Hang Seng Index Eyes Further Gains Amid Shifting US Rate Outlook

The Hang Seng Index is expected to maintain its upward momentum on Thursday, following a strong rally that has seen the index climb over 260 points, or 1.5%, across three trading sessions. The index most recently closed at 17,978.57, narrowly missing the 18,000-point threshold. This bullish trend is largely attributed to a shifting global interest rate outlook, sparked by weaker-than-expected economic indicators from the United States. Investors are reacting to a contraction in US service sector activity reported by the Institute for Supply Management and a modest rise in initial unemployment claims. On Wednesday, the Hang Seng jumped 1.18%, led by strong performances in the technology, property, and utilities sectors. Notable gainers included Meituan, which surged 4.37%, and New World Development, which rose 4.31%. Alibaba Group also saw a 2.48% increase, while China Resources Land climbed 3.47%. While US markets closed mixed ahead of the Independence Day holiday, the Nasdaq and S&P 500 both hit record highs. This divergence reflects a complex environment where cooling economic data is viewed positively for potential rate cuts but suggests underlying weakness in the US economy. In parallel, energy markets saw a lift, with West Texas Intermediate (WTI) crude futures rising $1.07 to settle at $83.88 per barrel. This move was supported by a significant drop in US crude inventories and a weaker US dollar.