Hang Seng Index Slides 1.89% as Trump Tariff Fears and Weak China Data Weigh on Markets

The Hang Seng Index opened June 2 with sharp losses, falling 1.89% to 22,849 amid rising US-China trade tensions and underwhelming Chinese PMI readings. Investor sentiment weakened further after former President Donald Trump accused China of violating a trade truce, fueling concerns over a new round of tariffs.

🔻 Tech and EV Stocks Lead the Sell-Off

Hong Kong tech giants and electric vehicle (EV) manufacturers bore the brunt of the sell-off. Alibaba fell 1.76%, Baidu dropped 1.59%, and EV leaders BYD (-3.67%) and Li Auto (-3.56%) tumbled as fresh restrictions on chip technology and rare earth mineral disputes heightened uncertainty.

The Hang Seng Tech Index declined 1.42%, reflecting sector-wide weakness fueled by potential US tariffs and Beijing’s cautious stance on stimulus.

⚠️ Trump Tariff Threats Rattle Sentiment

On May 30, Trump accused China of delaying rare earth exports—critical for EV and high-tech sectors—breaking the 90-day truce. The White House is reportedly exploring Section 122 of the 1974 Trade Act, which could permit temporary 15% tariffs across global imports for 150 days. This has reignited trade war fears.

📉 China PMI Data Signals Economic Weakness

Fresh Chinese macroeconomic data added pressure:

• NBS Manufacturing PMI ticked up to 49.5 in May (still contractionary).
• Export Orders PMI rose from 44.7 to 47.5.
• Non-Manufacturing PMI edged down to 50.3 from 50.4.

Although marginally better, these figures suggest China’s recovery remains fragile, and investors await possible fiscal or monetary support.

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📊 Hang Seng Technical Levels to Watch

Level	Zone Description
Support	22,750 → 50-day EMA at 22,744 → 22,000
Resistance	24,000 → March high of 24,847

Bias: Neutral-to-Bullish short term, dependent on China’s data and trade policy responses.

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🧐 Outlook: Volatility Ahead

Markets remain on edge as tariff fears, weak PMI prints, and a lack of stimulus guidance dominate the headlines. A decisive drop below 23,000 could open the path to test the 22,000 level. Conversely, any positive surprise in China’s June 3 and June 5 PMI updates or a stimulus announcement from Beijing may lift the Hang Seng toward 24,000 and beyond.

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