Hang Seng Index: Tech and Real Estate Lead Declines Amid Stimulus Worries

US Markets Retreat: Is the Labor Market Showing Cracks?

Here’s what US equity markets revealed on Thursday, December 12.

US equity markets posted losses on Thursday, highlighting investor concerns over economic stability. The Nasdaq Composite Index and the S&P 500 declined by 0.61% and 0.66%, respectively, while the Dow extended its losing streak to six sessions, falling 0.54%.

Adobe Inc. (ADBE) grabbed the market headlines, tumbling 13.69% after releasing below-estimate 2025 revenue forecasts.

US Economic Indicators Fuel Fed Uncertainty

US producer prices and jobless claims sent mixed signals on Thursday. Producer prices increased by 3.0% year-on-year in November, up from 2.6% in October. As a leading inflation indicator, the uptick could signal higher consumer price trends, complicating expectations for Fed rate cuts in Q1 2025.

However, US initial jobless claims jumped from 225k the week ending November 30 to 242k the week ending December 7, the highest level since early October. The unexpected spike in claims fueled concerns about the labor market, supporting a more dovish Fed rate path.

These labor market concerns set the tone for cautious trading in Friday’s Asian session.

Bank of Japan Tankan Data Surprises to the Upside

On Friday, December 13, the Bank of Japan’s survey-based Tankan data beat market forecasts.

• Tankan Large Manufacturing Index rose to 14 in Q4 2024, up from 13 in Q3 2024, defying forecasts of a drop to 12.
• Tankan Large Non-Manufacturing Index dipped slightly to 33 in Q4 2024, beating forecasts of 32.

Upbeat sentiment across the private sector could support bets on a December BoJ rate hike. The BoJ will announce its monetary policy decision on Friday, December 19.

A more hawkish BoJ rate path could drive Japanese Yen demand, weighing on Nikkei Index-listed export stocks. A stronger Yen may reduce contributions from overseas earnings, impacting company profits.

China’s Stimulus Measures Fail to Boost Confidence

On Thursday, China’s Central Economic Work Conference (CEWC) outlined measures to support China’s economy. The measures include a higher budget deficit, looser monetary policy, and issuing more debt. Thursday’s announcement followed the Politburo’s pledge to introduce fiscal stimulus, targeting consumption and broader domestic demand.

However, experts expressed doubts over whether the measures would meaningfully boost consumption.

Brian Tycangco, editor/analyst at Stansberry Research, commented on Beijing’s latest round of stimulus, saying,

“China’s economy is weak but not catastrophically weak. Trying to figure out the minimum amount (of stimulus) needed to keep the economy going. Property is weak in large part because they (Beijing) want it to be weak. What should be soaring is consumption but not doing too well. You can’t incentivize consumption through one-off vouchers.”

The Kobeissi Letter remarked on China’s consumer sentiment, saying,

“Even as hundreds of billions of dollars of stimulus have begun, Chinese consumer sentiment is terrible. Over the last 3 years, consumer confidence in China is down ~ 50 points. Such a drop in consumer assessment of the Chinese economy has almost never been seen before.”

Concerns about the stimulus measures failing to drive consumption and broad-based demand weighed on the Hong Kong and Mainland China markets.

Hang Seng Index Falls on Stimulus Concerns

In Asian markets, the Hang Seng Index slid by 1.74% on Friday morning. Investors reacted to China’s latest stimulus measure while considering the prospects of US tariffs on Chinese goods. Tariffs could reduce demand for Chinese goods, slowing the economy and pressuring domestic consumption. Real estate and tech stocks contributed to the morning losses.

The Hang Seng TECH Index declined by 2.03%, with tech giants Alibaba (9988) and Tencent (0700) falling 1.14% and 1.20%, respectively. The Hang Seng Mainland Properties Index tumbled by 3.94%.

Mainland China markets also suffered morning losses, with the CSI 300 and the Shanghai Composite down 1.58% and 1.23%, respectively.

As Beijing’s policies take shape, markets could remain volatile, with real estate and tech stocks particularly vulnerable in the short term.

Nikkei Falls Amid BoJ Policy Uncertainty and Trump Fear

Japan’s Nikkei Index dropped by 1.23% on Friday morning, weighed by overnight losses in the US markets. Despite the USD/JPY returning to the 153 level, it failed to boost export stocks. Risk off sentiment stemming from looming US tariffs and the possibility of a December Bank of Japan rate hike weighed on the Nikkei.

Tokyo Electron (8035) slid by 2.64%, while Sony Corp. (6758) declined by 2.89%. Auto stocks were also in negative territory, with Toyota Motor Corp. (7203) down 1.45%.

ASX 200 Faces Four-Day Losing Streak

Meanwhile, Australia’s ASX 200 Index eyes a four-day losing streak, falling 0.62% in the morning session. While losses were broad-based, gold and mining stocks suffered the heaviest losses.

Iron ore prices slid in the Friday morning session over market reaction to China’s measures to bolster the economy. BHP Group Ltd. (BHP) and Rio Tinto Ltd. (Rio) were down 1.84% and 2.94%, respectively.

Meanwhile, Northern Star Resources Ltd. (NST) dropped 2.0% after gold tumbled 1.36% to $2,681 on Thursday.

Outlook

Global markets may remain on edge as traders await clarity on Fed cuts, BoJ rate hikes, and China’s stimulus efficacy. Volatility across equities, currencies, and commodities could intensify in the weeks ahead.

For expert insights and detailed analysis of the Hang Seng Index and global markets, click here.