Hang Seng ends at near three-month high amid trade optimism

The Hang Seng Index jumped 389 points, or 1.6%, to close at 24,181 on Monday, marking its highest finish in nearly three months and rebounding strongly from prior session losses.

Hang Seng ends at near three-month high amid trade optimism

The rally was driven by broad-based optimism ahead of high-level trade talks between the US and China, set to take place in London later in the day. Hopes that the meeting could lead to a thaw in trade tensions provided a strong tailwind for risk assets across the Asia-Pacific region. Tech stocks led the advance, with Semiconductor Manufacturing International Corp (SMIC) and Meituan both surging 4.9%, while Alibaba added 2.0% amid speculation that improving diplomatic relations could ease regulatory overhangs and facilitate greater cross-border cooperation. Rare-earth companies also saw notable gains after Chinese authorities approved several pending export applications, a move interpreted as a goodwill gesture ahead of the negotiations. This helped alleviate concerns that Beijing might further weaponize its dominance in critical mineral supply chains. However, upside momentum was tempered by the release of disappointing Chinese macroeconomic data. Exports in May rose at their slowest pace in three months, while imports fell more sharply than anticipated, underscoring sluggish domestic demand. Moreover, deflationary pressures persisted, with consumer prices (CPI) falling for a fourth consecutive month and producer prices (PPI) declining at their fastest rate in nearly two years. The data reinforced concerns that China’s post-pandemic recovery is losing steam, increasing the likelihood of further policy support from Beijing in the coming months.

What investors monitor

Investors also kept an eye on the global macro backdrop, particularly upcoming US inflation data due Wednesday, which could sway expectations for Federal Reserve policy. With markets increasingly betting on potential rate cuts later this year, softer-than-expected CPI or PPI readings in the US could add further fuel to global equity rallies. In corporate news, Giant Biogene rose 3.1% after a key shareholder disclosed plans to increase its equity stake, signaling confidence in the firm’s long-term outlook. Other top gainers included Innovent Biologics, which surged 8.0% on positive drug development news, Kuaishou (+5.5%), and Trip.com (+4.4%), the latter supported by robust summer travel demand projections. Overall, Monday’s gains extended the Hang Seng’s rebound trend, reflecting a growing appetite for risk amid hopes of geopolitical easing and potential global monetary loosening.