The Hang Seng Index jumped by 1.30% on Tuesday as global investors embraced a risk-on sentiment. It jumped by 1.25% to $26,040, much higher than this month’s low of H$. So, will the blue-chip Hong Kong Index continue its recovery?

Hang Seng Index jumps amid risk-on sentiment

The blue-chip Hong Kong Index rebound coincided with the performance of American indices on Monday. The tech-heavy Nasdaq 100 Index jumped by over 2% in one of the best trading days this year. Similarly, the Dow Jones and S&P 500 indices were also in the green.

This rebound also happened in other countries in Asia. Japan’s Nikkei 225 Index rose by 73 basis points, while in China, the Shanghai and China A50 rose by over 1.2%. Elsewhere, the booming KOSPI Index jumped by over 1.20%. 

This rebound was boosted by a statement by Christopher Waller and Mary Daly, who concurred that the Federal Reserve should cut interest rates in the next meeting. 

Their statement mirrored that of New York Fed’s John Williams, who expressed concerns about the labor market when advocating rate cuts in his statement on Friday. As a result, odds of a December rate cut rose to 81% on Polymarket.

The Hang Seng Index also soared after the latest Trump and Xi Jinping call in which the two leaders discussed various events. In a statement, Trump maintained that the call was highly productive and that he would visit Beijing in April next year. Xi Jinping will also have a state visit to the United States. 

Still, Trump’s statement avoided any mention of Taiwan, which Xi Jinping pressed him on. Beijing believes that reunification with Taiwan is a matter of priority. 

Top HSI Index gainers and laggards

Most companies in the Hang Seng Index were in the green on Tuesday. Xiaomi’s stock price jumped by 5.48%, while Alibaba Health Information soared by 5.06%. 

Other top gainers in the Hang Seng Index were companies like CSPC Pharmaceutical Group, Kuaishou Technology, ZTO Express, Sino Biopharmaceutical, and Alibaba Group.

Aibaba’s stock price soared by 3.50% ahead of its earnings, which will come out later today. Analysts expect that its business will continue doing well in the third quarter, helped by its cloud division.

Alibaba’s earnings come a day after the company released its main application to rival OpenAI’s ChatGPT. The app drew over 10 million users on the first day.

On the other hand, top laggards in the Hang Seng Index are companies like JD Health, Xinyi Solar, SMIC, Baidu, and Galaxy Entertainment.

Hang Seng technical analysis

HSI Index chart | Source: TradingView

The daily timeframe chart shows that the Hang Seng Index formed a double-bottom pattern at H$25,193, its lowest level on October 17 and November 21. This is one of the most common bullish reversal patterns in technical analysis.

The index remains above the 100-day Exponential Moving Average (EMA) and the strong pivot reverse point of the Murrey Math Lines at H$25,780. 

Therefore, the most likely Hang Seng Index forecast is bullish as long as it remains above the double-bottom pattern at H$25,193. If this happens, the next key level to watch will be the ultimate resistance level at H$26,560. A move above that level will point to more gains, potentially to the year-to-date high of H$27,325.

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