Hang Seng Index News: Support at 25,000 or Rally Toward 26,000 on Stimulus Hopes?

Hang Seng Index Faces a Four-Day Losing Streak — Will It Hold Above 25,000?

Investors turned cautious ahead of crucial corporate earnings, economic data, and the Jackson Hole Symposium. The Hang Seng Index edged closer to the important 25,000 support level on Tuesday, August 19. Concerns that US tariffs could delay Fed rate cuts tested risk appetite. Signals of a slowdown in China’s economic momentum have also weighed on sentiment.

Near-term catalysts include US-China trade headlines, corporate earnings, and upcoming Chinese economic data. Additional stimulus measures from Beijing, following last week’s weak data, could raise sentiment.

These factors could determine whether the Index will drop below 25,000 or target 26,000.

Hang Seng Index and Mainland China Equity Markets Diverge

The Hang Seng Index slipped 0.07% to 25,160 in morning trading, risking a four-day losing streak. However, Mainland China’s equity markets trended higher. The CSI 300 and the Shanghai Composite Index posted early gains of 0.06% and 0.01%, respectively. Hopes of further policy support from Beijing drove demand for Mainland-listed stocks.

On Monday, August 18, CN Wire reported:

China vows to stabilize housing market, employment: CCTV China to accelerate development of service consumption and new types of consumption as growth drivers. China vows to improve effectiveness of macroeconomic policy.”

Brian Tycangco, editor at Stansberry Research, remarked on the Mainland equity markets, stating:

“China’s Shanghai Composite Index on the cusp of a multi-year breakout. Money is flowing into mainland stock markets in record amounts.”

Overnight, US markets were largely flat as investors turned their attention to upcoming retail sector earnings and the Jackson Hole Symposium. On Monday (August 18), the Dow and the S&P 500 slipped 0.08% and 0.01%, respectively, while the Nasdaq Composite Index edged up 0.03%.

Last week, key US inflation-linked data challenged bets on multiple Fed rate cuts. Producer prices soared, while import prices climbed, potentially reflecting the effect of US tariffs. According to the FedWatch Tool, the chances of a September Fed rate cut fell from 100% on August 13 to 83.6% on August 18. Fed Chair Powell could pour cold water on hopes for Fed rate cuts on Friday, exposing markets to heightened policy uncertainty.

Tech Stocks Overshadow Real Estate Sector Gains, Sending the Hang Seng into the Red

The Hang Seng Mainland Properties Index (HSMPI) advanced 1.12% in early trading, reversing its previous session’s losses. Monday’s pledge to stabilize the housing market bolstered demand for real estate stocks.

However, tech stocks trended lower as investors await corporate earnings, the People’s Bank of China’s Loan Prime Rate decision, and Fed Chair Powell’s speech.

Tech giants Alibaba (9988) and Tencent (0700) fell 0.17% and 0.73%, respectively, while JD.com (9618) dropped 0.97%. The morning losses left the Hang Seng Tech Index down 0.54%. Baidu (9888) bucked the trend in early trading ahead of its corporate earnings results on August 20.

EV Stocks rise on Upbeat Export Data

Meanwhile, electric vehicle (EV) stocks steadied, with Geely Automobile (0175) and BYD (1211) gaining 0.91% and 0.44%, respectively. Plans to boost consumption and upbeat export volumes lifted demand for auto stocks. According to East Asia Econ:

“After taking a breather in 2023-24, China’s auto export volumes have started to rise more strongly again this year. Data today show that continued in July. While the first wave of exports was led by ICE vehicles, now it is EVs and hybrids leading the way. Unit prices have been stable this year.”

Technical Setup: Hang Seng Index Recovery Hinges on Stimulus and Earnings

The Hang Seng Index fell toward its August congestion zone but traded above the 50-day EMA in morning trading, indicating a bullish bias.

A US-China trade agreement, upbeat corporate earnings, and policy support from Beijing could drive the Hang Seng Index toward its year-to-date high of $25,767.

However, stalled US-China trade talks, disappointing earnings, and uncertainty about the effectiveness of Beijing’s stimuli may weigh on sentiment. A break below the 25,000 support level could bring the 50-day EMA into play. If breached, the 24,000 mark would be the next key support level.

Hang Seng Technical Outlook

• Resistance: 25,737, then 26,000.
• Support: 25,000, the 50-day EMA (24,577 at the time of writing), then 24,000.
• The short-term bias remains bullish but hinges on US-China trade developments, corporate earnings, and stimulus.

Hang Seng Forecast: Will the Index Break above 26,000?

The Hang Seng Index pulled further back from its year-to-date high of 25,767 in morning trading. However, fresh stimulus measures could be the next catalyst, potentially bringing 26,000 into sight. Meanwhile, corporate earnings, economic data, and trade headlines will also influence sentiment. Renewed trade tensions, weak data, and disappointing earnings could affect demand for Hong Kong and Mainland China-listed stocks.

July’s Chinese data sent red flags, forcing policymakers to announce plans to bolster the economy. Ineffective measures could affect domestic demand as external demand weakens. Softer demand could escalate price wars and weigh on corporate profits. Firms could cut staffing levels further, in the absence of policy support, a headwind for consumer spending and the broader economy.

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