The Chinese stock market has had a weak session, with the real estate developer stocks benchmark retreated by more than 6% performing particularly poorly. The declines in China ended with a broader selling oressure earlier in the week first in the Asian session and now indirectly in the Europe. CHN.cash futures are already losing more than 2% and capping Friday's euphoric rebound dictated by comments from investment banks UBS and Goldman Sachs. In addition, sentiment toward emerging markets is constrained by a rising US dollar and still-strong oil. Bank of America expects yields on 10-year bonds to rise further to a 4.75% collar.
A sub-index of Chinese real estate developers fell 6.6% today, the strongest in nine months. Collapsing Chinese giant Evergrande postponed a meeting with creditors on Friday, which was scheduled to begin today. Meanwhile, the EU warned China that the bloc of countries would be more forceful in defending its economic interests (likely restrictions on Chinese exports), which also worsened sentiment. Friday's news that Washington and Beijing are forming working groups to resolve economic and financial problems gave some upward momentum, but it proved to be short-lived.
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CHN.cash futures (D1 interval) are losing more than 2% - the price failed to overcome the SMA50 average (orange line) on Friday and is currently trading below two other averages SMA200 (red line) and SMA100 (black line) - looking historically when it was below all three the supply side was definitely dominant, and it is possible that we are seeing the beginning of broader weakness this time as well. The RSI indicator has cooled to 42 points but is still far from oversold. Friday's rebound proved unsustainable, despite record foreign capital inflows to China in 7 weeks (about $1 billion).
Source: xStation5
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