The Hang Seng Index dipped 227 points, or around 1%, to close at 21,295 on Tuesday, marking its first decline in four sessions amid a broader market retreat. The sell-off came as US futures slid ahead of key US inflation data later this week, raising concerns over the Federal Reserve's potential policy path.
Hang Seng closes down by 1%
Adding to the negative sentiment, President Trump signed an executive order on Monday imposing a 25% tariff on steel imports and raising duties on aluminum from 10% to 25%, both set to take effect on March 4. The move heightened fears of global trade tensions, particularly with China, a major supplier of metals to the US.
Most sectors saw declines
Most sectors saw declines, with the technology sector dropping 2.7%—its third straight day of losses—as enthusiasm for AI and semiconductor stocks waned. Investors appeared to be taking profits after a recent rally, while concerns over slowing global chip demand also weighed on sentiment. Leading the losses, Chinese electric vehicle (EV) stocks tumbled as worries intensified that automakers like Geely Auto, which plunged 10.3%, and Xpeng, down 9.1%, would struggle to compete against BYD. BYD's aggressive pricing strategy and inclusion of advanced smart driving features across almost its entire vehicle lineup for free have put additional pressure on rivals.
Beyond the EV sector, broader market weakness was evident across various industries. Nongfu Spring, a major bottled water producer, sank 6.2% amid concerns over slowing consumer demand. Meanwhile, travel giant Trip.com and chip manufacturer Semiconductor Manufacturing International Corp (SMIC) each lost 4.9%, reflecting broader caution in the market.
Losses limited by Trump-Xi call
However, losses were somewhat limited by Trump's statement that he had spoken to Chinese President Xi Jinping since taking office on January 20, signaling a potential opening for dialogue between the two economic superpowers. Despite this, Trump did not disclose details about the conversation, leaving investors uncertain about the future trajectory of US-China relations.
Looking ahead, investors remain focused on upcoming US inflation data, which could influence Federal Reserve policy and impact global markets. Additionally, ongoing developments in trade policies and geopolitical tensions will likely continue shaping sentiment in the near term.
