Hong Kong Stocks Surge to Three-Year High as U.S. Markets Retreat

Asian markets rally as Hong Kong hits a three-year high, while U.S. markets retreat amid economic concerns. Key data and market updates for investors.

Global Market Overview: Asian markets saw a strong rally on Friday, led by Hong Kong, while U.S. stocks experienced a pullback amid investor concerns over corporate earnings and economic forecasts. The Hang Seng Index surged to its highest level in three years, driven by strong performance in the technology sector, particularly Alibaba. Meanwhile, the Japanese market reacted to inflation data, and Wall Street retreated following a record-breaking week.

Hong Kong’s Hang Seng Index led the regional gains, jumping 3.13% to reach its highest level since February 2022. The Hang Seng Tech Index also soared 4.67%, fueled by a remarkable 11% rise in Alibaba’s stock after the company posted robust December quarter profits. The strong performance was attributed to growth in Alibaba’s Cloud Intelligence and e-commerce divisions.

China’s CSI 300 Index increased by 0.4%, while Japan’s Nikkei 225 and the broader Topix Index saw declines of 0.24% and 0.33%, respectively. Japan’s inflation data played a key role in investor sentiment, as the country’s inflation rate rose to 4% in January, marking its highest level since early 2023. Core inflation, which excludes fresh food prices, climbed to 3.2%, surpassing analyst expectations.

Hong Kong Stocks Surge to Three-Year High as U.S. Markets Retreat

South Korea’s Kospi slipped 0.42%, while the small-cap Kosdaq rose 0.43%. In Australia, the S&P/ASX 200 saw a minor decline of 0.32%, weighed down by weakness in commodity stocks.

Investors closely monitored currency movements, particularly the Japanese yen, which strengthened to a two-month high of 150.52 per U.S. dollar on Thursday. The yen further firmed to 150.22 per dollar, reflecting market speculation on possible Bank of Japan rate hikes.

U.S. Treasury yields remained steady, with the 10-year yield at 4.486%, while UK and German 10-year yields stood at 4.6085% and 2.5335%, respectively.

U.S. markets pulled back following a rally that saw the S&P 500 hit consecutive record highs. Investors took profits amid concerns over corporate earnings and economic data. The Dow Jones Industrial Average dropped 450.94 points (-1.01%) to 44,176.65, while the S&P 500 fell 0.43% to 6,117.52, and the Nasdaq Composite declined 0.47% to 19,962.36.

Walmart’s weak earnings forecast triggered a wave of selling as investors worried about potential economic slowdowns affecting consumer demand. Additionally, U.S. unemployment claims came in at 219K, slightly above the expected 215K, adding to concerns about labor market conditions.

In commodities, gold prices dipped 0.53% to $2,940.35 per ounce, while silver declined 0.8% to $33.35 per ounce. Oil markets saw slight declines, with Brent crude at $76.8 per barrel (-0.2%) and WTI crude at $72.8 per barrel (-0.3%).

Upcoming Economic Events

Investors will be watching key economic data releases later in the day, including:

• 01:30 PM GMT – CAD Core Retail Sales m/m
• 01:30 PM GMT – CAD Retail Sales m/m
• 02:45 PM GMT – USD Flash Manufacturing PMI
• 02:45 PM GMT – USD Flash Services PMI

Market Outlook

While Asian markets remain strong, particularly in the technology sector, investors remain cautious about global inflation trends and corporate earnings. As markets navigate an uncertain global landscape, the focus will remain on upcoming economic data and central bank policies.

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