Technically, it is a bit too early to say that the UST10Y has peaked. The chart pattern is beginning to look like a head-and-shoulder top formation but there is no confirmation as the yield has not broken below the neckline of the formation. In order to do that, the UST10Y needs to confirm a break below 4.35% based on the current chart pattern.
While it is difficult to gauge why the US markets are able to rebound, but the STI and the Hang Seng Index have had challenges moving higher, it maybe that the US earnings season was not a disappointment.
On the other hand, China - and by the same token - stocks in the Hong Kong market have faced challenges especially in the property sector. This is evidenced by the increased provisions that banks such as HSBC and Standard Chartered have announced for their mainland property exposures.
It is likely that the local market is likely to start a rally in December. The STI often faces a Capricorn effect where prices strengthen between Christmas and Chinese New Year. During this period, the STI may well attempt to move above its resistance area that is now established between 3,150 and 3,177.
See also: Test of STI 4,000 causes dark cloud cover; HSTECH’s corrective phase to continue
