China-based stocks took a hit on Wednesday as the market awaited the Federal Reserve’s decision on interest rates at 2:00 p.m. EDT.
The Hang Seng Index closed up 1.79% at HKD 336.80 leading to this Alibaba Group Holdings, Ltd BAB and Baidu, Inc BIDU will open lower and continue falling intraday. A number of other Chinese blue-chip stocks tumbled in tandem.
The macro outlook: Data published by the consumer price index US Department of Labor Last week, August inflation came in above expectations despite four separate rate hikes in March, May, June and July. The news sparked fears that interest rates could be hiked by 0.75% or even a full percentage point.
The prospect of another big rate hike fueled fears that liquidity could dry up in China’s markets. Unlike the US, the Chinese government is in the process of boosting the economy through quantitative easing.
The yuan also fell to a 26-month low amid ongoing strict COVID-19 controls in China.
The ongoing COVID lockdowns, coupled with ongoing and rising geopolitical tensions, could also prompt the tech giant apple inc According to a report, AAPL will begin moving part of its iPhone production to India within the next three years.
Also Read: The Fed likely to hike rates to levels not seen since the Great Recession: What you need to know ahead of Wednesday’s decision
The technical outlook: For technical traders, Alibaba and Baidu are likely to continue lower as shares have traded in downtrends since Aug. 26 despite occasional and expected rallies.
On Wednesday, en route to the Fed’s decision, both stocks wicked lower to print possible hammer candlesticks, suggesting a spike could be in the offing depending on how the market reacts when the news is printed.
For traders interested in using technical analysis to guide their investments, there are a variety of tools including those from Ninja Trader.
Ninja offers advanced charting and other products as part of its trading suite designed to help investors navigate the markets. The platform allows its members to automate and execute trades and test trading ideas through simulation.