Dow, Nikkei 225 and Hang Seng retreat as China fails to unveil new stimulus
Dow hit by oil prices, higher yields and China news
Positive momentum has ebbed away here, and having held near highs for around two weeks the Dow Jones index has finally slipped lower.
Monday’s losses have taken the price back below 42,000 once more, and further declines head towards the previous high at 41,382. Below this comes the 50-day simple moving average (SMA), currently at 41,042.
A close back above 42,500 would see the buyers reassert control in the short-term.
Nikkei 225 falls on China disappointment
The Nikkei 225, like much of Asia overnight, was unable to escape the wave of selling that followed the latest update from China’s government.
This failed to unveil any fresh stimulus measures, leading to drops for the Hang Seng and others, and taking the Nikkei lower as well. It has given back most of the gains made on Friday following the payrolls report, though it is holding above the 200-day SMA (38,627) for the time being.
A close back below the 200-day SMA might then bring trendline support from early August into view.
Hang Seng drops sharply
The absence of any new stimulus measures prompted a swift drop on the Hang Seng, which has remained open all week while other Chinese markets have been closed.
The huge gains made in the second half of September were highly vulnerable to profit-taking, and the lack of new concrete policies led to a wave of selling, though the index is still firmly up on its mid-September levels.
The April 2023 high at 20,877 has been defended for now, and below this is the August 2023 high at 20,370.