A US-China trade deal, with lower tariffs on Chinese goods, could further boost exports, easing deflationary pressures. On the other hand, an escalation in US-China tensions may weigh on external demand, potentially intensifying deflationary pressures.
Market Outlook: Trade Talks and Looming Economic Data Key
China’s inflation numbers will set the early tone for the week. However, trade developments and key economic data on August 15 may ultimately drive sentiment.
Progress toward a US-China trade deal would likely overshadow the inflation numbers, lifting sentiment. Market sensitivity to the upcoming data hinges on trade headlines.
A trade deal and upbeat industrial production, labor market, and retail sales figures could drive Hong Kong and Mainland China-listed stocks to new 2025 highs. However, stalled trade talks may weigh on sentiment, potentially triggering a flight-to-safety.
The Hang Seng Index gained 1.43% in the week ending August 8, closing at 24,859. Meanwhile, Mainland China’s CSI 300 and the Shanghai Composite Index advanced 1.23% and 2.11%, buoyed by trade developments and the jump in exports.
