Hang Seng Index Gains: Stimulus Hopes Lift Mainland China and HK Markets

US Markets Turn Cautious: Will the US CPI Report Drive New Highs?

Here’s what US equity markets revealed on Tuesday, December 10.

On Tuesday, December 10, US equity markets extended their losses from Monday. The Nasdaq Composite Index and the S&P 500 declined by 0.25% and 0.30%, respectively. The Dow extended its losing streak to four sessions, falling 0.35%.

Investors turned cautious ahead of Wednesday’s crucial US CPI Report that could dictate the Fed’s December policy decision. Hotter-than-expected US inflation figures could weigh on ASX 200 and Hang Seng Index-listed stocks and the broader Asian tech sector.

China’s Central Economic Work Conference Gains Focus

A two-day Central Economic Work Conference in China, beginning Wednesday, December 11, has drawn significant market attention. China’s senior policymakers, led by President Xi Jinping, are expected to set policies for 2025.

Markets are optimistic about fresh stimulus measures targeting the real estate sector and domestic consumption.

On Monday, December 9, China’s Politburo signaled a shift toward monetary policy easing and fiscal stimulus measures, targeting domestic consumption and broad-based demand.

The announcement underscored Beijing’s determination to bolster the economy as potential US tariffs loom. US President-elect Donald Trump recently warned of 10% tariffs on Chinese goods.

Brian Tycangco, editor/analyst at Stansberry Research, remarked on Monday’s announcement and its significance, stating,

“In 2008, Beijing unleashed a fiscal package unlike anything seen in history. It boosted GDP growth and helped the world during its worst period caused by greedy Wall Street banks. In 2025, Beijing will unleash a new fiscal package. What it contains is anyone’s guess. But judging from the language coming out of the Politburo meeting, the sense of urgency is similar. The pressures both externally and internally are just as great if not greater.“

Hang Seng Index Gains on Stimulus Bets

In Asian markets, the Hang Seng Index gained 0.63% on Wednesday morning. Market speculation about fresh stimulus measures drove demand for Hong Kong and Mainland China-listed stocks.

The Hang Seng Mainland Properties Index jumped by 1.83%, with the real estate sector likely to be Beijing’s focal point. Tech stocks also trended higher. Baidu (9888) rallied 2.10%, while Alibaba (9988) gained 0.75%.

Mainland China markets followed suit, with the CSI 300 and the Shanghai Composite up 0.24% and 0.30%, respectively.

While US tariff jitters remain a headwind, updates from Beijing on stimulus plans will likely be crucial this week.

Nikkei Dips on BoJ Rate Hike Speculation

Japan’s Nikkei Index declined by 0.27% on Wednesday morning amid speculation about a Bank of Japan rate hike.

Japan’s producer prices increased by 3.7% year-on-year in November, up from 3.6% in October. The upswing could fuel bets on a December BoJ rate hike as producers raise prices as demand increases, passing on costs to customers.

The USD/JPY fell by 0.19% to 151.666 in the morning as investors reacted to producer price figures. A more hawkish BoJ rate path may raise borrowing costs, with a stronger Yen potentially reducing overseas earnings. These could lower company earnings and stock prices.

Tech stocks Tokyo Electron (8035) and Softbank Group (9984) posted losses of 0.67% and 1.08%, respectively. Nissan Motor Corp. (7201) dropped by 0.16%.

ASX 200 Falls, Mirroring US Market Losses

Meanwhile, Australia’s ASX 200 Index extended its losses from Tuesday, falling 0.59% in the morning session. While the losses were broad-based, banking and mining stocks saw the sharpest declines.

ANZ (ANZ) declined by 0.93%. Rising 10-year US Treasury yields climbed for a second consecutive day on Tuesday. Higher US yields could dampen demand or high-yielding Aussie bank stocks.

However, Mining giants BHP Group Ltd. (BHP) and Fortescue Metals Group (FMG) were down 0.89% and 0.78%, respectively. Iron ore spot fell 1.27% on Tuesday, impacted by China’s weak November trade data, weighing on mining stocks. Weak trade data signaled deteriorating demand, potentially affecting Aussie iron ore exports.

Outlook

Market sentiment will hinge on updates from China’s Central Economic Work Force Conference and global central bank chatter. Meaningful stimulus measures from China could boost risk sentiment. However, the Fed, RBA, and BoJ rate policies will continue influencing investor decisions.

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