The Hang Seng Index fell 104 points, or 0.5%, to close at 19,601 on Thursday, reversing slight gains from the previous session. The market decline was largely driven by Nvidia's earnings forecast, which failed to meet some investors' lofty expectations, coupled with the impact of a stronger US dollar. Analysts at Goldman Sachs have highlighted a clear shift in the macro environment, pointing to potential headwinds for Asian equities stemming from this stronger dollar.

Nvidia's Forecast and Its Ripple Effect

The disappointing sales outlook from Nvidia sent ripples through global markets, dampening sentiment among Asian investors. Nvidia, a bellwether in the tech sector, plays a critical role in influencing technology-heavy indices, such as the Hang Seng Tech Index.

US Dollar Strength and Regional Impact

A post-election rally in the US dollar has added another layer of pressure on Asian equities. A stronger dollar typically leads to capital outflows from emerging markets, reducing investor appetite for riskier assets like Hong Kong stocks.

Sectoral Declines: Tech and Property Hit Hard

All sectors on the Hang Seng ended in the red, with technology and property stocks taking the hardest hits:

• Kuaishou Tech: The stock dropped 1.8% amid concerns about its future profit growth, as investors reassess the company's long-term potential.
• Alibaba Pictures: Shares tumbled 8.4% after the company reported lower profits for the first half of 2024, raising questions about its ability to navigate challenges in the Chinese film industry.
• Yadea Group: The electric scooter maker lost 5.2%, driven by weaker market sentiment around consumer goods.
• Chow Tai Fook Jewellery: The luxury jeweler declined 4.2%, reflecting broader challenges in the high-end retail sector.
• KE Holdings: The real estate platform saw a 2.8% drop, mirroring concerns across the property sector in Hong Kong.

Optimism on Beijing's Fiscal Policy

Despite the market downturn, hopes for stronger fiscal policies from Beijing in 2024 helped mitigate deeper losses. Analysts are optimistic that the Chinese government will introduce measures to counter the ongoing impact of tariffs imposed by the Trump administration on Chinese exports. Such policies could provide much-needed support to the Chinese economy and related equities.

Upcoming Economic Data

Market participants are now awaiting the release of Hong Kong’s inflation data, expected later today. The September inflation figure, which reached a three-month low of 2.2%, has fueled speculation that October's data might show further moderation. Lower inflation could influence monetary policy and provide additional support to Hong Kong equities in the medium term.

Conclusion

The Hang Seng Index continues to face challenges from a mix of global and local factors, including Nvidia's forecast, US dollar strength, and sector-specific concerns. While tech and property stocks bore the brunt of today's losses, investor attention is now shifting to potential policy announcements from Beijing and Hong Kong's inflation data. As the broader macroeconomic environment remains volatile, traders are urged to stay cautious while keeping an eye on developments in global and regional markets.

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