“Chinese automakers may not lower car prices further in the second half of the year, though intense competition will persist, according to Nomura analysts. Strong sales of Xiaomi’s YU7 model have recently boosted demand for fully electric vehicles, benefiting the broader EV sector. The entry of tech firms like Xiaomi and Huawei into the auto industry may also help stimulate additional market demand.”
Expectations of a more dovish Fed stance drove demand for real estate stocks. The Hang Seng Mainland Properties Index rallied 2.14%.
Meanwhile, tech stocks extended their losses from July 9. Baidu (09888) and Alibaba (09988) dropped 1.14% and 0.68%, respectively, leaving the Hang Seng TECH Index down 0.46%.
FOMC Meeting Minutes Signal Rate Cuts
The FOMC Meeting Minutes for June pointed to a potential Q3 Fed rate cut, stating:
“Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate, noting that upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur.”
According to the CME FedWatch Tool, the chances of a September Fed rate cut rose from 64.6% on July 8 to 75% on July 9.
However, the prospect of further Fed easing would likely hinge on incoming US inflation data and tariff developments. The Wall Street Journal Chief Economic Correspondent Nick Timriaos highlighted Fed policy uncertainty, remarking:
“The next few months of inflation data will offer a key test of competing theories about whether tariffs will prove inflationary and animate potential Fed divisions over how to manage any costs if forecasts are wrong—in either direction.”
Technical Setup: 24,500 Resistance or 23,500 Support?
On July 10, the Hang Seng Index continued to trade within the July congestion zone. However, despite recent losses, the Index trades above its 50-day Exponential Moving Average (EMA), signaling bullish momentum.
A Trump U-turn on tariffs or stimulus measures from Beijing could send the Index above 24,000. A sustained move through 24,000 may pave the way to the June 25 high of 24,533. The March high of 24,874 would be the next key resistance level. Conversely, a break below 23,750 could expose the 50-day EMA and the 23,500 level.