Hong Kong’s Hang Seng Index (Hong Kong 50 on FXOpen) tumbled by over 13% as trading resumed after the weekend with a sharp bearish gap.

According to media reports, this marked the biggest single-day drop since the 1997 Asian financial crisis.

Hang Seng Index Chart

In our analysis of the upward trend on the Hang Seng (Hong Kong 50 on FXOpen) chart a month ago, we noted that:
→ investor enthusiasm around artificial intelligence was still fuelling the rally;
→ however, the price appeared vulnerable to a correction.

We also highlighted that the outlook would largely depend on the fundamental backdrop, particularly the tariff standoff between China and the United States.

Since then, the Hang Seng Index (Hong Kong 50 on FXOpen) has fallen by around 17%, following the announcement of harsher-than-expected tariffs by President Trump, with China responding in kind.

Despite the drop, Hang Seng is outperforming peers

Despite Monday’s dramatic decline, the Hang Seng is still outperforming several other markets. As shown in the chart above, it remains in positive territory for 2025, unlike:
→ the ASX 200 (Australia 200 on FXOpen);
→ the S&P 500 (US SPX 500 mini on FXOpen);
→ and other global indices, including those in Europe and Japan.

What lies ahead?

Market sentiment remains highly sensitive to tariff-related news. For instance, Bloomberg reported that a post on social media platform X claimed President Trump was considering a 90-day pause on tariffs (excluding China), sparking hopes of a rebound.

Should Trump choose to soften the recently announced tariffs, this could act as a catalyst for a strong recovery across global equity markets.

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