Today (January 8), Hong Kong’s stock index showed significant weakness, with the Hang Seng Tech Index plunging over 2% at one point, dragging down a wave of declines in A-shares in the afternoon. Observing the external markets, the Dow Jones Industrial Average fell nearly 1% last night, and the Asia-Pacific markets also opened lower across the board today. In particular, Japan’s stock market experienced sharp declines for two consecutive days, with the Nikkei Index continuing to drop in the afternoon session, extending its losses to more than 1.7%. Analysts believe that the US stock market has clearly lost momentum recently, while pressure from the US dollar is also beginning to show.

As of the close of Hong Kong stocks today,$Hang Seng TECH Index (800700.HK)$ down 1.05%,$Hang Seng Index (800000.HK)$ down 1.17%.$Penghua CSI HK Equities Technology ETF (159751.SZ)$ down 0.94%,$Yinhua HSI SCHK ETF (159318.SZ)$ down 0.79%. In terms of sectors, electrical equipment, hotels, and resorts,REIT were among the leading gainers; insurance and capital markets were among the top decliners.

Meanwhile, Goldman Sachs’ latest report is also circulating in the market. Its core view is that the bull market will continue, but momentum will weaken. Although the bull market is expected to last until 2026, the pace of growth may slow down. The forecast target of 7600 points for the S&P represents an increase of about 12%, which aligns with the range of growth expectations of 3% to 16% from other major banks.

Sharp decline

In the afternoon, the Hang Seng Index’s decline once widened to 1.88%, breaking below the 26,000-point level. The Hang Seng Tech Index fell more than 2% at one point,$BABA-W (09988.HK)$ dropping over 3% at one point,$LENS (06613.HK)$ and falling over 2%. Meanwhile, A50 also continued to plummet significantly, with a decline exceeding 1.5% at one point.

Driven by this, the Shanghai Composite Index also experienced a sharp drop in the afternoon, with both the Shenzhen Component Index and the ChiNext Index falling more than 1%. The Shanghai Composite Index dropped by 0.42%, with insurance, brokerage, lithium mining, precious metals, and other sectors posting significant declines, and Hualin Securities hitting the lower limit. However, the performance of individual A-share stocks was notably stronger than the broader market, with over 3,700 stocks rising and only around 1,600 stocks declining.

Market analysts believe that turbulence in overseas markets remains the main cause. Last night, U.S. stocks (especially financial shares) plunged. Today, Japan’s stock market continued to experience a significant downturn. Meanwhile, the strengthening of the U.S. dollar index put pressure on the highly elastic metal sector, causing non-ferrous metal stocks to fall sharply as well. Based on historical trends, if the U.S. dollar index continues to strengthen, the valuation space of growth stocks and non-ferrous metal stocks may be somewhat suppressed.

The market declined under the pressure of a stronger U.S. dollar as investors prepared for this week’s non-farm payroll report while also assessing the impact of U.S. pressure on Venezuela. MKS PAMP analyst Bernard Sin stated: ‘Traders are weighing the escalation of geopolitical tensions, including U.S. intervention in Venezuela and the possibility of Greenland becoming a new conflict zone, while also monitoring macroeconomic signals from the United States.’

Slower momentum?

Goldman Sachs has just released its 2026 financial market outlook report, forecasting that the U.S. stock market will continue to deliver robust returns. It emphasized that the bull market trend will persist, but the momentum of the rally is expected to slow compared to recent years.

Goldman Sachs forecasts that the S&P 500 Index will achieve a total return of 12% for the year, closing at around 7600 points by the end of the year. Strong earnings growth is expected to be the primary driver of the stock market’s rise. In a favorable macroeconomic environment characterized by healthy U.S. economic growth and continued easing by the Federal Reserve, S&P 500 companies are projected to see a 12% year-on-year increase in earnings per share (EPS) in 2026, with an additional 10% growth anticipated in 2027. These fundamental factors provide robust support for the continuation of the bull market.

Goldman Sachs expects that the early part of 2026 will present a favorable environment for cyclical sectors, primarily driven by an acceleration in U.S. economic growth. Growth catalysts include increased economic activity following government reopenings, fiscal stimulus from Trump’s “Big and Beautiful Bill,” easing financial conditions, and the diminishing impact of tariffs.

Goldman Sachs notes that companies will benefit from revenue growth spurred by economic acceleration while avoiding typical late-cycle challenges such as rising wage costs or tightening monetary policy. Strategists are particularly optimistic about opportunities in stocks catering to middle-income consumers and the non-residential construction sector.

Capital expenditure by large technology companies on artificial intelligence is expected to continue rising. AI-related capital expenditure in 2026 may increase significantly by 36%, reaching approximately $539 billion. This growth trend is projected to persist, with a further 17% increase expected by 2027, reaching $629 billion.

However, Goldman Sachs cautions that as spending and debt levels rise, companies must achieve higher profits to justify these ongoing investments, which could ultimately lead to a slowdown in spending.

In 2026, AI-related stocks may enter what Goldman Sachs strategists refer to as the third phase. Characteristics of this phase include a slowdown in capital expenditure growth (unlike the large-scale infrastructure investments of the previous phase), broader application of AI across enterprises, and the emergence of new AI leaders. As AI adoption accelerates, companies will need to demonstrate tangible productivity and profit growth to be regarded by investors as long-term winners. The AI theme in 2026 will be defined more by the deceleration in AI investment expenditure growth, accelerated AI adoption, and resulting rotations within the AI sector rather than widespread AI euphoria.

Despite the optimistic outlook, Goldman Sachs also highlights two key challenges facing the market: valuation levels near historical highs and record market concentration. The S&P 500’s forward price-to-earnings ratio currently stands at 22 times, matching its peak in 2021. Additionally, the top 10 companies by market capitalization in the S&P 500 account for 41% of the index’s total market value. This extreme concentration implies that market performance is highly dependent on the sustained strong performance of a small number of leading firms. If earnings fall short of expectations, the current high valuations will significantly amplify downside risks in the stock market.

Looking to pick stocks or analyze them? Want to know the opportunities and risks in your portfolio? For all investment-related questions,just ask Futubull AI!

Editor/Liam