Hang Seng Index News: Trade Talk Hopes Lift Sentiment as 26,000 Resistance Looms

Hang Seng Index Advances on Trade Deal Hopes

The Hang Seng Index advanced in early trading on Monday, July 28, reversing Friday’s losses. Investors reacted to the US and the EU reaching a trade deal, lifting hopes for a US-China trade agreement. The US and China’s third round of high-level trade talks kicks off later today.

This week, trade developments, China’s private sector PMI data on July 31, and Beijing policy updates will affect market sentiment. These key drivers will determine whether the Index drops below 25,000 or rises above 26,000.

Hang Seng Index and Mainland Markets Edge Higher

The Hang Seng Index rose 0.57% to 25,534 in morning trading on July 28, eyeing the 26,000 level. Mainland China markets also trended higher. The CSI 300 and the Shanghai Composite Index posted early gains of 0.11% and 0.03%, respectively. However, concerns about China agreeing to a potentially one-sided trade deal capped the gains.

US equity markets posted gains on Friday, July 25. The Dow rose 0.47%, while the Nasdaq Composite Index and S&P 500 advanced 0.24% and 0.40%, respectively, closing at record highs. Optimism toward a US-EU trade deal ahead of Sunday’s agreement lifted sentiment.

Tech Stocks Lead Hang Seng Gains

Tech heavyweights Alibaba (9988) and JD.com (9618) led the way in Monday’s morning session, rising 2.12% and 0.84%, respectively. However, electric vehicle (EV) shares offset the gains, leaving the Hang Seng TECH Index down 0.05%.

Notably, EV stocks BYD (1211) and Li Auto (2015) fell 0.54% and 1.28%, respectively, dragging the Tech Index into the red. China’s auto sector could be a potential target in the upcoming US-China trade talks.

Technical Setup: 26,000 Resistance or 25,000 Support?

After the morning gains, the Hang Seng Index trades comfortably above its July congestion zone and the 50-day Exponential Moving Average (EMA).

A US-China trade deal, including lower US tariffs on Chinese goods and easing export restrictions, could send the Hang Seng Index toward 26,000. A breakout above 26,000 could pave the way to 27,000. However, the risk of stalled trade talks exposes the Hang Seng to a reversal, with 25,500 the next key support level. Rising US-China trade tensions would likely weigh on risk appetite, potentially exposing the 25,000 level.

Hang Seng Technical Outlook

• Resistance: 26,000, then 27,000.
• Support: 25,500, followed by 25,000, and the 50-day EMA (24,118).
• The short-term bias remains bullish but hinges on a US-China trade deal and fresh policy from Beijing.

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

The Hang Seng Index neared its three-and-a-half-year high in early trading. Easing trade tensions raised hopes for a trade agreement ahead of this week’s talks, tempering market fears of a full-blown US-China trade war.

A one-sided trade deal, including zero tariffs on US goods and US levies on Chinese shipments, could raise concerns about China sticking to any agreement. A trade deal maintaining existing US tariffs could weigh on Chinese exports and challenge Beijing’s 5% GDP growth target for 2025.

Exports rose 5.8% year-on-year (YoY) in June, up from 4.8% in May, bolstering the economy. China’s economy expanded 5.2% YoY in Q2, above Beijing’s growth target. However, higher US tariffs on China’s trading partners in Southeast Asia have raised concerns about the economic outlook.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked:

“But, second half of the year, that’s in a way where things could really get worse, both in terms of exports but also in terms of the whole sentiment. Because the second half of the year is expected to be much worse, I think they need to stimulate further. […]. Rerouting will be much harder in the second half. So that’s going to hit Chinese exports indirectly. So, that’s why the second half is tougher and the government has been preparing.”

US tariffs could pressure Beijing to introduce stimulus measures to boost domestic consumption to offset any impact of tariffs on the broader economy.

Economic uncertainty may push the Hang Seng Index toward 25,000. Conversely, a fair trade deal, with lower US tariffs on China, could send the Index toward 26,000.

Momentum will hinge on clarity from trade talks and Beijing’s next moves. Stay informed with real-time updates. Geopolitical risks and US-China developments continue to drive sentiment. Follow our live coverage and consult our economic calendar.