Hong Kong stocks rally on trade and tech optimism

[WORLD] Hong Kong’s stock market rallied on Friday, propelled by renewed optimism over potential US-China trade talks and a powerful surge in US technology shares. The gains come as investors worldwide respond to signals of easing trade tensions and a string of strong earnings from American tech giants, fueling hopes for sustained market momentum.

Strong Lead for Hang Seng Amid Trade Developments

The Hang Seng Index climbed 0.9% to 22,313.99 by mid-morning, marking its third consecutive weekly advance and reflecting a broader sense of optimism across Asian markets. The Hang Seng Tech Index outperformed with a 1.5% gain, underscoring the sector’s sensitivity to both global tech trends and trade policy headlines. This positive sentiment followed an announcement from China’s Ministry of Commerce that it is considering new trade talks with the United States-an overture that investors interpreted as a potential thaw in the ongoing tariff standoff.

Mainland Chinese markets remained closed for the Labour Day holiday, but the rally in Hong Kong provided a barometer for regional investor sentiment. The main Hong Kong Stock Market Index (HK50) has now surged over 11% since the start of 2025, reflecting a significant recovery from last year’s lows.

US Tech Giants Drive Global Risk Appetite

Investor confidence was further buoyed by a robust overnight rally on Wall Street, where major indices posted their eighth straight day of gains. The S&P 500 rose 0.9%, the Nasdaq 100 jumped 1.5%, and the Dow Jones Industrial Average added 0.3%, nearly erasing losses suffered after the latest round of US tariff announcements.

The rally was led by blockbuster earnings from Microsoft and Meta Platforms (Facebook’s parent company), both of which reported results that far exceeded analyst expectations. Microsoft’s shares surged by as much as 10% after the company posted record quarterly revenue of $70.1 billion and net income of $25.8 billion, driven by strong demand for its cloud and AI services. Meta’s stock jumped nearly 7% after reporting a 16% year-on-year increase in revenue and a 35% rise in net income, highlighting the resilience of digital advertising and AI-driven products.

“We’ve had a strong start to an important year, our community continues to grow and our business is performing very well,” said Mark Zuckerberg, Meta founder and CEO.

The combined market capitalization of Microsoft and Meta swelled by $380 billion in a single day, with Microsoft overtaking Apple as the world’s most valuable company.

Key Movers in Hong Kong: Tech and Consumer Stocks Lead

The upbeat global mood spilled into Hong Kong’s equity market, with several major stocks posting notable gains:

Xiaomi surged 3.9% after reporting increased electric vehicle deliveries in April.

Alibaba Group advanced 2.3% on renewed investor interest in e-commerce and tech.

Hong Kong Exchanges and Clearing rose 2.6%, reflecting confidence in the local financial sector.

Zijin Mining and Shenzhou International gained 3.3% and 2.7% respectively, buoyed by commodity and consumer sector optimism.

However, the rally was tempered by declines in some high-profile names. HSBC Holdings fell 1.8% after chairman Mark Tucker announced his retirement, and Sinopharm Group and New Oriental Education slipped 1.5% and 1% respectively, as investors weighed sector-specific headwinds.

Trade Policy Uncertainty Lingers

Despite the market’s optimism, analysts caution that the underlying trade policy environment remains volatile. Recent statements from US and Chinese officials have sent mixed signals, with President Trump asserting that talks are underway while Beijing has denied any formal negotiations are in progress. The uncertainty has contributed to heightened market volatility in recent weeks, as investors attempt to gauge the likelihood of a meaningful resolution.

Financial experts warn that, while hopes for a deal are driving short-term gains, the risk of renewed tariff escalations and global economic slowdown persists. BlackRock analysts note that the current US average effective tariff rate has reached levels not seen in a century, raising concerns about inflation and sluggish growth. Nonetheless, the prospect of resumed dialogue is seen as a positive step, with many investors “taking a leap of faith” that an agreement could be reached in the coming months.

Broader Market Impact and Outlook

The co-movement between US and Asian markets has intensified during the trade dispute, with news of negotiations and tariffs directly impacting stock prices across both regions. The latest rally underscores the interconnectedness of global markets and the outsized influence of US tech giants on investor sentiment worldwide.

Looking ahead, analysts expect continued volatility as markets respond to both corporate earnings and geopolitical developments. The Hong Kong Stock Market Index is projected to trade at around 21,200 points by the end of the current quarter, with a potential pullback to 19,000 over the next year if trade tensions persist3.

Friday’s surge in Hong Kong stocks reflects a potent mix of optimism over potential US-China trade talks and the global influence of US technology giants’ earnings. While the rally highlights investors’ willingness to bet on a positive outcome, the path forward remains uncertain amid ongoing policy risks and economic headwinds. For now, markets are riding a wave of hope-but vigilance remains essential as the next chapter in the global trade saga unfolds.