Hang Seng Index News: Soft China PMI Drags Sentiment and Tech Stocks

Hang Seng Slides as Tariff Tensions and China Data Weigh on Market Outlook

Overnight US labor market data raised Fed rate cut bets, with ADP non-farm numbers signaling a weakening workforce. However, weaker-than-expected economic data from China raised concerns about Beijing achieving its 5% growth target for 2025.

On Thursday, July 3, the Hang Seng Index reversed its gains from Wednesday as losses in electric vehicle (EV) and tech stocks dragged the Index lower.

Economic indicators, trade developments, and central bank policy moves will continue to drive risk sentiment. These factors would likely determine whether the Hang Seng Index will drop below 23,500 or break above 24,500.

Hang Seng Index Slides on Services PMI Slump

US equity markets posted mixed performances on July 2 as weaker US labor market data raised Fed rate cut expectations. The Nasdaq Composite Index climbed 0.94%. While the S&P 500 also closed in positive territory, the Dow dipped 0.02%. Meanwhile, the Hang Seng Index slid 1.08% to 23,961 in morning trading on July 3.

Meanwhile, Mainland China markets trended higher. The CSI 300 and Shanghai Composite Index posted morning gains of 0.43% and 0.01%, respectively. Hopes for fresh stimulus from Beijing bolstered demand for Mainland stocks.

EV and Tech Stocks Slide on Private Sector Woes

June’s private sector PMIs underscored the impact of weakening overseas demand and intensifying domestic competition on corporate profits. The latest data followed recent reports of Chinese EV makers double-counting sales by exporting ‘zero mileage’ used cars.

Geely Automobile (00175) and Li Auto (02015) declined 0.74% and 1.64%, respectively. Li Auto faces a four-day losing streak. Tech heavyweights Alibaba (09988) and Tencent (00700) slid 1.02% and 3.47%, respectively, leaving the Hang Seng TECH Index down 1.26%.

US Labor Market and the Fed Boost Rate Cut Bets

On July 2, the ADP reported private employment falling 33k in June, reversing a 29k increase in May. Non-farm employment fell for the first time since March 2023, fueling speculation about Fed rate cuts. Wednesday’s numbers followed Fed Chair Powell’s comments from Tuesday, which highlighted increasing Fed scrutiny of US labor market data. Discussing this week’s crucial labor market data and potential influence on the Fed’s policy stance, Powell stated:

“We watch very carefully for signs of unexpected weakness.”

According to the CME FedWatch Tool, the probability of a September Fed rate cut dropped from 91.7% on July 1 to 96% on July 2.

China Caixin Services PMI: US-China Trade Impact

China’s Caixin Services PMI slid from 51.1 in May to 50.6 in June. While holding above the crucial neutral 50 level, softer new business, falling staffing levels, and selling price pressures weighed on sentiment. This morning’s Services PMI revealed a similar trend across the manufacturing sector, increasing the need for fresh stimulus from Beijing.

Brian Tycangco, editor at Stansberry Research, remarked:

“Manufacturing accelerated in June likely due to rush of orders ahead of the deadline for Trump’s tariff pause. Services expansion slowest in 8 months likely due to poor consumer sentiment. There’s a need for Beijing to keep its foot on the gas pedal when it comes to consumption-related stimulus.”

Technical Setup: 24,500 Resistance or Drop Below 23,500 as July 9 Trade Deadline Looms

On July 3, the Hang Seng Index dropped back toward the May-June congestion zone. Despite Thursday’s pullback, the Index remained above its 50-day Exponential Moving Average (EMA), sending bullish price signals.

The Index could target the June high of 24,533 if the US removes tariffs or Beijing rolls out fresh stimulus targeting employment, profitability, and consumption. A sustained move through 24,533 may pave the way to the March high of 24,874. Conversely, a drop below 23,750 could enable the bears to target 23,500, and the 50-day EMA.

Hang Seng Technical Outlook

• Resistance: 24,533, and then 24,874.
• Support: 23,750, the 23,500 and the 50-day EMA at 23,491.
• Short-term Bias: Bullish but dependent on US-China trade headlines, US labor market data, and central bank policy moves.

Hang Seng Index Forecast: Will the Index Break 24,500 or Drop Below 23,500?

The Hang Seng Index trades at the top end of its congestion zone while holding above the 50-day EMA on US-China trade developments.

Despite easing trade tensions, US tariffs may continue weighing on overseas demand, China’s labor market, and corporate profits. US tariffs and Beijing’s silence on stimulus may further impact risk assets, potentially dragging the Index toward 23,500. Conversely, dropping tariffs or fresh stimulus could boost sentiment, sending the Index toward the March high of 24,874.

What’s next for the Hang Seng? Stay informed with real-time updates as geopolitical risks and US-China developments drive sentiment. Follow our live coverage and consult our economic calendar.