Insights 
VT 
Key Points:
- HK50 ends at 23,854, down from a high of 23,918 and well below the 24,000 level
- US jobs data beats expectations with 147,000 new positions and a drop in unemployment to 4.1%, reducing chances of a July Fed rate cut
Asian equities faced a split reaction on Friday. The HK50 (Hang Seng Index) struggled to hold gains and finished the session at 23,854, closing near the session low of 23,687. The index failed to recover above the key 24,000 level despite strength in the US and China markets. A strong US jobs report, escalating trade tensions, and an advancing US dollar all contributed to a cautious mood across Hong Kong stocks.
Wall Street closed at record highs overnight, with the S&P 500 cash index gaining 0.8% in a shortened session before the Independence Day holiday. However, most Asian indices failed to mirror that momentum. The Hang Seng Index (HK50) slumped 1.3%, while the China50 surged higher, closing at 13,770 after a breakout rally. This divergence underlines a shift in risk appetite—traders appear more confident in mainland policy support than in the outlook for Hong Kong equities.
US Jobs Data Shifts Rate Cut Expectations
The move came after a surprisingly strong US labour market report. Employers added 147,000 jobs in June, outpacing forecasts, and the unemployment rate fell to 4.1%.
That data triggered a shift in Fed rate expectations. Futures now reflect no cut in July, with easing more likely to begin from October onwards. The US 2-year Treasury yield jumped 9.3 bps to 3.882%, while the 10-year yield rose 4.7 bps to 4.34%.
As yields rose, the US dollar rallied, gaining 0.4% on Thursday. Although it pared some gains early Friday—down 0.2% to 144.62 yen and 0.1% to 0.7942 Swiss franc—the strength of the dollar weighed heavily on regional equities.
A strong dollar typically pulls liquidity away from emerging markets and raises funding costs. For a global trading hub like Hong Kong, that translated into more pressure on large caps and tech exporters.
Technical Analysis
The HK50 dropped sharply to a session low of 23,687 after failing to reclaim the 24,000 level, retreating from earlier highs near 24,401. Price action remains pressured beneath the 5, 10, and 30-period moving averages, all of which are pointing downward—highlighting persistent bearish momentum.
Picture: HK50 struggles to reclaim 24,000 after selloff. Stay on top of the charts with the VT Markets app
A brief rebound is underway from the 23,730 support zone, and the MACD shows early signs of a potential bullish crossover. However, the histogram remains in negative territory and overall momentum is weak. Any recovery attempt will likely face stiff resistance near 23,950.
Sentiment toward Chinese tech and property remains fragile, despite modest signs of stimulus. Hong Kong stocks are also reacting to regional uncertainty and broad risk-off sentiment. Until confidence returns, the index may continue to see pressure on rallies.
Trump’s Tariff Countdown Triggers Unease
With Wall Street closed and Trump’s July 9 tariff announcement looming, traders are likely to stay defensive heading into the weekend. If the HK50 fails to reclaim 24,000 next week, selling pressure could intensify, dragging it toward 23,600. However, should risk appetite improve—potentially triggered by clarity on trade talks or dovish signals from the Fed—the index may rebound toward 24,200, though volume will need to confirm such a shift.
