Stock prices in Hong Kong surge on optimistic outlook for Federal Reserve interest rate cuts, with HSBC and Alibaba leading the charge, pushing the market close to a 4-year peak.

Hong Kong Stock Market Surges While Mainland China Indices Fall

In a contrasting trend, the stock market indices for Hong Kong experienced a surge on Tuesday, while those for mainland China saw a decline.

The Hang Seng Index, a benchmark for the Hong Kong stock market, reached its highest level since October 26, 2021, closing at 25,938.13. The Hang Seng Tech Index, which includes major Chinese tech firms, also hit a high, closing at 5,761.63.

Companies such as Alibaba Group Holding and Tencent Holdings, significant components of the Hang Seng Tech Index, saw strong gains. Alibaba's stock price increased by 3.4% to HK$141.90, while Tencent experienced a 1.5% rise, closing at HK$627. Other notable gains were seen in HSBC Holdings, which increased by 0.7% to HK$102.40, and gold producer Zijin Mining Group, which rose by 4% to HK$28.86.

The surge in the Hang Seng Index and Hang Seng Tech Index can be attributed to the rise in gold futures to US$3,600 per ounce, which positively impacted Zijin Mining Group.

In contrast, the stock market indices for mainland China, represented by the CSI 300 Index and Shanghai Composite Index, saw a decline. The CSI 300 Index slipped 0.7% on Tuesday, while the Shanghai Composite Index retreated 0.5%.

Meanwhile, the labor market report last week indicated a decrease in job growth in August, marking a significant decline in job growth compared to previous months.

In terms of monetary policy, the Federal Reserve is expected to make a 25-basis-point reduction in its policy rate next week, according to money-market traders. However, the odds of a half-point cut by the Fed next week, as per the CME Group data, are 10.6%.

This mixed economic outlook, with a potentially imminent interest rate cut by the Fed and contrasting trends in the stock markets of Hong Kong and mainland China, will likely continue to shape the global economic landscape in the coming weeks.

Stock prices in Hong Kong surge on optimistic outlook for Federal Reserve interest rate cuts, with HSBC and Alibaba leading the charge, pushing the market close to a 4-year peak.