Hang Seng Index: Tech Stocks Weigh as Tariffs Loom, with Baidu Down 1.01%

US Markets: Nasdaq Extends Winning Streak on Tech Stock Demand

How did the US markets fare on Tuesday, and can the Nasdaq maintain the momentum? Here’s what US equity markets revealed.

On Tuesday, December 3, US equity markets had another mixed session. The Nasdaq Composite Index extended its winning streak to three sessions, gaining 0.40%. The S&P 500 was up 0.05%, while the Dow dropped by 0.17%.

US labor market data signaled a tight labor market, influence the S&P 500 and the Dow. However, demand for tech stocks continued driving the Nasdaq higher.

US Labor Market Data Suggests a Hawkish Fed Policy Stance

JOLTS Job Openings increased from 7.327 million in September to 7.744 million in October, underscoring a resilient US labor market. Higher quit rates also signaled confidence in the labor market.

However, despite the upswing in job openings and quits, economists continued pricing in a December Fed rate cut. According to the CME FedWatch Tool, the chances of a 25-basis point rate cut stood at 74.6% on December 3, up from 61.6% on December 2.

Market sentiment toward a December Fed rate cut boosted demand for tech sector gains.

South Korean President Imposes Martial Law Impacting Market Sentiment

On Tuesday, South Korean President Yoon Yeol declared martial law, setting the tone for the Wednesday Asian session. Despite South Korea’s parliament voting against the measure, forcing President Yeol to lift martial law, uncertainty impacted the Asian markets. South Korea is the fourth largest economy in Asia, potentially affecting the regional economy.

South Korea’s KOSPI Index was down 2.31% on Wednesday morning.

China’s Caixin Services PMI Disappoints

China’s Caixin Services PMI unexpectedly fell from 52.0 in October to 51.5 in November. Economists expected an increase to 52.5. Slower new business growth and weaker selling prices fueled concerns about China’s economic outlook. Notably, the survey revealed concerns about the global trade outlook and increasing competition.

The latest data coincides with Trump’s threat of imposing 100% tariffs on BRICS nations.

Expert Views on China’s Economy and Stimulus

Brian Tycangco, Editor/Analyst at Stansberry, remarked on China’s latest private sector PMI data, saying,

“This mirrors the deceleration seen in the official non-manufacturing PMI that came out last week. Both manufacturing and services industries are in expansion mode in November. But it’s important for Beijing to keep its foot on the gas pedal when it comes to the services sector, which is driving the transition in the economy to one that is high-value, data-driven.”

Last week, speculation about further stimulus measures intensified ahead of December’s Central Economic Work Conference. Markets anticipate stimulus measures targeting domestic consumption to bolster the Chinese economy.

Hang Seng Index and Mainland China Markets Struggle Amid Economic Uncertainty

In Asian markets, the Hang Seng Index slipped by 0.04% on Wednesday morning. The Caixin Services PMI, Trump’s tariff threats, and South Korea’s political uncertainty weighed. Real estate and tech stocks led the morning losses.

The Hang Seng Mainland Properties Index declined by 1.05%, while the Hang Seng Tech Index dropped by 0.23%. Tech giants Baidu (9888) and Alibaba (9988) slid by 1.01% and 1.89%, respectively.

Mainland China’s equity markets also trended lower. The CSI 300 and the Shanghai Composite were down by 0.46% and 0.24%, respectively.

Punitive tariffs on Chinese goods and weaker demand may require more meaningful stimulus measures to support the economy. Tariffs and weak demand could impact company earnings and stock prices.

Nikkei Dips on BoJ Rate Hike Bets

Japan’s Nikkei Index declined by 0.37% on Wednesday morning. The USD/JPY gained 0.15% to 149.805, limiting the downside. South Korea’s political uncertainty and Bank of Japan rate hike bets weighed for Japanese stocks.

On Wednesday, the all-important Jibun Bank Services PMI rose from 49.7 in October to 50.5 in November, up from a preliminary 50.2. The rebound in the services sector could support a December Bank of Japan rate hike.

Notably, Nissan Motor Corp. (7201) slid by 3.00%. Softbank Group Corp. (9984) and Tokyo Electron (8035) saw losses of 2.24% and 0.59%, respectively.

ASX 200 Pulls Back on Banking Stock Losses

Meanwhile, Australia’s ASX 200 Index fell by 0.52% on Wednesday morning. Banking and gold-related stock losses countered mining and tech stock gains.

Commonwealth Bank of Australia and National Australia Bank declined by 0.65% and 1.20% respectively. Weaker-than-expected Aussie GDP numbers weighed on the banking sector. Slower growth could dampen credit demand, potentially lowering bank earnings.

Northern Star Resources Ltd. (NST) slid by 1.80% as gold failed to reverse its losses from Monday.

However, mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) gained 0.12% and 0.58%, respectively. Iron ore spot prices advanced further on Tuesday, fueling demand for mining stocks. Nevertheless, iron ore prices retreated on Wednesday amid demand uncertainty, limiting the gains for mining stocks.

Outlook

Investors should focus on developments in Chinese stimulus policies, central bank guidance, and US trade measures. Positive updates from Beijing could temper tariff concerns, while signals from the Fed, RBA, and BoJ will influence market sentiment. Political developments in South Korea will also remain a key watchpoint for Asian markets.

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