Hong Kong stocks tumbled sharply on Thursday as rising geopolitical tensions in the Middle East and the US Federal Reserve’s cautious stance on interest rates triggered a wave of risk aversion across Asian markets.
By 2:09 pm local time, the benchmark Hang Seng Index had plunged 463 points to 23,247.38, breaching the crucial 23,500 support level and testing its 50-day Exponential Moving Average at 23,230.
The sell-off reflected investor anxiety over a potential US military intervention in the Middle East following reports that former President Donald Trump had approved attack plans for Iran.
Middle East tensions and Fed policy drive market volatility
The steep losses came as the Federal Reserve held interest rates steady but signaled caution regarding future economic conditions, even as traders remained focused on unfolding geopolitical risks.
The escalation of hostilities between Israel and Iran, coupled with US fighter jet deployments and threats of retaliation, led investors to seek safer assets.
A fragile global backdrop continues to weigh on sentiment, particularly in Asia.
On June 18, US markets ended mixed — the Nasdaq Composite eked out a 0.13% gain, while the Dow Jones Industrial Average and S&P 500 posted slight losses.
However, Asian markets bore the brunt of investor fears on June 19, with the Hang Seng Index down 2.02% in the morning session and China’s CSI 300 and Shanghai Composite also retreating.
Tech, retail stocks hit hard as oil shares rally
Technology and consumer names were among the biggest casualties in Thursday’s trading.
The Hang Seng Tech Index shed 2.36% as heavyweight stocks slumped.
E-commerce platforms Meituan and JD.com fell more than 3%, while Alibaba and Baidu declined 1.96% and 1.56% respectively.
Pop Mart, the toy manufacturer known for its Labubu figurines, dropped 5.3% to HK$248.60.
Luxury jeweller Laopu Gold slumped 6.4%.
China’s leading condiment maker, Foshan Haitian Flavouring and Food, saw a modest 0.14% gain to HK$36.35, after briefly trading below its IPO offer price of HK$36.30 on debut.
Electric vehicle makers tracked broader weakness, with BYD down 2.51% and Li Auto off 1.34%.
The Hang Seng Mainland Properties Index dropped 2.42%, reflecting wider concerns about economic growth and housing demand in China.
In contrast, some oil and gas stocks surged amid rising concerns over energy supply disruption.
JX Energy soared 68%, while Petro-king Oilfield Services climbed 20.8%.
Source: FXEmpire
Hang Seng outlook: ceasefire could take index to 24,000; US involvement could push it down to 23,000
Analysts caution that further volatility is likely, with markets highly sensitive to any military developments or diplomatic breakthroughs.
FXEmpire noted that a ceasefire in the Middle East or meaningful progress on a US-Iran nuclear deal could lift the Hang Seng Index toward the 24,000 mark.
Should the index break and hold above 24,000, it may pave the way for a retest of the June 11 peak at 24,439.
On the downside, however, US military involvement could drag the index down to 23,000, with further losses possibly extending to 22,500.
Market sentiment may find some support if Beijing signals new stimulus measures.
Near-term resistance stands at 23,500, 24,000, and 24,439 — the high from June 11.
Support lies at the 50-day EMA (23,230), followed by 23,000 and 22,500. Short-term outlook remains cautiously bullish, but contingent on geopolitical and policy developments.
Until then, risk sentiment is expected to remain fragile.
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