Notably, US stock futures were in negative territory in the morning session, reflecting investor caution over inflation and central bank policy moves. The Nasdaq 100 E-mini and S&P 500 E-mini fell 34 points and 5 points, respectively, while the Dow Jones E-mini dropped 62 points.
Meanwhile, the Hang Seng Index and Mainland China’s CSI 300 and the Shanghai Composite Index bucked the broader market trend. The Hang Seng Index rose 0.39%, while the CSI 300 and Shanghai Composite Index gained 0.03% and 0.13%, respectively.
Sentiment toward Chinese firms advancing in the AI space, along with hopes for continued policy support from Beijing, has boosted Hong Kong and Mainland-listed stocks.
Surge in Chinese Markets
Xinhua News Agency’s China Wire reported record monthly turnover in Chinese markets, stating:
“China’s stock market is on track for record monthly turnover, with average daily volume reaching 2.2 trillion yuan ($309 billion) this month, surpassing the previous high of 2 trillion yuan set in October following government stimulus measures. The rally has propelled the onshore CSI 300 Index up nearly 10% this month, making it one of the world’s top performers, despite ongoing concerns over US tariffs and China’s property crisis.”
JPMorgan cited retail traders, foreign inflows, speculative activity, and AI optimism as key drivers.
Sustained gains could trigger a rotation from US to Hong Kong and Mainland-listed stocks. While US markets hover at record highs, the Hang Seng Index, CSI 300, and Shanghai Composite remain well below all-time highs.
Outlook: US Data in Focus
Looking ahead, investors should brace for market volatility. Later today, the US Personal Income and Outlays Report could influence the timeline for a Fed rate cut. Economists forecast the Core PCE Price Index to rise 2.9% year-on-year in July, up from 2.8% in June.
A sharper reading alongside robust personal income and spending could dampen expectations of multiple Fed rate cuts, weighing on risk assets. On the other hand, softer inflation and weaker income and spending may signal a more dovish Fed policy stance, lifting sentiment.
Technical Levels to Watch
Despite the morning losses, the broader short-term bias remains bullish, hinging on the upcoming Personal Income and Outlays Report and Jobs Report (September 5).
Dow Jones
- Resistance: August 22 high of 45,841, 46,000, then 46,500.
- Support: 45,500, 45,000, and then the 50-day EMA (44,469).