Hang Seng Index News: Trade Uncertainty and Mideast Tensions Pressure 24,000 Level

US-China Trade Deal and Middle East Tensions Hit Risk Assets

Markets reeled as Trump unveiled tariffs few analysts believed China would ever agree to. Hong Kong and Mainland China markets dipped on Thursday, June 12, reversing gains from the previous session. US President Trump expanded on initial updates from the two days of trade talks, suggesting a skewed agreement favoring the US. Trump and his administration also highlighted the need for more trade discussions, fueling uncertainty about a meaningful trade deal.

Concerns about a lack of stimulus from Beijing weighed and rising Middle East tensions also weighed on sentiment. Reports suggesting Israel is fully prepared to strike Iran spooked investors. The Hang Seng Index partially reversed Wednesday’s gains, with tech and EV stocks retreating.

Market focus remains on the Middle East, trade developments, and Beijing’s stimulus plans, especially with the 55% tariff on Chinese goods. These factors could dictate whether the Hang Seng Index drops below 24,000 or retargets 24,500.

Hang Seng Index Dips as EV and Tech Stocks Slide

US equity markets posted losses on June 11, with the Nasdaq Composite Index falling 0.50%, due to rising tensions in the Middle East and Trump’s latest tariff threats. The Hang Seng Index declined 0.54% to 24,236 in early trading on June 12. Mainland China’s markets also posted early losses, with the CSI 300 and Shanghai Composite Index falling 0.12% and 0.02%, respectively.

EV and Tech Stocks Stumble as Tensions Spike

Uncertainty about a US-China trade deal and Middle East tensions weighed on demand for tech and EV stocks. Tech heavyweights Alibaba (09988) and Baidu (09888) fell 0.75% and 2.03%, respectively, leaving the Hang Seng TECH Index down 1.17%.

EV stocks also faced selling pressure. BYD (01211) and Li Auto (02015) dropped 2.41% and 1.38%, respectively. Increasing government scrutiny of price strategies and price war concerns pressured demand for auto stocks.

Trade Updates Question Chances of a Meaningful Deal

Overnight on Wednesday, June 11, US President Trump shared details from the two days of trade negotiations.

He stated that the agreement was finalized, pending his and President Xi’s final approval. According to the agreement, China will deliver full supplies of magnets and any required rare earth materials upfront. The US would, in return, honor its commitments, including allowing Chinese students to study at US universities.

On tariffs, Trump said that President Xi agreed to levies of 55% on Chinese goods and 10% on US goods.

Trump did not offer details on the US administration’s restrictions on tech-related goods exports to China. However, the US President stated that both sides will maintain dialogue, suggesting that intense negotiations are likely to continue.

Market reaction to President Trump’s comments underscored the renewed uncertainty surrounding tariffs. Brian Tycangco, editor at Stansberry Research, remarked:

“Little coming out of the US side makes sense. China agreeing to 55% tariffs and giving into US rare earth demands without really getting much. They (China) had the upper hand going into the trade talks. These terms don’t make sense.”

Key Levels: 24,000 Support or 24,500 Breakout?

On June 12, the Hang Seng Index continued to trade above the recent congestion zone, holding above 24,000 for a third successive session. However, unresolved tech trade terms, geopolitical tensions, and tariff doubts pressured sentiment.

A break below 24,000 may test support at the 23,500 level and potentially expose the 50-day Exponential Moving Average (EMA). Conversely, a breakout above the June 11 high of 24,439 could support a move toward 24,750, bringing 25,000 into sight. Any stimulus moves from Beijing would likely accelerate a move toward 25,000.

Hang Seng Technical Outlook

• Resistance: 24,500, then 24,874.
• Support: 24,000, 23,500, then the 50-day EMA at 23,120 and 23,000.
• Short-term Bias: Bullish, contingent on trade developments, Middle East news, and stimulus bets.

Forecast Summary: Will the US and China Progress to a Deal, or Will 24,000 Give Way First?

The Hang Seng Index continues sitting above May and early June’s congestion zone. However, uncertainty about both sides reaching trade deal remains a headwind. Sentiment could improve if Beijing rolls out fresh stimulus and the US lifts restrictions on US tech exports to China. Resistance at 24,500 will likely limit any upside until both sides move closer to a deal.

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