Trump’S Tariff Easing Signal Triggers Wednesday Surge

Hang Seng raised 2.7%

Editor’s Note: As always, we would appreciate any feedback you have. It will help us make this app more useful to you.

The Hong Kong market was closed on Monday due to the Easter holiday, but over the remaining four trading days, the Hang Seng Index rose 2.7% while the Hang Seng Tech Index gained 2.0%. The Hang Seng Index posted a choppy rally this week, with most of the gains occurring on Wednesday. The advance was driven by U.S. President Trump’s acknowledgment that tariffs on Chinese exports were excessively high and his suggestion of significant cuts, as well as positive signals from Treasury Secretary Bessent hinting at a potential easing of the U.S.-China tariff dispute. The easing of global trade tensions notably boosted market risk appetite. Beyond the tariff-related optimism, two additional tailwinds supported the market this week: first, several Hong Kong-listed pharmaceutical companies reported breakthroughs in their R&D pipelines. Thanks to faster development timelines and stronger clinical data, Chinese innovative drugs are advancing global commercialization through business development (BD) licensing deals, with limited exposure to tariff risks. Second, the Shanghai International Automobile Industry Exhibition kicked off, with new energy vehicle startups launching a wave of new models, directly fueling continued strength in the auto sector. However, downside risks also emerged. The market pulled back on Friday as optimism around tariff negotiations faded and some investors opted to take profits. In addition, President Trump’s call for pharmaceutical firms to reshore production back to the U.S. dealt a heavy blow to the CXO sector, triggering sharp volatility across the contract research and manufacturing outsourcing supply chain.

In the U.S. stock market, trading was closed on Friday for Good Friday. As of Thursday, the S&P 500 had declined 1.5%, the Nasdaq dropped 2.6%, and the Dow Jones fell 2.7%. On the macro front, data from the U.S. Department of Commerce showed that retail sales in March surged 1.4% m/m, marking the largest monthly increase in over two years. Sales rose 4.6% y/y, the highest level since December 2023. The data suggest that consumers are accelerating their spending in anticipation of potential tariff adjustments. Of the 13 categories tracked in the report, 11 posted growth. Notably, auto sales recorded the biggest increase in two years. Excluding autos, retail sales were up 0.5% m/m, above the expected 0.4%. On the tariff front, the White House announced an increase in the total tariff rate on Chinese goods to 145%, while temporarily exempting certain electronic products. After China retaliated, the White House responded with a further 245% tariff hike on medical supplies and a dynamic adjustment of the tariff exemption list. Federal Reserve Chair Jerome Powell recently stated that the inflationary impact of tariffs could be more persistent, noting that tariff levels have even exceeded the upper bound of the Fed’s expectations. He also emphasized that the Fed will not cut rates or step in to support markets in response to volatility. According to the CME FedWatch Tool, as of April 18, the probability of the Fed holding rates steady in May rose to 90.9%. On the employment front, data from the U.S. Department of Labor showed that initial jobless claims for the week ending April 12 fell to 215,000, the lowest since the week of February 8, 2025, and below both the previous reading and expectations. The prior figure was revised up from 223,000 to 225,000. Continuing claims for the week ending April 5 rose to 1.885 million, higher than both the prior reading and expectations. The previous figure was revised down from 1.85 million to 1.844 million.

In the A-share market, the CSI 300 Index rose 0.4% this week, continuing to trade within a narrow range. In terms of trading volume, turnover remained subdued throughout all five trading days, with daily volumes consistently below the 50-day average, reflecting strong investor caution. The market is currently in a rally attempt phase, with technical support at the 200-day moving average, while the gap between 3,843.4 and 3,808.0 points is acting as an overhead resistance level. On the interest rate front, the People’s Bank of China, as authorized, announced via the National Interbank Funding Center that the Loan Prime Rate (LPR) on April 20, 2025, stood at 3.1% for the 1-year tenor and 3.6% for the 5-year and above tenor, both unchanged from the previous month, marking the sixth consecutive month of no change. In foreign exchange, data from the State Administration of Foreign Exchange showed that in March, the proportion of cross-border transactions settled in RMB by individuals and entities in China reached 54.3%, with total settlement volume hitting a record high of USD 724.9 billion. The central bank recently stated it will further promote the cross-border use of the renminbi, and, together with four other ministries, issued the Action Plan for Further Enhancing Cross-Border Financial Services in the Shanghai International Financial Center, which explicitly calls for streamlining RMB cross-border processes and improving settlement efficiency. On the fiscal side, data from the Ministry of Finance showed that in Q1, national general public budget revenue totaled RMB 6.0189 trillion, down 1.1% y/y; during the same period, general public budget expenditure reached RMB 7.2815 trillion, up 4.2% y/y, with a focus on livelihood and technology-related areas. On the policy front, the State Council executive meeting emphasized the importance of “stabilizing the stock market and property market,” laying out measures to strengthen counter-cyclical adjustments and promote stable and healthy development in real estate. It also introduced a package of policies to boost consumption and expand domestic demand, including targeted support for elderly care services, cultural tourism, and other niche consumption sectors.

Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 3.1% for this week. Our Hong Kong Model Portfolio rose by 2.9% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 728.4% vs. a 9.5% up for the Hang Seng.

The best performer in our Hong Kong 33 was JNCEC(00579), it’s a leading wind and photovoltaic power operator in China and the largest gas thermal power supplier in the Beijing region. The stock gained 15.0% this week. EPS rating stands at 95, RS rating of 83, and A/D rating of A+.

Our Hong Kong Market Status are in a Rally Attempt.

From a technical standpoint, the Hang Seng Index entered a sideways consolidation phase following a gap-up rally on Wednesday driven by positive news. In the short term, support lies at the 21-day moving average, while resistance is found at the overhead gap between 22,267.96 and 22,638.21. On the volume front, market turnover continued to shrink throughout the week, with daily trading volume staying below the 50-day average. Even on Wednesday, when the index surged 2.4%, volume failed to break above the 50-day average, reflecting persistently weak investor participation. In terms of capital flow, the Southbound inflow via the HK-China Stock Connect ended its previous streak of net buying, recording a net outflow of HK$380 million for the week. Notably, on Wednesday—the day of the sharp rally—Southbound funds registered a single-day net sell of HK$18.108 billion, marking the second-largest daily net outflow on record (only behind February 24, 2021). Overall, while the Hang Seng Index has rebounded nearly 10% from its recent bottom, the short-term rally faces several headwinds. Technical resistance at the gap zone, policy uncertainties from the Trump administration, and subdued volume indicating a cautious sentiment all pose risks to the sustainability of the rebound. In addition, China’s Manufacturing PMI data set to be released next Wednesday could act as a fresh catalyst for short-term market movements, given its importance as a leading macroeconomic indicator. At this stage, investors are advised to remain calm and rational, avoid chasing short-term gains blindly, and focus on stocks with stronger-than-expected earnings and robust technical setups. A balanced and flexible strategy remains key to navigating market volatility.

What do you think? Please email us any questions or comments.

Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.

published on April 25, 2025

Prev : The Market Continued Last Week’S Sideways Consolidation Pattern

Next : The A-Share Market Continues to Experience a Rebound Amidst Volatility, With Structural Opportunities Taking the Lead.