Hang Seng Index News: Stimulus Hopes vs. Tariff Fears as 26,000 Remains Elusive

Hang Seng Index Dips as Trade Talks Disappoint

The Hang Seng Index dipped on Wednesday, July 30, as US-China trade developments fell short of expectations. While the US and China agreed to extend the trade war truce by 90 days, negotiations failed to deliver a trade deal, leaving existing tariffs in effect.

This week, trade headlines, China’s private sector PMI data (out on July 31), and Beijing’s stimulus measures will influence market sentiment. These key drivers will determine whether the Index breaks below 25,000 or rises above 26,000.

Hang Seng Index and Mainland Markets Diverge

The Hang Seng Index declined 0.33% to 25,440 in morning trading on July 30, exposing the crucial 25,000 support level. However, Mainland China markets advanced on fresh stimulus from Beijing. The CSI 300 and the Shanghai Composite Index climbed 0.37% and 0.39%, respectively.

On July 28, Beijing announced plans to issue an annual childcare subsidy of 3,600 Yuan per child under three years of age, starting January 1, 2025. Standard Chartered Bank reportedly commented on the fresh stimulus, stating:

“The recent measures are responses to the decline in fertility rates and aging, with the central finance being the main source of funds. It can not only improve people’s well-being but also boost consumption. Although the annual subsidy of 3,600 yuan is not much for big cities, it is a considerable subsidy for residents in rural areas and small and medium-sized cities.”

Overnight, US equity markets posted losses as the Fed’s interest rate decision and Fed Chair Powell’s press conference loomed. The Dow fell 0.46%, while the Nasdaq Composite Index and S&P 500 snapped four and six-day winning streaks, dropping 0.38% and 0.30%, respectively.

EV and Tech Stocks Slide as US Tariffs Stay

Tech heavyweights Alibaba (9988) and Baidu (9888) fell 1.74% and 1.20%, respectively. Electric vehicle (EV) stocks faced heavier losses as US-China trade talks failed to yield an agreement to lower tariffs on Chinese shipments. BYD (1211) slid 3.43%, while Li Auto (2015) plunged 10.51%.

US Treasury Secretary Scott Bessent reportedly warned of more tariffs on China to push negotiations forward. Meanwhile, the US also threatened a 100% tariff on China if it continues purchasing oil from Russia.

Brian Tycangco, editor at Stansberry Research, remarked:

“Insanity is the act of doing the same thing again and again, expecting different results.”

On the threat of 100% tariffs, he added:

“Threatening to raise prices on your own consumers by 100% because another country is buying oil from another country. We live in a simulation.”

Technical Setup: Hang Seng Eyes 26,000 Resistance or 25,000 Support

Despite extending its losses, the Hang Seng Index trades above its July congestion zone and the 50-day Exponential Moving Average (EMA).

Progress toward a trade agreement and further stimulus measures from Beijing could send the Hang Seng Index toward 26,000. A breakout above 26,000 could enable the bulls to target 27,000.

Conversely, the Hang Seng could drop toward the 25,000 level if the US carries out its threat of hiking tariffs on Chinese goods. Renewed US-China trade friction would likely weigh on sentiment, potentially exposing the 24,500 level and the 50-day EMA.

Hang Seng Technical Outlook

• Resistance: 25,500, 26,000, then 27,000.
• Support: 25,000, 24,500, and the 50-day EMA (24,224).
• The short-term bias remains bullish but hinges on US-China trade developments, Beijing’s stimulus plans, and upcoming PMI numbers.

Hang Seng Forecast: Will the Index Break Above 26,000 or Drop to 25,000?

The Hang Seng Index fell further back from July 24’s three-and-a-half-year high in the morning trading session. Investors reacted to the outcome of two days of high-level trade talks that failed to deliver a balanced trade deal. Tariff threats also weighed on sentiment.

Concerns about existing US tariffs on China impacting trade terms and the broader economy pressured Hong Kong-listed stocks. Hopes for a trade deal could sink if the US imposes higher tariffs, with a full-blown US-China trade war on the cards if China retaliates.

Beijing’s stimulus measures could be crucial as the trade war truce extends for 90 days.

Economic uncertainty may push the Hang Seng Index toward 25,000, bringing 24,500 into play. However, easing trade tensions could send the Index toward 26,000.

Near-term trends will hinge on trade developments, July’s Chinese PMI data, and Beijing’s policy moves.

China’s NBS Manufacturing PMI rose from 49.5 in May to 49.7 in June. US tariffs weighed on external demand and new export orders, impacting the manufacturing sector.

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