Hang Seng Index Gains on Stimulus Signals Amid China’s Trade Data Concerns

How did the US markets Perform? Will the US CPI Report test market optimism?

Here’s what US equity markets revealed on Monday, December 9.

US equity markets posted losses at the start of the week, with the Nasdaq Composite Index and the S&P 500 falling 0.62% and 0.61%, respectively. The Dow extended its losing streak to three sessions, declining by 0.54%.

News of China launching an antitrust investigation into Nvidia (NVDA) over possible monopolistic practices weighed on tech stocks. NVDA ended the session down 2.55%.

US Consumer Inflation Expectations Signal Robust Demand

On December 9, US consumer inflation expectations rose from 2.9% in October to 3.0% in November. According to the New York Fed’s Survey of Consumer Expectations,

• Households expecting better financial situations in one year climbed to the highest since February 2020.
• The mean probability that the US unemployment rate will be higher in one year rose 0.5 percentage points to 35.0%.

The November survey underscored the positive sentiment toward the US economy, likely influenced by Trump’s Presidential election win.

Despite the optimism, the survey had a limited impact on Fed rate cut bets. According to the CME FedWatch Tool, the chances of a 25-basis point December cut slipped from 86.0% on December 6 to 85.8% on December 9. Wednesday’s US CPI Report and Thursday’s will be crucial for the Fed rate path and the global markets.

China’s Trade Data and Stimulus Plans Draw Interest

On Tuesday, December 10, China’s trade data sent mixed signals on demand.

Exports increased 6.7% year-on-year in November, down from 12.7% in October. Imports tumbled 3.9% in November after falling 2.3% in October. November’s trade data highlighted weak domestic and overseas demand, emphasizing the need for further stimulus to bolster the economy.

The November trade data followed Monday’s inflation figures that underscored deflationary pressures. China’s consumer prices declined by 0.6% in November month-on-month.

The trade data had a limited impact on the Hong Kong and Mainland equity markets. On Monday, China’s Politburo announced plans to roll out fresh fiscal stimulus measures and loosen monetary policy in 2025, aiming to drive consumption and broad-based domestic demand.

Investors await further details as Mainland China’s markets were closed during the announcement.

Hang Seng Index and Mainland China Markets Climb on Stimulus Signals

In Asian markets, the Hang Seng Index extended its late gains from Monday, advancing by 0.99% on Tuesday morning. Investors brushed aside November’s trade data following the Politburo’s forward guidance on stimulus and monetary policy.

The Hang Seng Mainland Properties Index was up 1.49% amid hopes Beijing can bolster the real estate market. Tech stocks also advanced, with Baidu (9888) and Alibaba (9988) gaining 0.29% and 1.78%, respectively.

Mainland China’s equity markets opened with gains. The CSI 300 and the Shanghai Composite were up by 1.90% and 1.57%, respectively.

Trump’s 10% tariff threat, hopes of improving US-China relations after Trump appointed David Perdue as the next US ambassador to China, and fresh stimulus pledges are potential tailwinds.

Nikkei Trends Higher on USD/JPY Return to 151

Japan’s Nikkei Index advanced by 0.22% on Tuesday morning. The USD/JPY returned to the 151 mark on Monday, supporting demand for Nikkei Index-listed export stocks. A weaker Yen could potentially improve overseas earnings and stock prices.

Sony Corp. (6758) and Nissan Motor Corp. (7201) rallied 3.46% and 0.95%, respectively. Tech stocks also advanced despite the Nasdaq’s losses. Softbank Group Corp. (9984) edged 0.20% higher, while Tokyo Electron (8035) gained 2.04%.

ASX 200 Falls Amid Banking and Tech Sector Sell-Offs

Meanwhile, Australia’s ASX 200 Index bucked the broader market trend, falling 0.54% on Tuesday morning. Banking and tech-related stock losses countered gold, oil, and mining sector-related gains.

The S&P/ASX All Technology Index tumbled 2.96%, while Westpac Banking Corp (WBC) and National Australia Bank (NAB) slid by 1.64% and 2.45%, respectively. The stocks succumbed to profit-taking ahead of crucial US inflation data that could impact Fed rate cut bets.

However, Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) surged by 3.38% and 4.34%, respectively. Iron ore spot jumped 3.69% on Monday, fueled by the Politburo’s announcement, driving demand for mining stocks.

This morning, the RBA held the cash rate at 4.35%, aligned with market expectations.

Outlook

Market sentiment remains sensitive to further updates from Beijing and global central banks. Positive details on stimulus plans from China could fuel risk sentiment. However, the Fed, RBA, and BoJ rate policies will continue to affect investor decisions. The RBA press conference is up next.

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