Hang Seng Index News: Extended Tariff Truce and Beijing Yield New 2025 High – Weekly Recap

Hang Seng Index: Trade War Truce, Fed Rate Cut Bets, and Beijing Boost Sentiment

It was an eventful week for the global markets, with a 90-day extension to the US-China trade war truce boosting risk appetite. Fresh stimulus measures and speculation about multiple Fed rate cuts added to the positive sentiment, sending the Hang Seng Index higher for a second week.

Mainland China markets also extended their gains from the previous week. Averting a full-blown trade war, alongside Beijing’s stimulus measures, drove demand for Mainland-listed stocks. However, disappointing Chinese economic indicators and mixed earnings capped the gains across the Hong Kong and Mainland equity markets.

Hong Kong and Mainland Markets Hit 2025 Highs: Hang Seng Index Outlook

The Hang Seng Index climbed 1.65% in the week ending August 15, building on the previous week’s 1.43% gain, closing at 25,270. Notably, the Index struck a new year-to-date high of 25,767 before dropping back below the 25,500 mark.

Mainland China’s CSI 300 and Shanghai Composite Index rallied 2.37% and 1.70%, respectively.

US CPI and Fed Rate Cut Bets: Impact on Global Markets

US equities also posted weekly gains. The Dow rose 1.74%, while the Nasdaq Composite Index and the S&P 500 advanced 0.81% and 0.94%, respectively. The US CPI Report fueled bets on a September Fed rate cut as headline inflation remained at 2.7% in July, easing stagflation fears.

However, a surge in producer prices, a robust labor market, and retail sales data undermined the certainty of a September Fed rate cut.

• Producer prices rose 3.3% YoY in July, up from 2.4% in June, while core producer prices soared 3.7% (June: 2.6%).
• Initial jobless claims fell from 227k (week ending August 2) to 224k (week ending August 9).
• Retail sales rose 0.5% month-on-month in July, following June’s 0.9% increase.

According to the CME FedWatch Tool, the probability of a September Fed rate cut increased from 88.9% on August 8 to 92.1% on August 15. Markets had fully priced in a September cut on August 13.

US-China Trade Talks: Truce Extension Boosts Hang Seng Sentiment

Agreements to lift export restrictions on China’s rare earth minerals and US chips allowed for trade talks to continue. Beijing and Washington agreed to extend the trade war truce for a further 90 days to pursue a trade agreement. President Trump announced:

“I have just signed an Executive Order that will extend the Tariff Suspension on China for another 90 days. All other elements of the Agreement will remain the same.”

China Stimulus Measures: Support for Property and Consumption

This week, Beijing announced key stimulus measures aimed at supporting the real estate market and boosting domestic consumption.

Plans for bad-debt managers and state-owned enterprises (SOEs) to acquire unsold homes from developers under financial distress drove demand for real estate stocks. Supporting the housing market could be a crucial step towards boosting consumer sentiment and spending.

China’s Ministry of Finance also issued an implementation plan for a personal consumption loan interest subsidy. The policy offers interest subsidies on personal consumer loans used across key sectors, including autos, education, elderly care, electronics, and home improvement. The loan interest subsidy, capped at 3,000 Yuan per borrower per lender, will be available from September 2025 to August 2026.

Hong Kong Real Estate and Tech Stocks: Weekly Market Movers

The Hang Seng Mainland Properties Index gained 5.3% in the week ending August 15. Beijing’s policy announcement and real estate sector data lifted demand for real estate stocks. Longfor Group (0960) and China Resources Land (1109) jumped 7% and 11.15%, respectively.

Tech giant Tencent Holdings (0700) rallied 6.64% after posting upbeat Q2 earnings, with revenue beating expectations. Alibaba (9988) and Baidu (9888) also posted gains, sending the Hang Seng TECH Index up 1.52% in the week. However, JD.com ended the week down 1.71% after announcing disappointing earnings.

China Economic Data: Warning Signals for Growth Momentum

Retail sales, industrial production, fixed asset investment, and unemployment data triggered concerns about China’s economy. The data highlighted a loss of momentum early in the third quarter:

• Retail sales rose 3.7% year-on-year in July, down from 4.8% in June (forecast: 4.6%).
• China’s unemployment rate rose from 5% in June to 5.2% in July (forecast: 5.1%).
• Industrial production increased 5.7% YoY in July compared with 6.8% in June (forecast: 5.9%).
• Fixed asset investment rose 1.6% YoY in July after June’s 2.8% rise.
• House Price Index fell 2.8% YoY in July after a 3.2% decline in June.

East Asia Econ remarked on July’s data, stating:

“China – softer again. Property prices and sales, investment and retail sales all deteriorated in July. It is at least possible to argue that the worst of the drop in property activity is now completed. That creates room for second-derivative improvement, but even that could be offset by slowing manufacturing capex.”

Hang Seng Index Forecast: Will It Hold 25,000 or Break Toward 26,000?

The Hang Seng Index hit a new YTD  2025 high before easing back. Despite falling back below the 25,500 level, the Index remained above the crucial 25,000 support level and the 50-day Exponential Moving Average (EMA), signaling bullish momentum.

Progress toward a US-China trade agreement and new stimulus measures from Beijing could boost sentiment. A breakout above 25,500 could pave the way to last week’s high of 25,767 and the 26,000 level. Conversely, rising US-China trade friction and Beijing’s silence on policy support could push the Index toward the 25,000 support level. If breached, the 50-day EMA would be the next key support level.

Hang Seng Technical Forecast: Key Support and Resistance Levels

• Resistance: 25,500, 25,767, and then 26,000.
• Support: 25,000, the 50-day EMA at 24,528, and 24,000.
• Short-term Bias: Bullish, contingent on US-China trade headlines and fresh stimulus from Beijing.

Forecast Summary

The Hang Seng pulled away from its August congestion zone (24,750 – 25,000) and remained above its 50-day EMA, indicating a bullish bias. In the week ahead, US-China trade talks, key data, and stimulus announcements will influence risk sentiment. Trade headlines and Beijing’s plans could be crucial.

For real-time updates on US-China trade talks, global stimulus efforts, and central bank signals, follow our live coverage and consult our economic calendar.