The Hang Seng Index fell 182 points, or 0.8%, to close at 23,600 on Wednesday, reversing the previous session’s muted performance amid widespread losses across sectors.
Hang Seng dips by 0.8% at finish
Market sentiment was weighed down by concerns over China’s deflation risks, persistent economic headwinds, and escalating global trade tensions. Investors remained cautious as the European Union intensified its trade dispute with the U.S. by announcing retaliatory measures against new American steel and aluminum tariffs. The EU’s countermeasures, set to impose duties on €26 billion worth of U.S. goods, added to fears of a prolonged trade conflict that could disrupt global supply chains and dampen economic growth.
Additionally, traders braced for the release of the U.S. February Consumer Price Index (CPI) report, following a stronger-than-expected January reading that raised concerns about persistent inflationary pressures. The uncertainty surrounding potential shifts in Federal Reserve policy kept investors on edge, with worries that higher-for-longer interest rates could impact global liquidity and capital flows into Asian markets.
Losses partially offset by upbeat data from China
Despite the bearish mood, some losses were partially offset by upbeat data from China, as car sales in the country surged 34.4% year-over-year in February, signaling resilience in the auto sector despite broader economic challenges. Moreover, U.S. futures rose modestly as President Trump sought to calm recession fears, describing the current economic slowdown as a "period of transition."
On the geopolitical front, Ukraine agreed to a month-long ceasefire with Russia, raising hopes for reduced tensions in Eastern Europe, though markets remained cautious about the long-term stability of the agreement.
Technology stocks bore the brunt of the selling pressure, with major losses in Horizon Robotics (-5.8%), Meituan (-2.3%), and Kuaishou Tech (-1.1%). Other notable laggards included Lenovo (-7.0%), which faced concerns over weakening global PC demand, Prada Spa (-6.7%) amid softening luxury retail sentiment, and Sands China (-4.1%) as investors worried about Macau’s post-pandemic recovery.
Eyes on further macro figures
Looking ahead, traders will closely monitor China’s upcoming economic data, particularly inflation and industrial production figures, for further insights into the health of the world’s second-largest economy. Additionally, global investors will be keeping an eye on any further developments in U.S.-China trade relations and potential policy moves from Beijing to stimulate domestic demand.
