The US Composite PMI rose from 55.1 in July to an 8-month high of 55.4 in August. Service providers hired at the fastest rate in seven months, while firms across both sectors reported higher import prices. Service sector price inflation reached its highest level since August 2022.
August’s flash PMI numbers overshadowed jobless claims data. Initial jobless claims increased from 224k (week ending August 9) to 235k (week ending August 16). According to the CME FedWatch Tool, the chances of a September Fed rate cut fell from 82.4% on August 20 to 75.5% on August 21.
EV and Tech Stocks Rebound as Dip Buyers Return
Dip-buyers jumped back into Hong Kong’s heavyweights Friday, driving EV and tech names higher despite weak earnings and private consumption signals. Electric vehicle (EV) stocks led the morning gains, with BYD (1211) rallying 1.44%. Tech heavyweight Tencent Holdings (0700) climbed 1.43%, with Alibaba (9988) and Baidu (9888) also advancing.
Power consumption numbers indicated continued economic momentum early in the third quarter, raising demand for Hong Kong and Mainland-listed stocks. Brian Tycangco, editor at Stansberry Research, commented:
“An 8.6% YoY hike in power consumption. China is collapsing backwards.”
The market’s near-term outlook remains highly event-driven. Downside risks linger unless Beijing acts decisively or Powell boosts rate cut bets.
Technical Setup: Hang Seng Index Rebound Hinges on the Fed and Beijing
Despite the morning gains, the Hang Seng Index remains within the mid-August congestion zone, underlining market uncertainty. Nevertheless, the Index trades above key technical levels, maintaining a cautiously bullish bias. The outlook hinges on several key events.
Hang Seng Index: Key Scenarios to Watch
Bullish Scenario: A dovish Fed Chair Powell, new stimulus from Beijing, upbeat Chinese PMI data, or a US-China trade deal. These factors could send the Hang Seng Index toward its 2025 high of 25,767.
Bearish Scenario: A hawkish Fed Chair Powell, Beijing’s silence on policy support, weak Chinese data, or stalled US-China trade talks. These factors may push the Index below 25,000, exposing the 50-day Exponential Moving Average (EMA).
