Hang Seng Index Gains as China Stimulus, Data, and US Market Rally Lift Asian Stocks

US Markets Rebound as Dip Buyers Return

US equity markets staged a relief rally on Friday, March 14, as dip buyers returned after a bruising market sell-off to multi-month lows. Risk appetite improved despite ongoing tariff risks, weak US data, and recession fears.

The Nasdaq Composite Index surged 2.61%, while the Dow and the S&P 500 advanced 1.65% and 2.13%, respectively.

Consumer Sentiment Wanes, Boosting Rate Cut Hopes

On March 14, the University of Michigan Survey of Consumers drew interest amid speculation about a US recession. The Michigan Consumer Sentiment Index fell to 57.9 in March, down from 64.7 in February, signaling a possible pullback in consumer spending. A slowdown in consumer spending, which accounts for over 60% of GDP, could raise bets on multiple Fed rate cuts.

However, inflation expectations may complicate the Fed’s policy outlook. The Michigan Inflation Expectations Index climbed to 4.9% in March, up from 4.3% in February.

The CME FedWatch Tool reflected a jump in expectations for a Fed rate cut in June. The probability of a June rate cut increased from 77.1% on March 14 to 83% on March 17.

Asian Market Implications: Friday’s US market relief rally set the tone for the Monday, March 17 session

China’s Economic Indicators Show Mixed Signals

On March 17, China’s economy remained in focus, with housing data, retail sales, industrial production, and unemployment figures drawing interest. Key stats included:

• Retail sales rose 4% year-on-year (YoY) in January and February, up from 3.7% in December.
• Industrial production increased by 5.9% YoY in January and February, down from 6.2% in December.
• China’s House Price Index fell 4.8% YoY in February after declining 5% in January.
• The unemployment rate climbed to 5.4% in February, up from 5.1% in January.

Brian Tycangco, editor/analyst at Stansberry Research, remarked on the housing market trends, stating:

“Steady as she goes. China’s property market recovery gaining ground. This will be a tailwind for stocks in 2025.”

China’s data followed fresh stimulus pledges from Beijing, targeting the labor market and domestic consumption, bolstering demand for Hong Kong and Mainland China-listed stocks.

Hang Seng Index Advances on China’s Stimulus and Data

In Asia, the Hang Seng Index rallied 1.34% on Monday morning as investors reacted to Beijing’s stimulus news and China’s economic data.

• The Hang Seng Technology Index rose 0.23%, while the Hang Seng Mainland Properties Index jumped 2.23%.
• Tech giants Baidu (09888.HK) and Alibaba (09988.HK) gained 1.42% and 1.62%, respectively.

Mainland China’s equity markets also posted morning gains. The CSI 300 and Shanghai Composite Index rose 0.09% and 0.42%, respectively. However, the upside was modest amid ongoing tariff concerns.

Nikkei Index Climbs on Tech Strength

The Nikkei Index gained 1.13% on Monday morning as tech stocks tracked Friday’s US market rebound. Meanwhile, the USD/JPY pair held onto Friday’s 0.55% gain, rising 0.02% to 148.648, supporting export-focused stocks.

Notable movers included Softbank Group (9984) and Tokyo Electron (8035), which advanced by 2.22% and 2.93%, respectively.

ASX 200 Tracks Wall Street Higher

Australia’s ASX 200 rose 0.68% on Monday morning, lifted by Wall Street’s strong Friday close.

• Iron ore spot prices advanced by 0.22% on March 17, driven by China’s better-than-expected industrial production numbers and stimulus news.
• Mining stocks BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) rallied 1.93% and 2.06%, respectively.
• The S&P/ASX All Technology Index climbed 0.83%, mirroring the Nasdaq’s relief rally on Friday.

Outlook: Key Risks and Opportunities

Global markets remain sensitive to shifting economic and policy dynamics:

• US-China Trade Tensions: A key driver of sentiment in Asian markets. An escalation in the trade war would need stimulus to offset any economic impact.
• US Economic Data and the Fed: Crucial for market sentiment. A hawkish Fed and weak US data could impact risk assets.
• China’s Stimulus Measures: Could counterbalance global uncertainty, boosting HK and Mainland-listed stocks.
• Central Bank Guidance: Market participants will closely track policy updates.

China’s stimulus efforts and innovation drive could help stabilize regional markets amid lingering tariff risks.

For in-depth analysis and expert insights, stay updated on market trends here to make informed investment decisions.