The Hang Seng Index reversed its losses from the previous week, rising 1.87% in the week ending December 27. China’s new stimulus measures boosted demand for listed shares from Hong Kong and mainland China.
In addition, equity markets benefited from a smaller-than-expected decline in Chinese industrial profits. Industrial profits fell 4.7% in November compared to the same period in 2023. Economists expected industrial profits to fall 5%.
The Hang Seng Tech Index rose 2.12%, while tech giants Baidu (9888) and Alibaba (9988) rose 3.72% and 2.81% respectively. New stimulus measures also boosted demand for real estate stocks. The Hang Seng Mainland Properties Index ended the week up 1.41%.
Mainland markets also made gains on stimulus measures aimed at consumers. The CSI 300 and the Shanghai Composite posted gains of 1.36% and 0.95%, respectively.
However, concerns about Trump’s threat of tariffs limited weekly gains. Markets remain uncertain whether focusing on domestic demand and consumption can counter the effects of a potential trade war between the US and China.
Gaining raw materials through demand optimism
Iron Ore Spot ended the week with a loss of 1.37%, extending losses from the previous week. Oversupply concerns weighed on spot prices, due to US tariff threats and Beijing’s new stimulus measures.
China is reportedly seeing steel production continue to shrink, while iron ore imports are boosting inventories. Supply from China and Africa could flood the market, potentially causing prices to fall.
Meanwhile, gold fell 0.06% to $2,621 in the week ending December 27, marking a second consecutive weekly loss.
ASX 200 enjoys China-driven recovery
Australia’s ASX 200 rose 2.41% in the week ending December 27, recovering from a 2.76% loss from the previous week. Banking and technology stocks led the rally.
The S&P/ASX All Technology Index gained 2.47%. Banking giants National Australia Bank (NAB) and Commonwealth Bank of Australia rose 3.33% and 3.96% respectively. Expectations of an RBA rate cut in February boosted demand for Australian banks as lower interest rates could boost lending appetite.
The Nikkei index rises while the USD/JPY rises to 158
In the week ending December 27, the Nikkei index rose 4.08%. The Bank of Japan’s reluctance to implement a rate hike and the Fed’s less accommodative outlook for the rate path fueled a rally between the USD and the JPY. The pair advanced 0.92% to 157,802, extending its winning streak to three weeks.
The weaker Japanese yen resisted speculation about a BoJ rate hike in the first quarter of 2025. Inflation in Tokyo and retail sales data fueled bets on a BOJ rate hike in January. However, the BoJ previously said it needed to assess the effects of Trump’s policies and more data on wage growth before taking action.
Technology stocks contributed to the weekly gains. Tokyo Electron (8035) and Softbank Group Corp. (9984) improved by 4.64% and 5.64% respectively.
Market hopes for a merger between Honda Motor and Nissan Motor Corp. (7201) supported demand for auto stocks. Nissan Motor Corp rose 14.94% this week.
Outlook: Private sector PMIs and policies in focus
Private sector PMI data could be crucial as markets assess the global economic outlook in the coming week. The PMI data will provide investors with insight into private sector demand, labor market conditions and price trends.
Weak data from the US could indicate a dovish Fed, which could increase demand for riskier assets. Meanwhile, economic developments in China and US tariff policy will remain important drivers of market sentiment.
Traders must keep a close eye on global economic trends and trade dynamics to navigate changing market conditions.
For an in-depth analysis of the Hang Seng Index and global market trends, click here.