The Hang Seng index drew support from a steadier tone in the dollar and yuan with the index at the highest level for over a month, although there was caution ahead of Trump’s press conference.
US equity markets were unable to sustain gains on Tuesday and the S&P 500 index closed unchanged on the day with lower energy prices having a negative impact. The decline in oil prices also had a negative impact on Hong Kong stocks, although this was offset by wider gains in commodities.
The dollar overall was little changed on the day, which lessened the immediate risk of a decline in Hong Kong equities and US bond yields were also little changed.
There was optimism surrounding short-term mainland trade flows with expectations that firm growth would underpin commodity inflows.
The yuan trend was more stable on the day as money-market pressures continued to ease, which provided some underlying market support.
After opening with slight gains, the market pushed significantly higher during the morning session with a move above 22,900 and there were solid gains into the session break.
There was underlying caution ahead of a scheduled press conference from US President-elect Trump, especially given the potential impact on the dollar and mainland markets, which would have an important impact on Hong Kong stocks.
The Hang Seng index was unable to make further headway after the break, but selling pressure was also limited.
At the close, there was a gain of 190.50 points and 0.84% at 22,935.35. This was the fifth successive daily advance and the highest close for over a month. All Hang Seng sectors were in positive territory, although the gain in Utilities was held to 0.12% due to underlying concerns surrounding rising interest rates. The Hang Seng China Enterprises index rose 0.72% on the day.
Trends in the dollar and US yields will continue to have an important impact on the Hong Kong market with Trump’s comments also likely to have a significant effect on global equity markets during Thursday amid the risk of higher volatility. At tough stance on the mainland trade and the yuan would undermine the Hang Seng index.