Hang Seng Index News: Can Weak China Data Push Prices Below 25,000 Support?

Hang Seng Index Slides — Can It Drop Below 25,000?

Overnight US economic data and Chinese economic indicators sent the Hang Seng Index toward the crucial 25,000 support level. Hotter-than-expected US inflation and labor market data tempered expectations of multiple Fed rate cuts, weighing on risk assets. Crucial Chinese economic data signaled a potential loss of economic momentum early in the third quarter, adding to the negative mood.

Near-term catalysts include US-China trade headlines, corporate earnings reports from Alibaba, and Chinese economic data. Additional stimulus measures from Beijing, following the weak data, could lift sentiment.

These factors could determine whether the Index will drop below 25,000 or target 26,000.

Hang Seng Index and Mainland China Equity Markets Diverge

The Hang Seng Index slid 1.07 to 25,247 in morning trading, pulling back from the previous session’s 2025 high of 25,767. However, Mainland China’s equity markets had a mixed morning session. The CSI 300 was flat while the Shanghai Composite Index rose 0.16%.

Overnight, US markets were largely flat as key US economic data weighed on sentiment. On Thursday (August 14), the Dow and the Nasdaq Composite Index slipped 0.02% and 0.01%, respectively, while the S&P 500 edged up 0.03%.

US producer prices rose 3.3% year-on-year in July compared with June’s 2.4% increase. Core producer prices jumped 3.7% YoY after rising 2.6% in June. Economists had forecast producer prices and core producer prices to rise 2.5% and 2.9%, respectively. July’s upswing in prices signaled a potential rise in headline and core inflation, supporting a less dovish Fed rate path.

US jobless claims signaled a resilient labor market, also dampening bets on Fed rate cuts. Initial jobless claims slipped from 227k (week ending August 2) to 224k (week ending August 9).

The CME FedWatch Tool reflected the effect of the US data on sentiment toward the Fed’s policy stance. The chances of a 25-basis-point September Fed rate cut fell from 94.3% on August 13 to 92.1% on August 14. The probability of a 50-basis-point rate cut dropped from 5.7% to 0%.

Tech Stocks Overshadow Real Estate Sector Gains, Sending Hang Seng Index toward 25,000

Better-than-expected housing market data from China lifted demand for real estate stocks. The Hang Seng Mainland Properties Index rallied 1.25% in the morning session. China’s House Price Index fell 2.8% year-on-year in July after declining 3.2% in June. Economists had expected a 3% drop in house prices.

The HSMPI extended its previous session’s gains, which stemmed from plans for state-owned enterprises (SOEs) and bad-debt managers to acquire unsold homes from distressed developers.

However, tech stocks struggled amid shifting sentiment toward the Fed rate path and the Chinese economic indicators. Tech giants Alibaba (9988) and Baidu (9888) slid 1.48% and 3.12%, respectively. Meanwhile, JD.com (9618) tumbled 3.76% after releasing disappointing earnings results. The morning losses left the Hang Seng Tech Index down 0.97%.

Electric vehicle (EV) stocks also trended lower. Geely Automobile (0175) dropped 2.96%, with BYD (1211) and Li Auto (2015) also posting heavy losses. On August 14, Geely Automobile reported weaker profits despite rising revenue, weighing on the broader EV sector.

China Economic Indicators Signal Loss in Momentum

On Friday, August 15, crucial Chinese economic data painted a gloomy picture. Key stats included:

• Retail sales: +3.7% year-on-year in July, down from +4.8% in June. Forecast: +4.6%.
• Industrial production: +5.7% YoY in July vs. +6.8% in June: Forecast: +5.9%.
• Unemployment rate: Climbs from 5% in June to 5.2% in July: Forecast: +5.1%.

Shane Oliver, AMP Head of Investment Strategy and Chief Economist, remarked:

“China July data was soft with retail sales, IP & investment all up< exp, home prices continuing to fall and property inv & sales remaining weak. Unemployment rose slightly possibly due to grad season & weather. On a trend basis its not so bad but more modest stimulus is likely.”

Technical Setup: Hang Seng Index Rebound and Move Toward Hinges on Earnings

The Hang Seng Index dropped toward the August congestion zone but remained above the 50-day EMA in morning trading, indicating a bullish bias.

Progress toward a US-China trade agreement, upbeat corporate earnings, and fresh stimulus measures from Beijing could send the Hang Seng Index toward its year-to-date high of $25,767.

On the other hand, rising US-China trade friction, weak earnings, and Beijing’s silence on fresh stimulus plans may weigh on sentiment. A drop below the 25,000 support level could expose the 50-day EMA. If breached, the bears may target the crucial 24,000 support level.

Hang Seng Technical Outlook

• Resistance: 25,737, then 26,000.
• Support: 25,000, the 50-day EMA (24,527 at the time of writing), then 24,000.
• The short-term bias remains bullish but hinges on US-China trade headlines, stimulus, and corporate earnings.

Hang Seng Forecast: Will the Index Break above 26,000?

The Hang Seng Index pulled back from the 26,000 mark in morning trading. However, a US-China trade deal could be the next catalyst, potentially bringing 26,000 into sight. Meanwhile, corporate earnings will also influence risk appetite. Renewed trade friction and disappointing earnings could pressure Hong Kong and Mainland China-listed stocks.

July’s Chinese data signaled a slowing economy. Job losses may affect consumer spending, softening domestic demand. Weak demand could fuel price wars and weigh on corporate profits. Labor market conditions may deteriorate further without appropriate stimulus if firms continue to cut staffing levels, a headwind for private consumption.

Stay informed with real-time updates. US-China trade headlines will continue to drive sentiment. Follow our live coverage and consult our economic calendar.