Here’s why the Hang Seng Index is soaring by 1.50% today

The Hang Seng Index rebounded by over 1.5% on Thursday, mirroring the performance of its American peers like the Dow Jones, S&P 500, and the Russell 2000 indices. It also rose as China’s political leaders met to deliver the economic goals. It was trading at H$25,600, up substantially from the year-to-date low of $24,975.

China National People's Congress 

The Hang Seng Index rose as investors reacted to the ongoing National People's Congress in Beijing. This is a closely-watched meeting where officials deliver the goals for the year.

China now targets an economic growth of between 4.5% and 5%, the least ambitious growth rate since 1992. This is happening as officials deliberately pivot towards boosting domestic demand.

China also expects to move from deflation this year, with the average CPI growth moving to 2%. Also, it expects to have a budget deficit target of 4%, with the defense target moving to 7%.

Still, China warned that the rising pressure at home and abroad may hurt the economy. Some of the top challenges are the ongoing war in Iran, which has pushed crude oil prices to over $80 this week. The other major challenge is the United States, which is expected to impose a global tariff of 15% later this week.

The Hang Seng Index also jumped as investors reacted to new reports that Iran had reached out to the United States. According to the New York Times, officials reached out to the US on Sunday. The report, however, noted that the request was not taken seriously by Washington.

The report led to a strong rebound of stocks and other assets. The Dow Jones Index jumped to 238 points, while the Russell 2000 jumped by 30 points. 

Other Asian indices also rebounded, with the Nikkei 225 Index rising by 2%. The Shanghai Composite Index jumped by 0.85%, while China A50 rose by 1.30%. Futures tied to European indices like DAX, CAC 40, and FTSE 100 also rose.

Most Hang Seng Index companies were in the green on Thursday. Sino Biopharmaceutical, AIA Group, Wharf Real Estate, Innovent Biologics, HSBC, China Hongkiao, and CITIC stocks jumped by over 3%. Other top gainers were companies like Hang Lung, Longfor Group, and CK Hutchison.

On the other hand, top indices like Trip, Netease, China Resources Beer, Meituan, Alibaba Group, and JD Health were the top losers.

Hang Seng Index technical analysis 

The daily timeframe chart shows that the Hang Seng Index peaked at $28,052 on January 29 and then resumed the downtrend. 

It dropped to a low of $25,060, which was notable as it coincided with the lowest level in October, November, and December last year. It is common for an asset to bounce back when it moves to a crucial support level.

The index has moved below the 50-day and 100-day Exponential Moving Averages (EMA). Also, the Relative Strength Index (RSI) has moved below the neutral point at 50.

Therefore, the most likely scenario is where the index resumes the downtrend in the near term. More downside will be confirmed when it moves below the key support level at $25,060. A drop below that level will point to more downside, potentially to the key support level at $24,000.