Hang Seng Index News: Powell, China Policy, and 25,000 Support in Focus

Hang Seng Index at Risk Five-Day Losing Streak — Will It Drop Below 25,000?

Market jitters over the Fed’s policy path weighed on global sentiment as the Jackson Hole Symposium loomed. The Hang Seng Index tested the crucial 25,000 support level in early trading on Wednesday, August 20. Concerns about a more hawkish Fed stance overshadowed hopes of fresh Beijing stimulus to bolster China’s economy.

Rising US import and producer prices have fueled uncertainty about the Fed’s policy stance. Producer prices surged 3.3% year-on-year in July, up from 2.4% in June, while import prices rose 0.4% month-on-month (June: -0.1%).

Near-term drivers include Fed Chair Powell’s speech, US-China trade talks, corporate earnings, and Chinese economic data. Any new stimulus from Beijing could help lift sentiment.

Hang Seng Index and Mainland China Equity Markets Mixed

The Hang Seng Index fell 0.41% to 25,014 in morning trading, on course for a five-day losing streak. By contrast, Mainland China’s equity markets steadied after Tuesday’s dip. The CSI 300 and the Shanghai Composite Index posted modest gains of 0.07% and 0.13%, respectively.

Economist Hao Hong struck an optimistic note, arguing that policy support remains a likely backstop:

“China making new decade high, but retail participation is measured, unlike the sharp but transient rally last Sept. As growth slowing, market is betting on renewed policy support. Liquidity is abundant and helps support the market.”

Overnight, US markets were mixed, with a light economic calendar shifting investor attention to the upcoming Fed Chair Powell’s speech. On Tuesday (August 19), the Dow rose 0.02%, while the Nasdaq Composite Index and the S&P 500 declined 1.46% and 0.59%, respectively, setting a cautious tone for Asia’s session.

Real Estate and Tech Stocks Weigh on the Index

Rate-sensitive sectors led early losses. The Hang Seng Mainland Properties Index (HSMPI) dropped 1%, while tech heavyweights Alibaba (9988) and Baidu (9888) fell 0.74% and 1.61%, respectively. Electric vehicle makers also retreated, with BYD (1211) down 1.23% and Geely Automobile (0175) and Li Auto (2015) also in the red.

David Ingles, Chief Markets Editor at Bloomberg TV, underscored the uncertainty ahead of Powell’s speech:

“What’s the best thing Powell can say at Jackson Hole that’s both non-committal and doesn’t cause a global market meltdown?”

The Index’s near-term outlook remains highly event-driven. Downside risks dominate unless Beijing acts decisively or Powell signals rate cuts.

Technical Setup: Hang Seng Index Rebound Hinges on the Fed and Stimulus

The Hang Seng Index has returned to its August congestion zone but remains above the 50-day EMA, maintaining a fragile bullish bias. The outlook now hinges on upcoming catalysts.

Hang Seng Index: Key Scenarios to Watch

Bullish Scenario: A dovish Fed, fresh stimulus from Beijing, upbeat earnings, or progress toward a US-China trade deal. These factors could send the Hang Seng Index toward its 2025 high of 25,767.

Bearish Scenario: A hawkish Fed, Beijing’s silence on stimulus, weak earnings, or stalled trade talks. These factors may push the Index below 25,000, exposing the 50-day Exponential Moving Average (EMA).

Hang Seng Forecast: Can the Index Break Higher?

The Hang Seng Index has retreated from the year-to-date peak of 25,767. However, a meaningful stimulus package could be the next catalyst, bringing 26,000 into sight.

Hong Kong and Mainland China’s equity market trends could draw Beijing’s attention. Hao Hong recently highlighted the link between equities and consumer confidence:

“There is no quick fix to boosting household confidence except for a stock market rebound.”

With weak Chinese consumer confidence curbing domestic consumption, further market losses could complicate Beijing’s 5% GDP growth target. Stimulus measures, alongside Powell’s policy stance, will be key to market stability. This week, Beijing pledged to boost spending, employment, and the housing market.

Stay informed with real-time updates, with the next 72 hours market critical. Follow our live coverage and consult our economic calendar.