Hang Seng Index: China PMI Boosts Gains, Eyes on China’s Stimulus Measures

US Markets Advance on Falling Treasury Yields

Are falling Treasury yields driving demand for riskier assets? Here’s what US equity markets revealed.

On Friday, November 29, US equity markets ended the month on a positive note. The Nasdaq Composite Index rose 0.83%, the S&P 500 advanced by 0.58%, while the Dow gained 0.42%.

10-year US Treasury yields dropped to 4.18%, boosting buyer appetite for riskier assets. Market bets on a December Fed rate cut likely pulled yields lower. Falling yields coincided with positive sentiment toward the US economy. Recent US economic indicators have revealed robust consumer spending and a resilient US labor market.

China Caixin Manufacturing PMI Signals Economic Momentum

On Monday, December 2, economic data from China drove demand for Asian stocks. China’s Caixin Manufacturing PMI rose from 50.3 in October to 51.5 in November. Sharp increases in domestic and overseas demand contributed to the upswing.

Notably, the Caixin Manufacturing PMI followed upbeat NBS private sector PMIs from the weekend. The November PMIs underscored the effectiveness of Beijing’s recent policy measures to bolster the Chinese economy.

Investor hopes of a stimulus boost to China’s economy further supported gains in Hong Kong and mainland China markets – can the rally be sustained?

China Stimulus Crucial for 5% Growth in 2025

Last week, Chinese government advisers reportedly called for a 5% growth target for 2025. The advisers emphasized the need for additional stimulus to mitigate the potential impact of US trade policies.

Will Beijing introduce meaningful measures to target consumer demand and counter potential US tariffs?

Markets expect the Chinese government to announce new stimulus at this month’s Central Economic Work Conference.

Stimulus measures targeting domestic consumption would be a tailwind for the Hong Kong and Mainland China equity markets.

Dr. Wang Zhe, Senior Economist at Caixin Insight Group, remarked on the Caixin Manufacturing PMI data:

“While the economic downturn appears to be bottoming out, it needs further consolidation. The consistency and effectiveness of those additional stimulus measures deserve close attention. The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers.”

Hang Seng Index and Mainland China Markets React to China’s PMI Data

In Asian markets, the Hang Seng Index advanced by 0.18% on Monday morning. The Index had rallied 1.3% in response to China’s Caixin Manufacturing PMI before easing back. Market caution led to a pullback as investors await stimulus-related news.

The Hang Seng Mainland Properties Index gained 0.50%, while the Hang Seng Tech Index rose by 0.41%. Tech giants Baidu (9888) and Alibaba (9988) were up by 0.98% and 1.14%, respectively.

Mainland China’s equity markets also responded positively to the November PMI data. The CSI 300 and the Shanghai Composite increased by 0.35% and 0.69%, respectively.

Nikkei Gains Amid USD/JPY Volatility

Japan’s Nikkei Index edged up by 0.03% on Monday morning. The USD/JPY rose by 0.59% to 150.590, providing early support. However, increasing bets on a December BoJ rate hike and last week’s sharp USD/JPY decline weighed on export-focused stocks. A stronger yen could dampen corporate earnings from overseas markets.

Softbank Group Corp. (9984) slid by 1.22%, while Sony Corp. (6758) and Nissan Motor Corp. (7201) declined by 0.38% and 0.08%, respectively.

ASX 200 Advances on China PMI Data and Mining Stocks

In Australia, the ASX 200 Index rose 0.16% on Monday morning. Mining and tech stocks offset a slump in gold-related stocks.

The S&P/ASX All Technology Index climbed 0.35%. Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) posted gains of 0.48% and 1.00%, respectively. Iron ore spot prices advanced, supported by China’s manufacturing sector data, boosting demand for mining stocks.

Meanwhile, Northern Star Resources Ltd. (NST) tumbled by 7.62% as gold prices retreated in the morning session.

Outlook

Investors should monitor developments around Chinese stimulus measures, central bank policy signals, and US trade news. Positive updates from Beijing may alleviate tariff concerns, but forward guidance from the Fed, RBA, and BoJ will remain critical for dictating market trends.

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