- Summary:
- The Hang Seng Index has declined by more than 1 percent after US President Donald Trump's flip-flop statements on trade tariff negotiations.
The Hang Seng Index dropped on Thursday as investors reacted to apparent indecision by US President Donald Trump regarding trade talks with China. The Index was at 21,822 points down by 1.1% in the afternoon session and on course to snap a three-session winning streak. However, mainland China’s SSE Composite Index fought off the negative sentiment, marginally gaining +0.02%.
The Hang Seng Index is yet to close the gap created in early April when Trump announced an unprecedented triple-digit tariffs against China, which retaliated shortly thereafter.
Trump’s Mixed Signals Spook the Market
The US President earlier this week indicated that a deal with China wasn’t far off and that tariffs against the world’s second-largest economy could come down significantly in the coming days. However, the latest statement from the White House has spooked the markets. While investors had anticipated that Trump would substantially cut the high tariffs pending the outcome of trade talks.
However, a statement released on Wednesday says that any talks would be in conjunction with Beijing, and not a unilateral action. That has raised fears that it could prolong the trade talk paralysis, considering China’s recent hardline stance, including banning importation of Boeing aircrafts.
In addition, the Hang Seng Index will be subdued by the sentiment created by Trump’s threat to reimpose the reciprocal tariffs he suspended a week ago. The US President had announced a 90-day pause to the tariffs, but said on Wednesday that they could be back in play in two-to-three weeks. Top Hang Seng Index stocks dropped in reaction to the news, with Li Auto declining by 2.9%, JD.Com at -6.65%, Alibaba losing 2.1% and BYD dropping by 1.6%. However, notable gainers included Xiaomi (+0.95%), and ICBC (+0.54).
Hang Seng Index Prediction
The momentum on Hang Seng Index signals bearishness. The downward action will likely prevail if resistance persists at 22,030 points. The first support will likely be at 21,620 points, but an extended control by the sellers could take the action lower to test 21,316.
On the other hand, going above 22,030 will signal a momentum shift to the upside. In that case, the Index will likely find the first resistance at 22,315. Breaking above that level will invalidate the downside thesis. Also, such momentum could extend gains and test the second resistance at 22,645 points.
