Hang Seng Index Climbs on Stimulus as the Nikkei Drops on BoJ Bets – Weekly Recap

US Equity Markets Extend Weekly Gains on Upbeat US Data

US equity markets advanced in the week ending November 29, extending their gains from the previous week. The Dow climbed 1.39%, while the Nasdaq Composite Index and the S&P 500 advanced by 1.13% and 1.06%, respectively.

US Economic Indicators Boost Bets on a ‘No Landing’

Key US Economic indicators, including personal income/spending and jobless claims, signaled a robust US economy.

Better-than-expected personal income and spending trends signaled stronger private consumption. Accounting for above 60% of the US GDP, rising private consumption could bolster the US economy.

Tight labor market conditions also signaled a likely rise in consumer spending. Initial jobless claims remained at their lowest level since May 2024, reinforcing optimism about consumer spending.

The chances of a December Fed rate cut increased in the week despite the Core PCE Price Index rising in October, also supporting demand for riskier assets.

China Stimulus Speculation Offsets Trade Concerns

This week, Trump raised the prospect of US tariffs, threatening tariffs on China, Canada, and Mexico. Concerns about Trump pushing for a decoupling from China also fueled market uncertainty.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently remarked on Trump’s decoupling plans, saying,

“Trump will be pushing on decoupling more generally. There will be export controls, restrictions on the trade of science and technology, and a push for the repatriation of profits. All of that can be even more negative than tariffs.”

How can China counter US tariffs?

China could move production overseas to circumvent US tariffs, with ASEAN countries possible options. More importantly, Beijing may roll out more stimulus measures, targeting domestic consumer consumption to bolster the Chinese economy.

Is Beijing preparing for bold measures to boost consumer demand and counter US tariffs?

On Thursday, speculation about further stimulus measures intensified. The focus turned to December’s Central Economic Work Conference. Investors expect the introduction of measures to boost consumer spending.

Expert Views on US Tariffs on China

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked on Trump’s latest tariff threat, saying,

“Whether China will stop the rollover of the 6 month-long tariff exemptions to the US since 2019 will be crucial to understand whether China will retaliate against Trump’s incoming tariffs. My guess is that China will not, at least not now, since Trump’s announcement has been quite moderate for China (only 10% additional tariffs instead of 25% for Mexico and Canada).”

Lower-than-expected tariffs on China and expectations for further stimulus measures from Beijing drove demand for Hong Kong and Mainland China-listed stocks.

Hang Seng Index and Mainland China Equity Markets Rise on Stimulus Hopes

The Hang Seng Index broke a two-week losing streak, gaining 1.01% in the week ending November 29. Rising hopes for stimulus measures from Beijing countered US tariff fears. Real estate and tech stocks contributed to the weekly gains.

The Hang Seng Mainland Properties Index ended the week up 0.76%, while the Hang Seng Tech Index rallied 2.53%. Tech giants Baidu (9888) and Alibaba (9988) partially reversed losses from the previous week, advancing by 6.07% and 3.66%, respectively.

Mainland markets also benefited, with the CSI 300 and the Shanghai Composite advancing 1.32% and 1.81%, respectively.

Commodities: Gold Dips on Easing Geopolitical Tensions

Commodity markets had a mixed week. Iron ore spot ended the week up 1.23% on optimism toward China’s economic outlook. However, easing geopolitical tensions dampened demand for gold, which slid by 2.41%, ending the week at $2,650.

ASX 200 Hits Record High

Australia’s ASX 200 followed US equity market trends, rising 0.51% in the week ending November 29. Significantly, the Index stuck to an all-time high of 8,477 before easing back to close at 8,436.

Mining and tech stocks offset losses across the banking, gold, and oil sectors.

The S&P/ASX All Technology Index jumped by 3.21%, while mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) advanced by 1.02% and 0.90%, respectively. Higher iron ore spot prices drove demand for mining stocks.

However, ANZ (ANZ) and National Australia Bank (NAB) slid by 3.38% and 2.42%, respectively. RBA Governor Michele Bullock poured cold water on near-term rate cut bets, impacting demand for banking stocks. A delay to RBA rate cuts could dampen credit demand, potentially weakening bank earnings.

Nikkei Index Slips Amid Yen Strength

In the week ending November 29, the Nikkei Index slipped by 0.20%. Tokyo inflation figures for November fueled bets on a December Bank of Japan rate hike, boosting demand for the Japanese Yen.

The USD/JPY slid by 3.23%, ending the week at 149.707, impacting demand for Nikkei Index-listed export stocks. A stronger Yen adversely affects company earnings from overseas, potentially impacting company earnings and stock prices.

Nissan Motor Corp. (7201) was the main contributor to the weekly loss, tumbling 11.67% in the week. Toyota Motor Corp. (7203) and Honda Motor Co. (7267) saw weekly declines of 4.24% and 5.21%, respectively.

Outlook: Tariffs and Stimulus in Focus

In the coming week, US tariff-related news will continue to draw interest. However, investors should monitor stimulus-related updates from Beijing. November’s private sector PMI data from China further underscored the need for additional measures to bolster the economy.

The NBS Manufacturing PMI increased slightly from 50.1 in October to 50.3 in November. However, the Non-Manufacturing PMI slipped from 50.2 to 50.0, signaling stagnation across the services sector.

Covering China’s business and market, CN Wire commented:

“Looking at external demand, the new export order index is 48.1%, marginally higher, but staying in the contraction zone for the 7th month. This indicates that the overall export business of enterprises demand is still weak.”

Weak overseas demand lingers ahead of potential US tariffs on Chinese goods. Despite the PMIs hovering around the crucial 50 mark, avoiding contractions could drive HK and the Mainland China equity markets higher on Monday.