The Hang Seng Index reversed its gains from the previous week, falling 1.64% in the week ending January 3. Waning manufacturing sector activity and a potential US-China trade war weighed on market sentiment.
The tech sector led the declines, with the Hang Seng Tech Index falling 2.98%. Key movers included Baidu (9888), which slid by 4.65%, while JD.com (9618) and Tencent (0700) declined by 1.25% and 0.84%, respectively. Real estate stocks also contributed to the losses. The Hang Seng Mainland Properties Index ended the week down 1.39%.
Mainland markets posted heavier losses as investors considered the latest economic data, policy assurances, and Trump’s policies. The CSI 300 and Shanghai Composite tumbled by 5.17% and 5.55%, respectively.
Commodities Edge Higher on Demand Hopes
Commodities saw modest gains. Iron ore futures ended the week 0.45% higher despite China’s weaker manufacturing sector data. The upside was modest as markets expect more oversupply, with China’s real estate sector recovery unlikely to drive demand higher materially. Gold also trended higher, ending the week up 0.69% to $2,639.
ASX 200 Mirrors US Market Losses
Australia’s ASX 200 declined by 0.14% in the week ending January 3, tracking US market losses. Banking, mining, and tech stock losses countered gold and oil stock-related gains.
The S&P/ASX All Technology Index dropped by 0.80%, while banking giant Commonwealth Bank of Australia fell 0.76%.
In contrast, Northern Star Resources (NST) advanced by 1.03%, while Woodside Energy Group (WDS) rallied 3.96% on higher oil prices. Falling US inventories and China’s stimulus drove WTI crude higher.
Nikkei Index Set for a Choppy Reopen
In the week ending January 3, the Nikkei Index saw limited trading. Uncertainty about the Bank of Japan and the Fed’s policy outlooks weighed.
Looking at the week ahead, investors should consider the USD/JPY trends, Bank of Japan’s forward guidance, and potential intervention threats.
The USD/JPY dropped by 0.34% to 157.266 in the week. Holding onto the 157 level could support demand for export stocks. A weaker Yen improves overseas earnings. However, intervention threats and rising bets on a January BoJ rate hike could impact risk sentiment.
Outlook: Focus on Services PMIs and Trade Policies
Service sector PMIs will influence market sentiment as investors gauge global economic health. Strong data could signal tighter monetary policies in Japan and the US, while weaker readings may support riskier assets. Meanwhile, developments in Beijing’s stimulus measures and US-China trade relations remain critical drivers for global markets.
Traders should closely monitor global economic trends and trade dynamics to navigate shifting market conditions. For in-depth analysis of the Hang Seng Index and global market trends, click here.