Hang Seng Index News: Markets Eye 25,000 as Beijing Unveils Fresh Stimulus – Weekly Recap

Hang Seng Index: Beijing Stimulus Trumps Tariffs

Beijing responded to a string of weak data from China, pledging fresh stimulus to counter the effects of tariffs, boosting demand for Hong Kong and Mainland China stocks. Meanwhile, Wall Street faltered on renewed trade tensions.

The Hang Seng Index partially reversed the previous week’s losses, logging weekly gains in ten of the last thirteen weeks.

Following last week’s inflation data from China and tariff headlines, investor focus now turns to crucial economic data from China, US inflation numbers, and trade talks.

Hong Kong and Mainland Markets Climb on Stimulus News

US equities snapped a three-week winning streak in the week ending July 11, with the Nasdaq Composite Index dropping 0.08% and the Dow falling 1.02%. US tariff developments weighed on US markets.

Meanwhile, Beijing’s moves to bolster the economy and rising Fed rate cut bets sent the Hang Seng Index up 0.93% to end the week at 24,140. Mainland markets extended their winning streak to three weeks, with the CSI 300 and Shanghai Composite Index ending the week up 0.82% and 1.09%, respectively.

Despite Beijing’s highly anticipated stimulus, inflation data from China capped the weekly gains.

Hong Kong Tech, Real Estate, and EV Stocks Shine

Electric vehicle (EV) shares rebounded as Beijing targeted the labor market to boost domestic consumption. Improving consumer sentiment and demand may ease competition and potentially end price wars impacting company profits. Geely Automobile (00175) surged 8.12%, while Li Auto (02015) rallied 4.82%.

The Hang Seng Tech Index rose 0.62%, partially reversing the previous week’s 2.34% loss. Tech giant Alibaba (9888) ended the week flat, while Baidu (09888) advanced 0.7%.

Meanwhile, the Hang Seng Mainland Properties Index rallied 3.12% on rumors of high-level meetings to tackle China’s real-estate sector troubles. Sino Ocean Service (06677) soared 15.38%, while Longford Group (00960) jumped 9.22%.

China Deflation Intensifies Drawing a Beijing Response

China’s inflation data sent mixed signals, increasing pressure on Beijing to combat labor market weakness and lackluster domestic demand. Consumer prices rose 0.1% year-on-year (YoY) in June, reversing May’s 0.1% fall, but fell 0.1% month-on-month. Producer prices slid 3.6% YoY, accelerating from a 3.3% fall in May.

The sharper fall in producer prices aligned with June’s Caixin private sector PMI surveys. Waning overseas demand fueled domestic competition, intensifying price wars. Price wars have impacted corporate profits and the labor market. Weaker labor market conditions may undermine Beijing’s efforts to boost private consumption. Rising job instability is hitting younger workers hardest.

East Asia Econ remarked on the June inflation reports, stating:

“Deflation is deepening, which for PPI is broad-based. Core CPI is more stable, but that’s partly due to a rise in “other” prices. Headline CPI is lower on food prices, which have started dropping again.”

On July 9, Beijing announced measures aimed at supporting job stability. Measures included an expansion of job-stability loans, streamlining access through government-bank corporations, raising the unemployment insurance refund ratio, and expanding the scope of social insurance subsidies.

US Tariffs Overshadow Falling Recession Risk

President Trump announced new tariffs on key trading partners, impacting US markets. Notably, Trump hit Brazil and Canada with 50% and 35% tariffs, lifted levies on Japanese goods to 25% (effective August 1), and threatened sweeping tariffs of 15% or 20%. The US President also rolled out a 50% tariff on copper, sending prices for the metal up 10.42% in the week.

The latest round of tariffs could muddy the Fed’s policy outlook. Chicago Federal Reserve Bank President Austan Goolsbee spoke on July 11, reportedly stating:

“I’ve got to wait until that noise kind of dies down, that anxiety dies down, before I’m gonna be comfortable that we are back on the old golden path, as I called it, to a stable soft landing. If we, every six weeks, have to revisit whether we’re about to have some big supply shock, that’s messy at the least.”

While Fed policy uncertainty weighed on sentiment, US jobless claims and airline earnings eased fears of a US recession. Initial jobless claims dropped from 232k (week ending June 28) to 227k (week ending July 5), signaling a resilient labor market. Delta Airlines released third-quarter and full-year profit forecasts, topping consensus, dampening US recession concerns.

According to Polymarket, the chances of a US recession dropped to 20% on July 11, well below the May peak of 66%.

Hang Seng Faces Key Test Between 24,000 Support and 25,000 Resistance

Beijing’s stimulus moves and rising bets on a September Fed rate cut sent the Hang Seng Index to a weekly high of 24,506, testing the crucial 24,500 resistance level. Despite easing back, the Index avoided a drop back below 24,000. The Index also steered clear of the 50-day Exponential Moving Average (EMA), indicating bullish momentum.

US-China trade talks, strong Chinese economic data, or more stimulus from Beijing could send the Hang Seng Index toward last week’s high of 24,506. A sustained move through 24,500 may enable the bulls to target the March high of 24,874 and potentially 25,000.

Conversely, weak China data, rising US-China trade tensions, and Beijing’s silence on stimulus could push the Index below 24,000, exposing the 50-day EMA.

Hang Seng Technical Forecast

• Resistance: 24,506, 24,874, and then 25,000.
• Support: 24,000, 50-day EMA at 23,605 and 23,500.
• Bias: Cautiously bullish in the short term, hinged on US-China trade talks, Beijing’s stimulus moves, and economic data from China.

Forecast Summary

The Hang Seng traded above its June congestion zone and 50-day EMA, signaling a bullish bias. In the week ahead, key economic data from China, including trade, retail sales, industrial production, and GDP numbers, will drive risk appetite. However, US-China trade headlines and Beijing’s stance on stimulus could be pivotal for market trends.

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.