Asian shares tentative after Fed minutes, Hang Seng charts death cross

  • Asian stocks are trading mixed as Fed minutes confirmed reluctance on the part of members to start an easing cycle. 
  • Hang Seng's 50-day average of price has crossed below the 200-day average, confirming a death cross. 

Asian stocks are restricted to tight ranges at press time with Hong Kong's Hang Seng index flashing a long-term bear market signal.

As of writing, Japan's Nikkei is down 0.12% and Australia's S&P/ASX 200 is adding 0.35%. Stocks in New Zealand and South Korea are also flashing green while the Shanghai Composite index is shedding 0.18%.

Hong Kong's Hang Seng index is currently down 0.80%. Notably, its 50-day moving average (MA) has crossed below the 200-day MA. That is the first death cross (bearish crossover) since July 2018.

According to the technical analysis theory, the death cross is an indicator of a long-term bear market. The study, however, is based on moving averages, which are lagging indicators. So, the death cross has limited predictive powers at best

Fed reluctant to start rate-cutting cycle

The market is pricing at least 100 basis points of easing by the end of 2020. The US Federal Reserve, however, is reluctant to signal the start of an easing cycle.

The minutes of the July meeting released on Wednesday showed the policymakers were united in signaling the policy is not on a preset easing course.

Further, President Trump on Wednesday said that he is not looking to cut payroll taxes, dashing the fiscal stimulus hopes.

Even so, the US stocks managed to eke out gains with the S&P 500 futures gaining 0.82%. As of now, however, the futures on the S&P 500 are currently reporting a 0.10% drop.

Looking forward, a lot depends on what Fed's Chair Jerome Powell says during his Jackson Hole speech on Friday.

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