Hang Seng Index Rallies as Hong Kong-Listed AI-Stocks Gain Momentum

US Markets Mixed as Tariffs Hit Consumer Sentiment

US equity markets had a choppy session on Tuesday, February 25, as ongoing US tariff threats impacted consumer sentiment. The Nasdaq Composite Index and the S&P 500 posted losses of 1.35% and 0.47%, respectively, while the Dow gained 0.37%.

Tesla (TSLA) fell 8.39% after reports of a 45% slump in European sales. Meanwhile, MicroStrategy (MSTR) tumbled 11.41% as bitcoin (BTC) dropped to a session low of $85,986, its lowest level since November’s Trump election-fueled rally.

Concerns over US tariffs and their impact on import prices weighed on risk sentiment. Rising import costs could drive inflationary pressures, supporting a more hawkish Fed rate path. A higher-for-longer Fed rate path may lift borrowing costs, pressuring corporate earnings and demand for risk assets.

US Consumer Confidence Slumps Below Key Level

The US CB Consumer Confidence Index slid from 105.3 in January to 98.3 in February, down from a preliminary 102.5 reading. A reading below 100 signals potential weakness in consumer spending, a crucial driver of US GDP. In December 2024, private consumption contributed 68.8% to US GDP, highlighting the importance of consumer sentiment.

The February survey revealed growing concerns about trade and tariffs, with consumers becoming more pessimistic about future job prospects.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, remarked:

“US Feb consumer confidence down more than expected on the back of gov policy concerns with a sharp increase in mentions of trade and tariffs. Perceptions of jobs mkt weakened.”

The downbeat sentiment spilled over into Asian markets on Wednesday, February 26.

Hang Seng Index Gains Despite Global Uncertainty

In Asia, the Hang Seng Index rallied 1.57% on Wednesday morning as investors brushed aside concerns about a potential US-China AI and trade war. A pullback in the Mag7 drove demand for Hong Kong-listed tech stocks, while real estate stocks drew interest from dip buyers.

The Hang Seng Mainland Properties Index jumped 3.16%, while tech giants Alibaba (9988) and Baidu (9888) advanced 1.30% and 1.40%, respectively.

EV stocks also gained, with Li Auto Inc. (2015) rising 1.59%, extending Tuesday’s 12.52% surge after unveiling its first all-electric SUV.

Mainland China’s equity markets edged higher, though the gains were modest as concerns over tariffs and tech-related restrictions lingered.

Brian Tycangco, editor and analyst at Stansberry Research, highlighted strong demand for HK-listed tech stocks, saying:

“Despite the early plunge in HK markets and closing down from the day’s highs, mainland investors kept piling into Alibaba’s shares via the StockConnect today. Wow. Another HK$6.6b (US$850m) in net buying of 9988.HK.

Nikkei Index Slides as USD/JPY Drops Below 149

Japan’s Nikkei Index declined by 1.03% on Wednesday morning, pressured by a stronger Yen and concerns over US tariffs. Falling 10-year US Treasury yields narrowed the US-Japan interest rate differential, sending the USD/JPY pair below 149.

Bets on a BoJ rate hike and expectations of multiple Fed rate cuts influence yield differentials. A stronger Japanese Yen could impact earnings for export-focused stocks and weaken demand for Japanese stocks.

Tech stocks led the losses, with Tokyo Electron (8035) and Softbank Group (9984) down 5.6% and 2.65%, respectively. Nissan Motor Corp. (7201) steadied, rising 0.45% after Tuesday’s 8.02% plunge.

ASX 200 Dips on Mining and Tech Stock Losses

Australia’s ASX 200 Index fell 0.29% on Wednesday morning, dragged lower by gold, mining, and tech stocks.

Mining giants Fortescue Ltd. (FMG) and Rio Tinto Ltd. (RIO) declined by 4.76% and 1.06%, respectively, as iron ore spot prices dropped 1.34% overnight. Gold prices also weakened on February 25, sending Northern Star Resources (NST) down 1.96%.

Tech stocks followed Wall Street lower, with the S&P/ASX All Technology Index declining 1.30%.

Outlook: Key Risks and Opportunities

Looking ahead, US-China trade tensions, central bank policies, and tariff developments will remain key drivers of market sentiment.

While innovation and strategic partnerships in AI and technology offer growth opportunities, a prolonged US-China AI war could hinder progress. Meanwhile, ongoing tariff uncertainties may fuel further market volatility.

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