Trouble ahead? Hong Kong (HSI) stock market looks bearish

The “trade war” waged by US President Donald Trump against the United States’ major economic partners, especially China, seems to increasingly impact foreign stock markets.

While Wall Street reached new highs recently, the China stock market lost almost USD 1.000 billions YTD and Cyceon found out that the technical analysis of the monthly charts of the Hong Kong Hang Seng Index (HSI) shows potential for consolidation.

In the meantime, China exports growth slowed and the turnover of the Shanghai stock exchange shrank to 4-year low, possibly an indication of a loss of investors’ interest in the Chinese market; at least for some time.

This looks like a warning sign similar to the one observed in 2015 but for different reasons.

The Dollar (USD) at the heart of stock market and Trump’s near future

The S&P-500 index reached a new record high on August 21, 2018 at 2,862.96 points after equaling its longest historical uptrend.

While the bullish cycle of US stock markets – and more generally European markets, apart from the sovereign debt crisis in 2011 – is now as long as that observed from November 1990 to March 2000 with 3,452 days, the continuation of such a long-term trend will depend more than ever on the dollar (USD) and the policy of the US Federal Reserve (Fed).

Like President Donald Trump, some investors are worried about a further weakening of the dollar following the policy of interest rate hikes planned by the Fed. Confident in the economy and given the rising inflation in the United States as in most developed countries, the Fed should not significantly change its objectives.

In Washington DC, the Trump administration seems eager to avoid any bump, even minimal, on that long road of good figures for stock markets and economic growth before the mid-term elections scheduled for November.