Hang Seng Index Surges on China Growth Forecasts, Stimulus Hopes

US Markets Consolidate Friday’s Rally on Fed Rate Cut Bets

On Monday, March 17, US equity markets extended their gains from March 14 amid expectations for a more dovish Fed rate path. The Dow and the S&P 500 climbed 0.85% and 0.64%, respectively, while the Nasdaq Composite Index added 0.31%.

US Retail Sales Miss Forecasts

On March 17, US retail sales missed forecasts, raising expectations of multiple Fed rate cuts. Retail sales increased 0.2% month-on-month (MoM) in February, following January’s 1.2% fall. Economists expected retail sales to rise 0.6%.

Weaker consumer spending could dampen demand-driven inflation, supporting a more accommodative Fed stance.

Meanwhile, the retail sales control group, which excludes volatile components—car sales, building materials, and gas stations—rose by 1%, reversing a 1% fall in January.

Asian Market Implications: Stronger Fed rate cut bets and Wall Street gains set the stage for an upbeat Asian session on Tuesday, March 18.

OECD Raises China Growth Forecasts

On March 17, the OECD released its Economic Outlook Interim Report. Notably, the OECD raised China’s growth forecast to 4.8% for 2025, up from 4.7% while leaving its forecast for 2026 unchanged at 4.4%.

In contrast, the OECD revised its global GDP forecast for 2025, down from 3.3% to 3.1% and from 3.3% to 3.0% for 2026. Tariffs were a focal point, with the OECD highlighting the adverse effects of bilateral tariffs on Mexico, the US, and Canada. Significantly, the OECD expected tariffs to have minimal impact on China’s economy.

The OECD’s report and expectations of further monetary and fiscal stimulus from Beijing drove demand for Hong Kong and Mainland-listed stocks.

Hang Seng Index Rallies on GDP Projections and Stimulus Hopes

In Asia, the Hang Seng Index rallied 1.84% on Tuesday morning as investors reacted to the latest OECD report and hopes for further stimulus measures from Beijing.

• The Hang Seng Technology Index soared 2.45%, while the Hang Seng Mainland Properties Index gained 1.28%.
• Tech giants Baidu (09888.HK) and Alibaba (09988.HK) surged 9.72% and 5.46%, respectively.
• However, NIO Inc. (09866.HK) led the charge, jumping 13%.

CN Wire reported:

“NIO and Contemporary Amperex Technology Co., Ltd. (“CATL”) signed a strategic partnership in Ningde, Fujian. Together, they will advance the high-quality development of the new energy vehicle industry by building a battery swapping network for passenger vehicles across the full range of products, unifying industry technical standards, enhancing capital and business collaboration, and providing efficient recharging solutions for users.”

Meanwhile, Mainland China’s equity markets posted modest gains, with the CSI 300 and Shanghai Composite Index rising 0.13% and 0.10%, respectively.

Nikkei Index Rallies as Yen Weakens

The Nikkei Index advanced by 1.46% on Tuesday as the USD/JPY pair climbed 0.31% to 149.661, its highest level since March 5. A weaker Yen makes Japanese exports more competitive, boosting earnings prospects.

Notable movers included Nissan Motor Corp. (7201) and Sony Corp. (6758), which rallied 2.01% and 2.12%, respectively.

ASX 200 Advances on Gold and Tech Gains

Australia’s ASX 200 edged up 0.13% on Tuesday morning, supported by Wall Street’s overnight gains.

• Northern Star Resources (NST) rose 0.48% as gold climbed to a record high of $3,015.
• The S&P/ASX All Technology Index gained 0.14%, tracking the Nasdaq’s rise.
• A mixed performance in banking and mining stocks limited further upside.

Outlook: Key Risks and Opportunities

Global markets remain highly sensitive to economic and policy shifts:

• US-China Trade Tensions: Rising tensions could dampen sentiment, prompting stimulus efforts.
• US Economic Data and the Fed Policy: A hawkish Fed and weak economic data may pressure risk assets. Conversely, softer data an a dovish Fed could fuel demand for risk assets.
• China’s Stimulus Measures: Further policy support could bolster HK and Mainland-listed stocks.
• Central Bank Guidance: Investors will monitor rate decisions for market direction.

Despite ongoing tariff risks, China’s stimulus efforts and innovation drive could continue boosting demand for regional stocks.

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