Hong Kong's benchmark Hang Seng Index climbed more than 3% on Wednesday, reaching 24,660—its highest level since September 28—as global markets rallied following the Democratic Party's decisive victory in the U.S. midterm elections. The index has now recovered over 8% from its lowest point this year, joining a broad upswing across major stock markets worldwide.
The rally was led by gains in technology, consumer, and energy-related stocks, with the blue-chip index posting its strongest one-day advance in weeks. The surge mirrors moves in the U.S., where the S&P 500 and Dow Jones Industrial Average hit record highs, as investors welcomed the prospect of a divided government that could temper aggressive trade policies.
Democratic sweep and trade policy expectations
Investors are betting that a Democratic-controlled Congress will act as a check on President Trump's tariff agenda, which has been a source of uncertainty for global trade. While the Supreme Court recently ruled against universal tariffs, the president has continued to use executive authority to impose levies on specific countries. A Democratic majority is seen as likely to constrain such actions, easing concerns for multinational companies and exporters.
Additionally, the post-election rally is a well-documented phenomenon. Historical data shows that U.S. stocks often enter bull markets after midterm elections, as seen after the 2016 election. This time, the pattern is playing out globally, with Hong Kong's market joining the upward move.
Oil prices and geopolitical factors
Crude oil prices continued their downward trend, with Brent crude falling to $93.8 per barrel. The decline is partly attributed to expectations that the Trump administration may seek to de-escalate tensions in the Middle East, particularly regarding Iran, which many believe contributed to the president's loss of congressional support. Lower oil prices are generally positive for importing economies like Hong Kong and China, reducing inflationary pressures.
Top performers and laggards
Among the best-performing stocks in the Hang Seng Index, Laopu Gold surged 8%, driven by a rally in gold prices, which reached $4,130 per ounce. Gold's rise is supported by falling bond yields and oil prices, leading some investors to speculate that the Federal Reserve may hold interest rates steady at its next meeting.
Li Auto, the electric vehicle maker, jumped 8.2%, despite facing intense competition and a price war in China's EV market this year. Meituan, the food delivery giant, rose over 8%, while other notable gainers included Netease, Alibaba, Trip.com, and Xiaomi Corporation.
On the downside, laggards included Lenovo Group, Weichai Power, Orient Overseas, and PetroChina, reflecting mixed sector performance.
Technical outlook
From a technical perspective, the Hang Seng Index has rebounded sharply from its recent low of 22,786, climbing above the 50-day exponential moving average (EMA). The index has formed an inverted head-and-shoulders pattern, a classic bullish reversal signal, and is now approaching a key resistance level on the Murrey Math Lines tool. Analysts suggest that if the index can break above this level, the next target could be 25,000. However, a drop below the pivot support at 24,218 would invalidate the bullish outlook.
This article is for informational purposes only and does not constitute financial advice.
