Market Insights > Daily Market Analysis

28 August 2025,06:42

Daily Market Analysis

Hang Seng Tumbles as Trade War Fears and Tech Weakness Weigh on Sentiment

28 August 2025, 06:42

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Key Takeaways:

*President Trump’s threat of a 200% tariff on Chinese goods reignited concerns of a renewed trade war, weighing heavily on Hong Kong-listed firms.

*Profit-taking and uncertainty ahead of Friday’s U.S. PCE data kept investors on edge, with markets eyeing its impact on the Fed’s upcoming rate decision.

*Meituan’s sharp Q2 earnings drop and intensified competition in the food delivery sector further deepened the index’s decline.

Market Summary:

Hong Kong’s Hang Seng Index fell sharply this week, retreating from a four-year peak as risk-off sentiment intensified across Asian markets. The sell-off was triggered by renewed U.S.–China trade tensions after former U.S. President Donald Trump threatened a 200% tariff on Chinese goods if Beijing restricts exports of rare earth minerals to the U.S. The remarks stoked fears of a renewed trade conflict, particularly affecting Hong Kong-listed firms with significant exposure to mainland China.

Profit-taking following the index’s recent rally added downward pressure, while caution prevailed ahead of Friday’s U.S. Personal Consumption Expenditures (PCE) data—a key inflation gauge that could influence the Federal Reserve’s upcoming rate decision on September 17. Uncertainty over the timing and magnitude of potential U.S. rate cuts has left investors reassessing the outlook for global liquidity and risk assets.

The decline was further amplified by a steep drop in shares of Meituan, a heavyweight constituent of the index, which reported a sharp decline in second-quarter earnings amid intensifying competition with Alibaba and JD.com in the food delivery sector. The stock’s plunge underscored concerns over corporate profitability in a tightening competitive landscape and contributed significantly to the index’s losses.

Market participants are monitoring whether the Hang Seng can stabilize near current levels or faces further downside should trade tensions escalate or U.S. inflation data reinforce a hawkish Fed stance. A breach of key technical support could signal a deeper correction ahead.

Technical Analysis

Hang Seng Index (HK50), H4:

The Hang Seng Index extended its sharp decline from its four-year peak of 25,941.00, erasing more than 3.5% of recent gains and breaking its previous bullish structure, signaling a bearish bias.

However, the index is now approaching a critical support zone near 24,740.00—a level where it previously formed a triple-bottom pattern before staging a 4% rebound. Holding above this support could pave the way for another technical recovery.

Momentum indicators paint a mixed picture: the RSI has dipped into oversold territory, while the MACD has crossed below the zero line. A potential golden cross on the MACD, coupled with an RSI rebound, could serve as an early sign of a trend reversal for the index.

Resistance Levels: 24,145.00, 25,320.00

Support Levels: 24,740.00, 24,440.00

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