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Headline shares of the Hong Kong financial market inclined on Friday, 11 January 2019, with investor sentiment lifted by Wall Street's overnight rise amid continued signs of flexibility from the Federal Reserve after Chairman Jerome Powell said the U.S. central bank intends to further shrink the balance sheet and optimism over U.S.-China trade negotiations. In late afternoon trades, the Hang Seng Index added 52.93 points or 0.2% to 26,574.36. The Hang Seng China Enterprises Index added 21.20 points or 0.2% to 10,415.78.

Risk appetite buying in the local market today bolstered as signs of progress between the world's two biggest economies and dovish commentary from the Fed help lift sentiment. Fed Chairman Jerome Powell reiterated on Thursday the U.S. central bank has the ability to be patient on monetary policy given that inflation remains stable. Fed Vice Chair Richard Clarida also struck a dovish tone, further cementing the central bank's willingness to remain patient on the issue of raising rates. Minutes from the Federal Reserve's Dec. 18-19 meeting showed several policymakers were in favor of keeping rates steady this year. On Thursday, Fed officials echoed the minutes' cautious stance. St. Louis Fed President James Bullard, a voter on the Federal Open Market Committee this year, said the U.S. central bank's policy stance may be too hawkish and it should listen to market signals and stop raising interest rates. Charles Evans, president of the Federal Reserve Bank of Chicago, another FOMC voter in 2019, repeated his view on Thursday that the Fed has “good capacity to wait” before delivering what he expects will be three more rate hikes. Markets are now pricing in no further rate hikes by the Fed this year.

On the trade front, China and the United States made progress on “structural issues” such as forced technology transfers and intellectual property rights in talks this week and more consultations are being arranged, China's commerce ministry said on Thursday. The three-day talks in Beijing that wrapped up on Wednesday were the first face-to-face negotiations since US President Donald Trump and his Chinese counterpart, Xi Jinping, met. Overall, investors remained on a wait-and-see mode, as they awaited resolution of three key issues: U.S.-China trade negotiations, the U.S. government shutdown, and Britain's exit from the European Union.

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