A decline in energy prices ahead of OPEC undermined Hong Kong stocks, but the overall tone was slightly more positive with stabilisation in the dollar and yields helping to underpin sentiment.
US equity markets were unable to sustain their best levels on Tuesday, but did close in positive territory with the S&P 500 index advancing 0.13% on the day. There was a firm overall trend in regional markets, although there was still an important element of caution.
Weaker oil markets again had a significant impact in curbing support for the Hong Kong index.
The yuan was fixed slightly stronger on the day, the third successive daily advance, which helped ease concerns surrounding the risk of mainland instability. There was, however, a significant decline in the mainland MNI consumer confidence reading to the lowest level since August, which triggered some caution surrounding the outlook for consumer demand.
The dollar’s overall strength was also an important factor in curbing optimism surrounding the overall growth outlook even with a slightly weaker US currency on Tuesday providing some support.
The Hang Seng index moved significantly higher at the market open, repeating the recent pattern, although the gains quickly reversed with the index edging into negative territory by the session break. Rally attempts during the afternoon session faded with modest selling in the final hour of trading.
At the close, there was a gain 52.7 points and 0.23% at 22,789.77, although the Hang Seng Enterprises index fell 0.08% on the day. The Utilities sector surrendered some of the gains seen the previous day, while other sectors were in positive territory as the Property sector advanced 1.48%.
Oil prices moved higher after the Hong Kong market close. Trends in oil prices and the dollar will continue to have an important impact on equity markets following Wednesday’s OPEC meeting with the risk of notably volatile trading conditions. A sustained gain in oil prices would provide some net support.
Hang Seng 4H Chart