The Hang Seng Index reversed its gains from the previous week, falling 1.64% in the week ending January 3. Declining activity in the manufacturing sector and a possible trade war between the US and China weighed on market sentiment.
The technology sector led the declines, with the Hang Seng Tech Index down 2.98%. Major gainers included Baidu (9888), which fell 4.65%, while JD.com (9618) and Tencent (0700) fell 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 steeper losses as investors factored in the latest economic data, policy assurances and Trump’s policies. The CSI 300 and Shanghai Composite plunged 5.17% and 5.55% respectively.
Raw materials are higher in demand
Commodities posted modest gains. Iron ore futures ended the week 0.45% higher despite weaker Chinese manufacturing data. The upward trend has been modest as markets expect greater oversupply, while the recovery of China’s real estate sector is unlikely to significantly increase demand. Gold also trended higher, ending the week up 0.69% to $2,639.
ASX 200 reflects US market losses
Australia’s ASX 200 fell 0.14% in the week ending January 3, tracking US market losses. Losses in banking, mining and technology stocks offset gains associated with gold and oil stocks.
The S&P/ASX All Technology Index fell 0.80%, while banking giant Commonwealth Bank of Australia fell 0.76%.
In contrast, Northern Star Resources (NST) advanced 1.03%, while Woodside Energy Group (WDS) rose 3.96% on higher oil prices. Falling US inventories and Chinese stimulus pushed WTI crude higher.
Nikkei index poised for a choppy reopening
The week ending January 3 saw limited trading on the Nikkei Index. Uncertainty about the policy prospects of the Bank of Japan and the Fed weighed heavily.
Looking to the week ahead, investors should consider USD/JPY trends, the Bank of Japan’s forward guidance and potential intervention threats.
The USD/JPY fell 0.34% this week to 157.266. Holding the 157 level could support demand for export stocks. A weaker yen improves foreign earnings. However, intervention threats and rising expectations of a BoJ rate hike in January could impact risk sentiment.
Outlook: Focus on services PMIs and trade policy
Services PMIs will influence market sentiment as investors assess global economic health. Strong data could point to tighter monetary policy in Japan and the US, while weaker data could support riskier assets. Meanwhile, developments in Beijing’s stimulus measures and US-China trade relations remain crucial factors for global markets.
Traders must keep a close eye on global economic trends and trade dynamics to deal with changing market conditions. For an in-depth analysis of the Hang Seng Index and global market trends, click here.