[Zhen Zhuo Hong Kong Stocks Experts] US Stocks Expected to Remain Stable This Week

By the time this column is published, the author will already be in Japan, embarking on the first overseas trip in three years, and will therefore offer a one-off forecast of next week's global financial-market developments. This week's key focus will be the release on Wednesday of the minutes from the Federal Reserve's policy meeting last month, which the market will scrutinize for clues about the Fed's decision at its final rate-setting meeting of the year—including whether it will depart from the "traditional" 0.75-percentage-point hike. In my view, the minutes are likely to be ambiguous and fail to provide a clear indication of the December rate increase; they will probably emphasize the importance of inflation data. That said, I expect the release of the minutes will not alter the market's consensus that the Fed will raise rates by 0.5 percentage point in December, and US equities should remain broadly stable this week.

Another key focus is the US Thanksgiving holiday, observed on the fourth Thursday of November each year, and the sales performance on "Black Friday" the following Friday. Traditionally, Black Friday marks the start of the peak retail season in the United States, which typically continues through Christmas. Whether this year's Black Friday will see a fade in momentum has become a major market concern. In my view, US retail data are likely to be highly polarized: retailers that more closely reflect the purchasing power of ordinary consumers—such as supermarket chains and big-box stores—are expected to post weaker sales, reflecting the inflationary pressures faced by lower-income households, who are being forced to tighten their belts; meanwhile, luxury goods sales may remain robust, driven by two factors: first, the continued strength of the US dollar, which still provides a purchasing-power advantage for foreign products; and second, the strong spending intentions of high-income consumers around the Thanksgiving period.

Follow "Black Friday" sales

The European Union and the United Kingdom are set to release their November PMIs this week; weaker-than-expected readings could weigh on global equity markets. Market expectations point to a further decline in both the Eurozone manufacturing and services PMIs, following October surveys that indicated the Eurozone economy is heading into recession. Since hitting a nearly 20-year high of 114.78 in September, the US dollar has softened as US CPI and PPI data came in more moderate than anticipated, dampening bets on further rate hikes. After a prolonged slide, the dollar has recently begun to rebound, a development that will have implications for global financial and equity markets. In my view, the dollar may have already peaked, but it is likely to remain at elevated levels, exerting some degree of downward pressure on investor sentiment—particularly in Hong Kong, which operates under a linked exchange-rate system.

As the number of confirmed COVID-19 cases on the Chinese mainland continues to rise, several cities have implemented strict lockdowns and containment measures, clouding the economic outlook and drawing market attention to the possibility of additional stimulus measures. Although it was previously reiterated that the mainland's epidemic-control policy—focused on dynamic zero-COVID, preventing domestic flare-ups, and guarding against imported cases—remains unchanged, the relatively low rates of severe illness and mortality indicate that there is indeed room for further easing of restrictions. However, with confirmed cases recently surging and potentially exceeding 30,000, this trend is likely to place downward pressure on expectations for the future performance of the mainland’s retail and manufacturing sectors. Consequently, pandemic-related factors are expected to continue weighing on A-shares in the short term, which could also dampen the performance of Hong Kong stocks.

$Hang Seng Index (800000.HK)$There remains a likelihood of a downward retracement to partially fill the recent gap; traders should adopt a "fight while retreating" strategy given that the Hang Seng Index has already experienced a cumulative rebound of more than 4,000 points. At this juncture, the possibility of the index falling below the 50-day moving average at 17,079 cannot be ruled out; however, the 20-day moving average at 16,566 provides strong support, and any dip near this level would present an attractive entry opportunity following a swift pullback and technical correction.

Huang Deji, Executive Director of the Research Department at Golden Glory Securities

The author is a licensed professional with the China Securities Regulatory Commission and does not hold any of the shares mentioned above.

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