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Why Alibaba Stock Is Up By 24% Today

Key Insights

  • Chinese stocks enjoy strong rebound as the country promises to provide support to markets and economy.

  • Traders are willing to bet that Alibaba stock will rebound from levels that were last seen back in 2016.

  • A move above the $95 level will push the stock towards the psychologically important $100 level.

Alibaba Stock Rallies On Hopes For Government Support

Shares of Alibaba gained strong upside momentum after China’s Vice Premier Liu He promised to provide support to markets and economy. Other Chinese stocks, like NIO or Baidu, have also enjoyed strong demand today.

In recent weeks, Chinese stocks have been under strong pressure amid fears that China may provide too much support to Russia, which will lead to sanctions on the country. However, China has so far managed to navigate the challenging diplomatic environment without big problems.

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China’s problems on the coronavirus front have also served as a bearish catalyst for Chinese stocks. At this point, it is not clear whether China will be able to hold to its previous “zero tolerance” policy towards coronavirus.

In this environment, the promise of support from a highly-ranked official was sufficient enough to push Chinese stocks away from their recent lows as traders were already searching for bargains after a massive pullback.

What’s Next For Alibaba Stock?

Alibaba shares are currently trading at levels that were last seen back in 2016. China’s crackdown on tech companies pushed the stock from the $319 level to the $73 level in just one and a half year.

Not surprisingly, this pullback attracted speculative traders who are willing to bet that the company’s stock was oversold. The government’s willingness to support Chinese markets may serve as a long-term positive catalyst for Alibaba and other Chinese stocks.

At the same time, the traders will stay focused on the trajectory of U.S. – China relations as rising tensions may ultimately lead to sanctions on China or force Chinese companies to leave U.S. – based exchanges.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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