Hong Kong stocks head for longest rising streak in 3 weeks on cooling US inflation data

Hong Kong stocks rose for a third day on Friday, putting the benchmark gauge on course for its longest winning streak in three weeks, after softer US inflation data bolstered the case for monetary easing that would allay concerns about frothy valuations of global equities.

The Hang Seng Index advanced 0.7 per cent to 25,663.41 at the noon break, paring the weekly loss to 1.2 per cent. The Hang Seng Tech Index gained 1.1 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index both added 0.6 per cent.

Chinese pharmaceutical firms led the gains on rising optimism that the country will emerge as a global hub for innovative drugs. Innovent Biologics rallied 2.8 per cent to HK$83.80 and Wuxi AppTec added 2.7 per cent to HK$105.10. Chow Tai Fook Jewellery Group gained 2.3 per cent to HK$12.60 after raising prices of some of its products. Alibaba Group Holding rose 0.8 per cent to HK$145.20 and Tencent Holdings added 1.2 per cent to HK$612.

Cooling US inflation is expected to ease jitters about a potential global bubble in artificial intelligence, which has been fuelled by massive spending in data centres and lofty valuations of tech titans from Nvidia to Microsoft. Global stocks have been oscillating wildly this week as investors navigate through a complicated macro environment after a strong labour market report earlier in the week tamped down bets on immediate monetary easing and spurred sell-offs in equities.

Cooling US inflation is expected to ease worries about a potential global bubble in AI. Photo: AFP
Cooling US inflation is expected to ease worries about a potential global bubble in AI. Photo: AFP

“Lower-than-expected inflation has left more room for the US Federal Reserve to cut interest rates,” said Yan Xiang, an analyst at Founder Securities. “The next window for a reduction may start in March. The easing narrative is positive for stocks and we might see some rotation from technology stocks with high valuations and concentrations.”

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