Hang Seng Index: Real Estate and Tech Lead Losses as US Tariff Fears Linger

US Markets: Dow Ends Five-Day Winning Streak

On Wednesday, November 27, US equity markets posted losses, with the Dow ending a five-day winning streak. The Nasdaq Composite Index fell 0.60%, while the Dow and the S&P 500 declined by 0.31% and 0.38%, respectively.

Upbeat US economic indicators signaled a robust US economy ahead of the Thanksgiving holiday. However, pre-holiday profit-taking dampened market sentiment.

US Personal Income and Outlays Report Signals Sticky Inflation

On Wednesday, the US Personal Income and Outlays Report signaled sticky inflation. The Core PCE Price Index rose 2.8% year-on-year in October, up from 2.7% in September. Additionally, personal income and spending beat forecasts, suggesting a higher inflation outlook.

Tight labor market data pointed to higher consumer spending and inflation pressures.

However, the CME FedWatch Tool suggested rising bets on a December Fed rate cut. Higher expectations for a December Fed rate cut failed to boost demand for riskier assets.

US Tariffs on China Loom Over Markets

President-elect Trump’s tariff threats targeting Canada, China, and Mexico continued to weigh on market sentiment. Beyond tariffs, concerns over Trump’s push for decoupling from China created further uncertainty.

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently remarked on Trump’s decoupling plans, saying,

“Trump will be pushing on decoupling more generally. There will be export controls, restrictions on the trade of science and technology, and a push for the repatriation of profits. All of that can be even more negative than tariffs.”

How will tariffs reshape global markets?

US tariffs could trigger a trade war with China and other economies, potentially impacting economic growth and corporate earnings. Weaker growth and earnings would likely weigh on tariff-affected economies, including China.

Hang Seng Index and Mainland China Markets Dip on US Tariff Woes

In Asian markets, the Hang Seng Index dropped by 1.08% on Thursday morning. Overnight losses from the US session contributed to the morning losses. Notably, the real estate and tech sectors contributed to the morning pullback.

The Hang Seng Mainland Properties Index and Hang Seng Tech Index declined by 1.23% and 1.17%, respectively. Tech giants Baidu (9888) and Alibaba (9988) saw losses of 1.94% and 2%, respectively.

Mainland China’s equity markets partially reversed gains from Wednesday. The CSI 300 and the Shanghai Composite were down 0.49% and 0.09%, respectively. Concerns over US tariffs and the absence of domestic consumption-boosting stimulus measures left investors cautious.

Nikkei Index Advances on Fed Rate Cut Bets

Japan’s Nikkei Index advanced by 0.38% on Thursday morning. Increasing bets on a December Fed rate cut countered the effects of a weaker USD/JPY pair, which tumbled 1.33% on Wednesday.

Tech stocks Tokyo Electron (8035) and Softbank Group Corp. (9984) advanced by 6.45% and 0.02%, respectively. Nissan Motor Corp. (7201) was up 1.12%.

ASX 200 Strikes Record High

Turning to the Australian market, the ASX 200 Index gained 0.68% on Thursday morning. Significantly, the Index brushed aside the losses on Wall Street, striking a new all-time high of 8,466. Banking and tech-related stocks contributed to the morning gains, countering a pullback in gold stocks.

The S&P/ASX All Technology Index gained 0.45%, while the Commonwealth Bank of Australia (CBA) advanced by 1.02%. Rising bets on a December Fed rate boosted demand for high-yielding Aussie bank stocks. Westpac Banking Corp. (WBC) and National Australia Bank (NAB) also saw strong morning gains.

Meanwhile, Northern Star Resources Ltd. (NST) was down 1.14% as gold prices trended lower in the Thursday morning session.

Outlook

Investors should monitor developments in Beijing’s stimulus measures, central bank commentary, and US trade policy. Further stimulus targeting Chinese consumers could mitigate tariff concerns. However, increasing Bank of Japan rate cut expectations may drive Yen demand, potentially impacting Nikkei-listed exporters. Stay updated with our insights to navigate evolving market risks.