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What’s happening: The Hang Seng index spiked on Thursday amid a broader rally in the Asian markets.
What happened: Chinese stocks listed on Hang Seng climbed as the Asian dragon set its GDP and inflation targets.
Investors shrugged off trade war jitters and focused on China’s economic data.
Why it matters: Mounting concerns of a US-China trade war had been weighing on market sentiment. President Donald Trump slapped additional tariffs on China and the Asian nation responded with 10%-15% tariffs on US agricultural products. China’s statements of being prepared to fight “any kind of war” further stroked geopolitical tensions.
Against the backdrop of rising pressure from the US, China announced an economic growth target of around 5% for 2025. The country pledged additional fiscal support to counter the effects of higher US tariffs.
China also lowered its inflation expectations to “around 2%.” It said it would take special initiatives to boost consumption and cut interest rates whenever needed. The government added that it would issue treasury bonds to replenish capital and use monetary policy to boost China’s property and stock markets.
On Wednesday, the Caixin China General Services PMI improved to 51.4 in February, from January’s four-month low of 51.0. The figure also surpassed market estimates of 50.8. The increase in China’s services PMI was driven by a rise in new business, with improved market demand.
The Caixin China General Composite PMI rose to 51.5 in February, from 51.1 in the previous month. This was the highest reading since November 2024.
Chinese tech stocks led the charge on Thursday. Shares of Kuaishou Technology advanced 15.70% to close at HK$60.80, while JD.com climbed 8.42% to HK$179.00, Alibaba rose 8.39% to HK$140.80 and Tencent Holdings spiked 7.22% to HK$542.00.
The Hang Seng Index rallied 3.29% to 24,369.71. Meanwhile, Shanghai Composite Index rose 1.17% to settle at 3,381.10 on Thursday.
This morning, China reported a widening of its trade surplus to $170.52 billion in January-February combined, from $125.16 billion in the same period last year. The figure surpassed expectations of a trade surplus of $142.4 billion.
What to watch: Investors will monitor comments by the Trump administration about China’s retaliatory tariffs.
Markets will also watch the release of China’s inflation rate on Sunday. China’s annual inflation rate had climbed to 0.5% in January, from 0.1% in December. The figure not only surpassed market expectations of 0.4%, but also marked the highest reading since August 2024. In sharp contrast, the country is expected to report deflation of 0.5% in February.
Context: The EUR/USD climbed on Thursday, remaining on track for its biggest weekly gain since March 2020.
Details: The European Central Bank cut its benchmark interest rates for the second time this year. The ECB announced a cut of 25 basis points, bringing the interesting rate to 2.5%, in-line with market expectations.
With President Donald Trump threatening to levy 25% tariffs on goods imported from the EU, ECB President Christine Lagarde said there was a “high level of trade and policy uncertainty.” The ECB reduced its economic growth projections for 2025 and 2026 from 1.1% to 0.9% and from 1.4% to 1.2%, respectively.
On Thursday, EU leaders signed off a plan to loosen budget restrictions so that the 27 countries of the bloc can increase their military spending, amid growing uncertainty over Trump’s support for the region’s security.
Investors shrugged off weak economic data from the Eurozone on Thursday. The HCOB Eurozone Construction PMI declined to 42.7 in February, from 45.4 in the previous month. The figure missed market expectations of 45.4 and marked the steepest downturn in three months. The Eurozone also announced retail trade growth of 1.5% year-on-year in January, decelerating from 2.2% in December and missing estimates of 1.9%.
Despite this, weakness in the US dollar lent support to the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, declined by 0.13% to 104.17 on Thursday.
The EUR/USD rose by 0.5% to 1.084 on Thursday. The forex pair has gained more than 4% so far this week.
What to watch: Investors will monitor further announcements by the Trump administration, especially related to tariffs.
Markets will also watch the Eurozone’s annual GDP growth rate and employment change data, scheduled to be released today (14:00 UAE Time). The Eurozone’s economic growth is expected to remain flat at 0.9% in the fourth quarter of 2024. The number of employed persons in the bloc is projected to rise by 0.1% to 171.17 million in the fourth quarter of last year.
Other Markets: European trading indices closed mixed on Wednesday, with the Stoxx 600 and FTSE 100 down by 0.03% and 0.83%, respectively, and the DAX and CAC 40 up by 1.47% and 0.29%.
President Donald Trump has suspended military shipments to Ukraine, pausing the sharing of US intelligence in the country’s war with Russia. The news sent the RUB/USD pair higher in forex trading this morning.
Bangladesh’s inflation rate eased to 9.32% in February, from 9.94% in the previous month, lending some support to the BDT/USD forex pair.
Indonesia’s foreign exchange reserves fell to $154.5 billion in February, from January’s record high of $156.1 billion. This being lowest level of reserves since November 2024 sent the IDR/USD pair lower in forex trading this morning.
The Philippines said its manufacturing production rose 4% year-on-year in January, following a 0.4% rise in the previous month. The acceleration lend support to the PHP/USD forex pair.
South Korea’s current account surplus fell sharply to $2.94 billion in January, from $12.37 billion in the previous month. However, this being the ninth consecutive month of a current account surplus sent the KRW/USD pair higher in forex trading this morning.
Austria balance of trade and wholesale prices (12:00 UAE Time), Spain’s industrial production (12:00 UAE Time), Switzerland’s foreign exchange reserves (12:00 UAE Time), Taiwan’s balance of trade and inflation rate (12:00 UAE Time), Hang Kong’s foreign exchange reserves (12:30 UAE Time), Singapore’s foreign exchange reserves (13:00 UAE Time), Greece’s GDP growth (14:00 UAE Time), Chile’s inflation rate (15:00 UAE Time), Chile’s balance of trade (15:30 UAE Time), India’s foreign exchange reserves (15:30 UAE Time), Brazil’s GDP growth (16:00 UAE Time), Mexico’s inflation rate and auto exports (16:00 UAE Time), Russia’s foreign exchange reserves (17:00 UAE Time), Canada’s unemployment rate (17:30 UAE Time), US nonfarm payrolls (17:30 UAE Time), Turkey’s treasury cash balance (18:30 UAE Time), Brazil’s balance of trade (22:00 UAE Time) and Argentina’s industrial production (22:00 UAE Time).
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