Is that last weekday correction, or we have gone through the worst conditions
After several days of falling in a row, on the last day of the week, Asian stocks closed higher with about 3% in Hong Kong, 1.6% in Shanghai, and 1.3% in Japan, while this positive sentiment moved to the European market as well with more than 1% gain on average. Today, banking decisions in China and Retail sales in the UK were the main market drivers.
In China, the central bank cuts the five-year loan prime rate (LPR) by 15 basis points to support the slowing economy. With increasing global geopolitical risks, the latest Covid-19 breakout also doubled the pressures on Chinese Stock Markets in the last weeks, which was the reason to encourage the officials to have more supportive policies. The Chinese economy does not have inflation issues as we can see in Europe and United States; therefore, holding the dovish policies there, is still possible.
Later at the beginning of the EU season, UK retail sales showed a 1.4% monthly gain in April. Compared with a 1.2% decline in March, it was excellent. However, complex numbers show that this growth was thanks to higher spending on alcohol, tobacco, and more robust clothing sales. None of them can confirm the positive consumer sentiment. These fears should be more tangible with GfK comments and data that show UK consumer confidence is now at an all-time low, even ignoring the incredible growth in the labor market. Add the 2.8% increase in the factory gate prices in Germany; then, it can become a little harder to maintain a positive outlook in the last few hours.
From the technical point of view, the HK50 price moved above 20 DMA and trying to cross the trend line. However, it is not confirmed yet. The primary resistance is sitting at 22683. To see the Bull Run in the market, we have to see the prices above 22683 and MACD histograms above the 0-line; otherwise, bears are still there, and these corrections are just crating the selling opportunity.
