Hang Seng Index News: Tech, Property Stocks Rally While Xi-Trump Talks Loom

Trump Escalates US-China Trade Tensions, 24,000 in Sight

Investors brushed aside an escalation in the US-China trade war as optimism about an eventual deal continued lifting risk appetite. The US administration warned of a response to China’s restrictions on rare earth mineral exports. Meanwhile, Trump’s plans to hold a call with China’s President Xi Jinping continued to drive market optimism.

A pickup in China’s services sector activity cushioned the impact of the slump in manufacturing sector activity on the economy. Nevertheless, May’s PMI data may boost hopes for further stimulus measures, driving demand for Hong Kong and Mainland China-listed stocks.

The Hang Seng Index extended its gains from Wednesday in early trading, buoyed by housing and tech stocks.

Investors remain focused on trade developments ahead of upcoming inflation, trade data (due June 9), and any potential stimulus from Beijing. These elements could determine whether the index slides toward 23,000 or breaks above 24,000.

Hong Kong Stocks Eye Three-Day Winning Streak

While US equity markets posted mixed performances on June 4, with the Nasdaq Composite Index rising 0.32% and the Dow falling 0.22%, investors remained hopeful for easing trade tensions and stimulus, fueling risk sentiment. The Hang Seng Index rose 0.81% to 23,846 in early trading on June 5. Mainland China’s markets posted modest gains, with the CSI 300 and Shanghai Composite Index advancing 0.02% and 0.04%, respectively.

Housing and Tech Stocks Advance

The Hang Seng Mainland Properties Index rallied 2.54% as Henderson Land (0012) surged 5.38%, while New World Development (HK0017) gained 1.32% on Fed rate cut bets. Overnight US services sector and labor market data may pressure the Fed into cutting rates.

The Hang Seng Tech Index climbed 1.2%, with Baidu (09888) and Alibaba (09988) advancing 0.90% and 2.88%, respectively.

Trade Headlines and Services PMI

Reports of the US administration planning to curb ethane exports to China, which are needed for plastics manufacturing, failed to spook investors. The move followed the US accusing China of breaching the trade war truce for restricting rare earth mineral exports.

The US President also warned against over-optimism toward US-China trade talks overnight, stating:

“I like President Xi of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!”

Recent media reports suggest China isn’t ready to concede to US demands. Beijing has reportedly introduced a mechanism to track its rare earth magnet sector after the recent export restrictions.

Meanwhile, a pickup in service sector activity contributed to the upbeat sentiment. China’s Caixin Services PMI rose to 51.1 in May, up from 50.7 in April. The upswing in services sector activity offset a slump in the manufacturing sector, bolstering demand for risk assets.

Key Levels: 23,000 Support or 24,000 Breakout

Thursday’s gains drove the Hang Seng Index beyond its recent trading range, signaling a return to 24,000.

Positive feedback from Trump-Xi talks or upbeat inflation and trade data could lift risk appetite, driving a breakout above the May 21 high of 23,917. A return to 24,000 could signal a move toward the March high of 24,874. Any new stimulus chatter from Beijing may accelerate upward momentum.

Conversely, failed talks could trigger a sell-off. A drop below 23,500 could expose support at 23,000 and the 50-day Exponential Moving Average (EMA).

Hang Seng Technical Outlook

• Resistance: 24,000, then 24,874.
• Support: 23,500, 23,000, then 50-day EMA at 22,884.
• Bias: Neutral-to-Bullish in the short-term, hinged on trade headlines, economic data, and stimulus cues.

Forecast Summary

Despite trade uncertainty, the Hang Seng trades above its recent trading range. Trade war concerns and the absence of stimulus from Beijing remain market headwinds. However, upbeat trade and inflation data or easing trade tensions could lift risk appetite. Until then, resistance at 24,000 maycap gains.

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.