The Hang Seng Index tumbled 409 points, or 1.9%, to close at 21,057 on Wednesday, breaking a six-session winning streak as renewed concerns over U.S. trade policy sent jitters through global markets. The decline followed a sharp drop in U.S. futures after President Trump reignited tariff threats, stoking fears of a prolonged trade conflict with China.
Hang Seng pares losses at finish
Investor sentiment was further dampened after major investment banks including Morgan Stanley and UBS slashed their 2024 GDP forecasts for China, citing intensified external pressures from tariffs and a weaker global demand outlook. Goldman Sachs also flagged concerns that frontloaded exports in late 2024 could drag on second-quarter economic activity, clouding the near-term outlook despite a stronger-than-expected first-quarter GDP figure.
China's economy grew by 5.4% year-on-year in Q1, outperforming expectations of 5.1% and marking a second consecutive quarter of steady expansion. However, the upbeat data failed to offset market pessimism, as traders feared that escalating trade tensions could weigh on future growth and corporate earnings.
Losses were widespread across sectors
Losses were widespread across sectors, with technology stocks leading the retreat. The tech sector sank 3.7% after Nvidia revealed it may face a $5.5 billion revenue hit due to new U.S. export restrictions on its H20 AI chips, a development that sent shockwaves through the broader chip and AI-related industries.
Among notable laggards, Alibaba dropped 4.1% and Tencent fell 2.6%, while Meituan plunged 7.4%, Kuaishou Technology slid 4.6%, Wuxi Biologics dropped 4.5%, and Xiaomi retreated 4.4%.
Still, the Hang Seng managed to pare some losses late in the session after Chinese Premier Li Qiang reiterated Beijing’s commitment to strengthening domestic consumption and boosting internal demand—key pillars in the country’s strategy to offset external headwinds.
Market watchers now look ahead to further policy signals and corporate earnings for clues on whether the pullback marks a short-term correction or the start of deeper volatility.
