Asian markets are mixed today as investors assume a more defensive posture amid several concerns. These concerns include:
- overstretching of AI valuations despite Nvidia’s strong Q4 2025 earnings.
- rising geopolitical tensions, especially from the current US-Iran frictions.
- broader flows into safe-haven assets such as the greenback and the Yen.
The market mood on the Hang Seng index remains cautious this Friday, and sentiment appears more mixed than earlier in the week. The index is now more headline-sensitive than before, as the risk-on driven rebound appears to have faded. Despite losing a lot of ground this week, the Hang Seng index managed to close the week higher at 27276, a gain of 0.74%.
Hang Seng Prediction: What has happened in the last week?
Earlier in the week, the Hang Seng index had made a positive start, rallying after the US Supreme Court (SCOTUS) ruled that the US tariffs were illegal. However, that optimism quickly faded after the US President Donald Trump defied the SCOTUS and immediately placed a 15% global tariff on all US imports. The situation has now forced the markets to view the current tariff imbroglio as a trade uncertainty that remains far from resolution, and an overhanging source of risk-off sentiment. This leaves the Hang Seng index in a vulnerable position, where the next headlines on US tariff policy appear to be a main driver of the index’s near-term price moves.
On a more constructive note, the Hang Seng index could get a renewed filip from four reported listings seeking to raise $626 million combined, as post-Lunar New Year issuance has picked up strongly. This could prove supportive for the index in the medium term, even as geopolitics and other macro drivers push day-to-day movements in the near term.
Hang Seng Prediction: Macro Driver
The US Producer Price Index for January 2026 is due for release at 8.30 am EST on 27 February 2026 (today).
A hotter-than-expected PPI drives the narrative of globalized inflation driven by the US tariffs. This is a risk-off scenario that will put pressure on the Hang Seng index. If this proves to be the case, expect the Hang Seng to open lower on the first trading day of March.
A softer-than-expected PPI would ease the pressure from tariffs, and a rebound could be on the cards.
Base case: the near-term scenario is for the index to remain sensitive to rhetoric around the tariff regime and to PPI data. The sentiment is for a headline-driven trade, which could result in choppy price action.
Bull case: a benign PPI outcome amid calmer tariff rhetoric would stabilize the Hang Seng and be more supportive of risk-on demand.
Bear case: a red-hot PPI print or worsening of tariff and geopolitical headlines will put the Hang Seng index under pressure.
Hang Seng Prediction: Technical Outlook
The weekly chart shows that the index is in a clear medium-term uptrend. However, the rally has pushed into a previous supply band at 27000-27500, lining up with the 27% Fibonacci extension. Momentum has slowed, and price is now consolidating between this supply zone and the 24922 support below.
The bulls need to uncap the 27% Fibonacci extension to make room for a further push towards the 30288 – 31630 resistance zone, where previous highs were seen in June 2018, April 2019, and February 2021. The 61.8% Fibonacci extension at 30966 lies within this zone.
On the other hand, any correctional declines that breach the 24922 pivot (the January 2022 and March 2025 highs) will open the door to the 22834 support level and the prior high of January 2023. The same levels were previously seen in September 2020 and December 2021. The 38.2% Fibonacci retracement and the prior high on 9 December 2024 at 21205 are the next downside targets in a deeper correction.