Hang Seng Index News: Will Tariff Tensions Derail Bullish Momentum Toward 25,000?
Meanwhile, the Hang Seng TECH Index edged 0.07% higher. While Baidu (09888) climbed 0.36, Alibaba (09988) and JD.com fell 1.43% and 0.69%, respectively.
US Personal Income and Outlays Report and Fed Rate Cut Bets
The US Core PCE Price Index rose 2.7% year-on-year in May, up from 2.6% in April. While hotter inflation could delay Fed rate cuts, unexpected falls in personal income and spending supported a more dovish Fed policy stance. Personal income declined 0.4% month-on-month in May after rising 0.7% in April, while personal spending dropped 0.1% (April: +0.2%). Weakening income and spending trends could signal a softer inflation outlook, potentially enabling the Fed to ease monetary policy further.
Friday’s data followed Thursday’s GDP numbers, which showed the US economy contracted by more than previously expected (Q1: -0.5% vs. prelim -0.3%).
China’s Manufacturing PMI Hit by US Tariffs
On June 30, PMI numbers from China influenced market sentiment. The NBS Manufacturing PMI rose from 49.5 in May to 49.7 in June, remaining below the critical 50 neutral level. However, service sector activity picked up, with the Non-Manufacturing PMI rising from 50.3 to 50.5 in June. Nevertheless, the Manufacturing PMI numbers pressured HK-listed stocks, with external orders falling for 14 consecutive months.
Hopes of further stimulus measures from Beijing and the US and China potentially removing tariffs bolstered demand for Mainland China stocks.
US and China Retain Tariffs Despite Trade Deal
Last week, news broke of the US signing a trade deal with China. However, a lack of details on the deal tested demand for Hong Kong-listed stocks on June 30. While Beijing stated that the US would remove restrictive measures on China, US Treasury Secretary Scott Bessent clarified tariffs on China are 30%, with 20% on fentanyl, while levies on the US remained at 10%.
The PMI numbers for June and last week’s industrial profit figures for May reflected the effect of tariffs on China’s economy.
Natixis Asia Pacific Chief Economist Alicia Garcia Herrero remarked on the industrial profit numbers, stating:
“Cost of over-competition- but also US tariffs, clearly hurting Chinese companies. Corporate profits fell 9.1% in May. Unsustainable without additional subsidies.”
Technical Setup: 24,500 Resistance or Drop Below 24,000 as Trade Uncertainty Lingers
On June 30, the Hang Seng Index held above its May-June congestion zone despite the morning pullback. The Index also traded above its 50-day Exponential Moving Average (EMA), indicating a bullish bias.
Easing Middle East tensions and the removal of tariffs could drive the Index above the June high of 24,533. A sustained move above 24,533 may pave the way to the March high of 24,874. Conversely, a drop below 24,000 could bring 23,500 and the 50-day EMA into play.