Hang Seng Index News: From Gains to Uncertainty on Trade News and PMIs – Weekly Recap

Trade Deal Optimism Triggers Hang Seng Rebound

US-China trade developments continued to drive sentiment in the week ending June 6. President Trump set the tone, announcing plans to call China’s President Xi Jinping after accusations of breaching the trade truce. Weaker-than-expected Chinese manufacturing PMI data failed to spook investors, highlighting the market’s focus on trade progress.

The Hang Seng Index reversed the previous week’s losses with interest, posting gains for the seventh time in eight weeks as EV and tech stocks rebounded. However, Trump’s vague update on the call with President Xi and Beijing’s silence tempered the upside.

With disappointing PMI data behind them, investor focus now shifts to Beijing’s policy response, trade headlines, and key economic data scheduled for release on June 9.

Hong Kong Stocks Recover on Trade Deal Hopes

US equities extended gains from the previous week, with the Nasdaq Composite Index climbing 2.18%. Easing trade tensions also fueled demand for Hong Kong and Mainland China-listed stocks. The Hang Seng Index rose 2.16% to end the week at 23,793. Mainland China’s CSI 300 and Shanghai Composite Index advanced 0.88% and 1.13%, respectively.

Tech and EV Stocks Rebound

The Hang Seng Tech Index rallied 2.25%, reversing the previous week’s 1.46% decline over hopes of a potential US easing of chip export restrictions. Tech giants Alibaba (9988) and Baidu (9888) posted weekly gains of 2.37% and 2.39%, respectively. Tencent (0700) gained 2.63%.

However, EV stocks also rallied. BYD (1211) advanced 2.6%. Geely Automobile Holdings (175) rose 1.82%, while Li Auto (2015) surged 4.01%.

From Optimism to Caution: Mixed Reaction to Trump-Xi Call

President Trump kept his word and spoke with President Xi on June 5. Trump shared limited details of the call. He described the 90-minute call as highly positive and stated that rare earth-related issues had been addressed. Trump also announced that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick would join the next round of talks.

Yet, Beijing remained silent about the call’s details, and doubts lingered over tariff removal, raising concerns and snapping a three-day winning streak for the Hang Seng Index on June 6.

Brian Tycangco, editor at Stansberry Research, commented:

“The China side was quiet about the details of the Trump-Xi call yesterday. But in this Trump post, he alludes to a “trade deal” that opens up exports of rare earths, which makes it clear that China has the upper hand in negotiations. No rare earths = complete paralysis of many vital industries. Can we please have no more escalation from now until the two sides meet again?”

China’s Manufacturing and Services Sectors Diverge

China’s Caixin private sector PMI data signaled divergence. The closely watched Caixin Manufacturing PMI dropped from 50.4 in April to 48.3 in May, below the neutral 50 level. New orders declined at the fastest rate in over two-and-a-half years as overseas orders continued to weaken.

By contrast, the Caixin Services PMI rose to 51.1 in May from April’s 50.7. Domestic demand offset weaker overseas orders, leading to the first rise in staffing levels in three months. However, the Caixin Composite PMI slipped from 51.1 to 49.6 due to manufacturing’s heavier index weighting.

Key Levels to Watch: 23,000 Support or a 24,000 Test

Last week’s rally drove the Hang Seng Index to within touching distance of the crucial 24,000 level. Progress toward a trade deal and upbeat data could drive the index back to 24,000. A breakout above 24,000 may bring the March high of 24,847 into play. Any fresh stimulus announcements from Beijing could accelerate a return to 24,000.

Conversely, a drop below 23,500 may expose 23,000 and the 50-day Exponential Moving Average (EMA).

Hang Seng Technical Outlook

• Resistance: 24,000, then 24,874.
• Support: 23,500, then 23,000, and 50-day EMA at 22,926.
• Bias: Neutral-to-Bullish in the short term, hinged on upcoming economic indicators, trade developments, and stimulus policy.

Forecast Summary

The Hang Seng broke above its May-June trading range as easing trade tensions lifted sentiment. May’s private sector PMIs also raised hopes of fresh stimulus from Beijing to boost domestic consumption. Looking ahead, upcoming inflation and trade data (due June 9) or stimulus signals from Beijing could influence risk appetite. However, trade developments will likely be pivotal. On June 6, President Trump announced:

“I am pleased to announce that Secretary of the Treasury Scott Bessent, Secretary of Commerce Howard Lutnick, and United States Trade Representative Ambassador Jamieson Greer will be meeting in London on Monday, June 9, 2025, with Representatives of China, with reference to the Trade Deal. The meeting should go very well.”

Markets may wait until June 10 to react fully. Until then, sentiment is likely to remain cautiously optimistic.

For real-time updates on US-China trade talks, global stimulus efforts, and central bank signals, follow our live coverage and consult our economic calendar.