Hang Seng Index Surges as Tech, EV Stocks React to Trade Optimism

Wall Street Surges on Rate Cut Hopes

Microsoft and Meta Platforms soared on Thursday, May 1, as recession fears grew. US equity markets advanced on May 1 as investors reacted to the latest corporate earnings reports and key US economic data. The Nasdaq Composite Index rallied 1.52%, while the Dow and the S&P 500 posted gains of 0.21% and 0.63%, respectively, extending their winning streaks to an impressive eight sessions.

Microsoft (MSFT) soared 7.63%, and Meta Platforms (META) rallied 4.23% after topping earnings estimates. US economic indicators also bolstered demand for risk assets as jobless claims and manufacturing sector data supported hopes for multiple Fed rate cuts.

However, Apple (AAPL) and Amazon.com (AMZN) fell 3.78% and 3.21%, respectively, in after-hours trading after earnings misses, potentially impacting Asian tech stocks on Friday, May 2. Despite weakness in select megacaps, broader optimism held on rate cut hopes.

US Jobless Claims Spike as Recession Fears Mount

Initial jobless claims jumped from 223k (week ending April 19) to 241k (week ending April 26). A weaker labor market may slow wage growth, potentially softening consumer spending and dampening inflationary pressures, signaling a more dovish Fed stance.

The ISM Manufacturing PMI fell from 49 in March to 48.7 in April, remaining below the crucial 50 neutral level and reinforcing rate cut expectations.

Thursday’s data increased the chances of a US economic recession. According to Polymarket, the probability of a 2025 US recession jumped to 66%, up from 27% on Trump’s Inauguration Day and matching the April 7 high.

Trade Developments: Beijing Considers Tariff Talks

On Friday, May 2, speculation intensified about potential US-China trade talks. CN Wire reported:

“China’s Ministry of Commerce stated that it has noted repeated remarks by senior U.S. officials expressing a willingness to engage in tariff negotiations with China. Recently, relevant U.S. parties have also proactively conveyed messages to China, hoping to initiate talks. In response, China is conducting an assessment.”

Markets considered the statement a potential green light for Washington and Beijing to resume negotiations.

Hang Seng Index Rallies on Trade Optimism

Asian markets opened higher on Friday, May 2. Trade news boosted risk appetite. The Hang Seng Index rallied 1.35% in the morning session. The tech sector led the charge, with the Hang Seng Tech Index surging 2.72%, with Alibaba (09988.HK) rising 2.81%.

EV stocks also contributed to the morning gains. Li Auto (02015.HK) and BYD Electronic Int. (00285.HK) jumped 3.41% and 3.10% in early trading.

Brian Tycangco, editor and analyst at Stansberry Research, remarked on the morning moves, stating:

“Hang Seng Tech Index pops above that 5,077 resistance on Friday morning (5/2) following Wall Street’s rally fueled by speculation of a US-China trade talk/deal.”

There is no trading on Mainland China’s equity markets, which are closed on May 2.

Nikkei 225 Climbs as Yen Stumbles on BoJ Guidance

Japan’s Nikkei 225 advanced 0.66% on Friday morning, supported by a weaker Japanese Yen. On May 1, the Bank of Japan left interest rates at 0.5% and revised down its growth and inflation forecasts, sinking bets on a Q3 2025 rate hike.

The USD/JPY pair reacted, soaring 1.59% to close at 145.32. In morning trade, the pair briefly touched a 16-day high of 145.923, boosting demand for Japanese stocks.

A softer Yen helped lift shares of Nissan (+0.58%) and Sony (+0.93%), as a competitive currency outlook supported earnings optimism.

ASX 200 Eyes Seven-Day Rally

Australia’s ASX 200 climbed 0.74% in morning trade, eyeing a seven-day winning streak. Banking and oil stocks led the gains, while gold and tech stocks came under selling pressure.

• ANZ (ANZ) jumped 1.92%, while economic bellwether Commonwealth Bank of Australia (CBA) rose 0.72% on upbeat sentiment toward trade.
• Woodside Energy (WDS) rallied 2.48%, buoyed by WTI oil’s move toward $60. Reports of the US targeting governments purchasing Iranian oil sent prices higher.
• Meanwhile, Northern Star Resources (NST) dipped 0.08% as gold continued its retreat, while overnight earnings left the S&P/ASX All Technology Index down 0.43%.

Outlook: Trade, Stimulus, and Central Bank Cues

Market sentiment remains tethered to trade talks, Beijing’s policy moves, and signals from global central banks.

Progress on US-China negotiations, renewed stimulus, and dovish guidance could bolster risk appetite. Conversely, stalled talks, hawkish pivots, or policy inaction may impact investor sentiment.

Amid market shifts, traders may benefit from strategies aligned with evolving monetary and trade policy shifts. For deeper insights, please refer to our latest market coverage.