HK stocks gallop up as midterms fuel caution in region

Asian markets experienced significant gains on Thursday, with stocks rallying as US voters overwhelmingly supported Democrats in midterm elections. This result brought hope for an end to the ongoing war with Iran, particularly concerning oil prices. In Hong Kong, the Hang Seng Index surged 1.66 percent, opening at 24,316. Key technology and China enterprises indices also saw substantial gains, rising 1.43 percent and 1.45 percent, respectively.

Meanwhile, Shanghai's Composite Index and Shenzhen Component Index both declined by 1.1 percent, at 3,646 and 11,216, respectively. The Nikkei in Tokyo opened 0.32 percent higher at 62,384, while the 225 index experienced a brief dip of 104 points before noon. In Seoul, the Kospi fell 1.82 percent, opening at 5,580. Brent crude futures plummeted nearly 9 percent overnight, falling below $100 a barrel, marking the largest weekly drop since early 2020.

This drop in energy prices led to higher bond yields and a weakened dollar, contributing to the market rally. Solar supply chain stocks performed exceptionally well, anticipating potential Democratic support for renewable energy. Data centre companies and their equipment suppliers faced a decline, with expectations of stricter regulation.

Democrats' victory in Texas and Georgia highlighted a shifting public opinion regarding the AI sector, which analysts believe may temporarily slow its expansion. Oil prices tested overnight lows at $93.50, signaling a potential drop as President Trump's presidency was affected by the war and the high energy costs.