Hong Kong stocks snap 3-day decline on optimism about US trade deals

The Hang Seng Index climbed 1.1 per cent to 24,148.07 at the close, snapping a three-day, 1.4 per cent decline, while the Hang Seng Tech Index gained 1.8 per cent. On the mainland, the CSI 300 Index rose 0.8 per cent and the Shanghai Composite Index added 0.7 per cent.

US President Donald Trump told Japan and South Korea that new tariffs would take effect on August 1 after applying a 25 per cent rate on the two countries, fanning speculation that there would be additional wiggle room in future negotiations. The tariff rates imposed on other countries including Malaysia, Indonesia and Laos ranged from 25 to 40 per cent, according to the White House.

Hong Kong stocks traded close to a three-month high after reclaiming all the losses caused by Trump’s “Liberation Day” sell-offs in April, while US stocks and an MSCI gauge of global equities both rose to record highs in July. Stocks seemed to thrive on the “Trump always chickens out” trade, also known as TACO, which refers to the idea that the American president backs down at the last minute after initial tough talk in tariff negotiations.

“Traders have seen this episode before,” said Stephen Innes, a managing partner at SPI Asset Management in Bangkok. “Whether it ends in a hard split or another handshake will depend on how the next few weeks unfold, and how much of the tariff drama makes it off the page. Until then, the tape walks a fine line between tactical jitters and strategic patience.”