainties in the Middle East, rising Treasury yields, and a strengthening US dollar may lead to cautious trading behavior among investors.
Chinese equities have recently experienced a significant rally, reaching their highest levels since February 2022. This surge is fueled by short-covering activities, a reset in valuations, and aggressive buying from hedge funds and institutional investors.
The Hang Seng Tech Index has shown resilience, supported by upward trendlines and its 20-period moving average. Market analysts recommend buying on dips, as the recent formation of higher highs could indicate a bearish divergence in the relative strength index (RSI) and moving average convergence/divergence (MACD).
The lack of significant macroeconomic data at the start of the week may keep some investors on the sidelines. Geopolitical risks in the Middle East, the surge in Treasury yields, and the strengthening of the US dollar contribute to the prevailing risk-off sentiment. Investors should remain vigilant and responsive to market movements, particularly in light of the technical indicators suggesting potential volatility.
The performance of the Hang Seng Tech Index will be closely watched as a barometer for broader market trends in the region. Investors need to balance the prospects of policy support against external risks that could influence market stability.