The Hang Seng Index has recently showcased notable resilience, experiencing a 2.46% rise in the week ending January 24, 2025. This upward trend is a continuation of gains from the previous week, driven primarily by bullish sentiment surrounding a mixture of political and economic factors. The market’s reaction to the policies of former President Trump, particularly his mutable stance on tariffs, has undeniably influenced investor confidence. Additionally, the anticipation of a less aggressive Federal Reserve (Fed) has played a significant role in propelling demand for equities, not only in Hong Kong but across Mainland China as well.
The tech sector has emerged as a leader in this rally, with the Hang Seng Tech Index appreciating by 3.98%. Key players in this space, such as Alibaba, have seen significant increases, with shares up by 4.95%. Similarly, industry giants like Baidu and Tencent reported weekly gains of 3.69% and 2.91%, respectively. However, this bullish trend is not uniform across all sectors; the challenges facing China’s real estate market have resulted in the Hang Seng Mainland Properties Index navigating a downward trajectory of 2.05%. Despite these mixed signals, the overall performance of China’s equity markets remained positive, with the CSI 300 and Shanghai Composite closing up 0.54% and 0.33%, respectively.
Shifting focus to commodities, the week ending January 24 saw varied performance across different segments. Gold, often viewed as a safe haven, continued its upward trajectory, adding 2.54% to close at $2,771. This rally is fueled by expectations that inflation may be stoked by Trump’s policy shifts, solidifying gold’s status as an inflation hedge. On the other hand, iron ore experienced a minor gain of 0.23%, driven by reactions to US tariff news. In contrast, crude oil prices experienced a downturn as the market digested Trump’s intentions to persuade OPEC nations to implement price cuts.
The Australian market also saw stability, with the ASX 200 gaining 1.19% for the week, marking its third consecutive week of growth. The banking and technology sectors were significant beneficiaries of this rise, with the S&P/ASX All Technology Index soaring by an impressive 3.38%. Factors contributing to this performance included falling US Treasury yields, which enhanced the appeal of Australian banks for yield-seeking investors. Notable performers in this area, such as the National Australia Bank (NAB), which climbed by 4.29%, underscored the positive investor sentiment, while Woodside Energy Group (WDS) faced pressure, dropping 4.93% due to oil price concerns.
Turning to Japan, the Nikkei Index surged by 3.26% despite the backdrop of a stronger Japanese Yen. This increase can be attributed to market optimism surrounding Trump’s tariff strategies and a robust focus on artificial intelligence (AI) and tech sectors, which has outweighed the anticipated Bank of Japan (BoJ) rate hikes. The BoJ recently raised interest rates by 25 basis points to 0.50%. Governor Kazuo Ueda’s remarks regarding the Bank’s flexible approach to monetary adjustments, based on economic conditions and inflation signals, reflect a cautious yet optimistic outlook.
In contrast, the stronger Yen poses a risk to Japan’s export-driven enterprises, as heightened currency values can diminish profits for international sales. Consequently, stocks such as Nissan Motor Corp. experienced slight declines, falling by 0.78%. The market remains poised for volatility in the coming week, with many eyes watching for crucial data releases from China and the United States, along with updates from global central banks.
As we move into the forthcoming weeks, market participants will need to remain vigilant to fluctuations influenced by potential tariff threats and the monetary policy landscape. The Chinese government’s targeted stimulus measures may serve as a counterbalance to the emerging risks, providing some stability amid the uncertainties. Additionally, inflation data from Australia will be significant in guiding the Reserve Bank of Australia’s (RBA) future rate trajectories. Investors should closely observe these economic indicators and adjust their strategies accordingly to navigate the intricacies of an evolving market landscape. Overall, while recent trends paint a positive picture for several sectors, the potential for volatility fueled by external factors is ever-present.