Hong Kong’s stock index faces a crucial week or two after the price was dragged through a key support level.
The level around 18,150 provided support in the March slump and also marked the low in 2016.
The HK50 is now trading at the 17,808 level as the week gets underway, and traders will have to look for any clue that a relief rally is coming.
That would require a break above the 18,150 mark again and will require some change in investors’ sentiment as global stocks continue to get pummelling.
The problem for investors is that the breach of the support level was driven by fundamentals, with the Federal Reserve hiking rates by another 0.75% and signalling that higher rates were to be expected into the year-end.
"If you were to compare this rate hike cycle to previous rate hike cycles going back to 1983, the Fed has never raised rates this much in this short time period," David Chao, global strategist at Invesco, told CNN.
"It is becoming increasingly difficult for the US to avoid recession given the Fed's forceful and rapid 'rate hikes," he added.
"The geopolitical backdrop, the China slowdown story, the potential for energy rationing in Europe, the strong dollar, and fragile-looking domestic US equity and housing markets point to clear recession risks," said analysts at ING bank last week.
With the global central bank complex piling on extra rate hikes, it is hard to see what will spark a significant rally in stock markets.