Hong Kong stocks snap 3-day decline as weak US jobs data raises bets on Fed rate cut
Sentiment recovers as investors see a September rate cut as a done deal, while mainland stocks recuperate lost ground from tumult
The Hang Seng Index rose 1.4 per cent to 25,417.98 at the close, capping a 1.4 per cent gain for the week. The Hang Seng Tech Index added 2 per cent.
The CSI 300 Index of China’s onshore stocks climbed 2.2 per cent and the Shanghai Composite Index rebounded 1.2 per cent, recovering all the lost ground from a rout sparked by bubble concerns.
Hang Lung Properties advanced 6.1 per cent to HK$8.49 and Wharf Real Estate Investment rallied 3.9 per cent to HK$22.62 on expectations the city’s monetary authority will follow the US in cutting rates, spurring home sales. Tencent Holdings, the second-biggest weighting on the Hang Seng Index, rose 2.2 per cent to HK$605.50, while Alibaba Group Holding gained 1.5 per cent to HK$131.80. Xinyi Solar Holdings rallied 7.5 per cent to HK$3.71 on optimism that the downturn in the photovoltaic industry is behind it.
Sentiment on Hong Kong stocks got a fillip after the S&P 500 index rose to a record on Thursday, with traders pricing in a 99 per cent probability of a quarter-point cut in the borrowing cost at the Fed’s policy meeting on September 18. A private report showed that US payroll increases missed estimates, while jobless claims rose to the highest since June. The string of data came just a day before the official non-farm payroll report due Friday night. A soft reading will cement a Fed cut, with some traders even expecting a half-point reduction.
“Markets took that mix as evidence of a gentler landing – the labour market losing steam but not stalling out, keeping the September rate-cut drumbeat alive,” said Stephen Innes, a managing partner at SPI Asset Management in Bangkok. “Equity traders are playing the Goldilocks script, betting on a soft payroll print to hand them another record close.”