Hang Seng Index News: Will Tariff Tensions Derail Bullish Momentum Toward 25,000?

Trade Developments Overshadow Fed Rate Cut Bets—Will the US and China Drop Tariffs?

The US Personal Income and Outlays Report bolstered bets on a Q3 Fed rate cut despite inflation creeping higher. Fed rate cut expectations boosted demand for risk assets. Meanwhile, US-China trade developments suggested progress toward a trade agreement, although tariff uncertainties lingered.

On June 30, the Hang Seng Index dropped, with electric vehicle (EV) and tech stocks dragging the Index into negative territory. Manufacturing sector PMI numbers from China weighed on sentiment.

Economic data, trade headlines, geopolitical risks, and stimulus speculation continue to influence risk sentiment. These factors could dictate if the Hang Seng Index will break below 24,000 or target 25,000.

Hang Seng Index Drops on Tariff News

US equity markets extended gains on June 27, as US data supported a more dovish Fed rate path. The Nasdaq Composite Index gained 0.52%. However, the Hang Seng Index fell 0.52% to 24,157 in morning trading on June 30.

EV and tech stocks came under selling pressure on reports of the US and China retaining tariffs.

Meanwhile, Mainland China markets had a positive start to the week. The CSI 300 and Shanghai Composite Index posted morning gains of 0.01% and 0.18%, respectively. The absence of details on the US-China trade deal and weak PMI data from the Mainland capped gains.

EV and Tech Stocks Slide

EV stocks faced heavy selling pressure amid reports of Chinese EV makers double-counting sales by exporting ‘zero mileage’ used cars. Intense domestic competition and price pressures remained a headwind.

BYD (01211) and Li Auto (02015) dropped 0.64% and 2.26%, respectively.

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.

Hang Seng Technical Outlook

• Resistance: 24,533, and then 24,874.
• Support: 24,000, 23,500, then the 50-day EMA at 23,445.
• Short-term Bias: Bullish but hinged on the Iran-Israel truce holding, US-China trade developments, and stimulus-related updates.

Hang Seng Outlook: Will the Index Break 25,000 or Fall Below 24,000?

While easing US-China trade tensions are market positive, ongoing tariffs may continue impacting China’s economy.

US tariffs and a lack of stimulus support from Beijing may weigh on sentiment, potentially dragging the Index below 24,000. Conversely, progress toward dropping tariffs could boost sentiment, driving the Index toward the March high of 24,874.

What’s next for the Hang Seng? Stay informed with real-time updates as geopolitical risks and US-China developments drive sentiment. Follow our live coverage and consult our economic calendar.