Asian markets made notable gains following Wall Street’s second consecutive day of rallying, while the dollar steadied after early losses. A denied report suggesting potential dilution of US tariffs provided some relief to investors. Regional equities rose across Japan, South Korea, and Australia, reflecting optimism, even as Hong Kong’s market experienced modest declines amid US-China tensions.
Asian stocks gained momentum on Tuesday, with a regional equity gauge up 0.7%, boosted by optimism in Japan, South Korea, and Australia. In contrast, mainland Chinese stocks were mixed, and Hong Kong saw slight losses as shares of Tencent Holdings Ltd. and Contemporary Amperex Technology Co. plunged. The Pentagon’s addition of these firms to a blacklist citing military links highlights the persistent strain in US-China relations, raising concerns about Beijing’s economic trajectory.
US futures remained stable after Wall Street closed with robust gains. The S&P 500 added 0.6%, and the Nasdaq 100 surged 1.1%, driven by tech sector strength. Nvidia Corp. reached a record high, bolstered by anticipation ahead of CEO Jensen Huang’s keynote.
The dollar initially slumped but narrowed losses after former President Donald Trump refuted a report suggesting a potential softening of his tariff policies. Following a 1% drop on Monday, the dollar index settled with a 0.6% loss and remained flat during Asian trading. Traders are bracing for volatility as concerns over trade policies and the yuan’s stability weigh on global sentiment.
Treasury yields held steady, with the 30-year yield at a one-year high and the 10-year note climbing to 4.63%. Meanwhile, the yen weakened to its lowest level since July 2024, as traders digested strong US data released during Japan’s recent holiday. Market observers expect further yen depreciation ahead of pivotal US jobs data on Friday.
Portfolio managers like Sat Duhra of Janus Henderson Investors voiced caution about Chinese markets, citing tariff volatility and yuan jitters. Duhra highlighted opportunities in undervalued high-yield sectors, which have outperformed broader markets despite uncertainties.
The resilience of the “buy the dip” sentiment was evident in the US market recovery. Nationwide’s Mark Hackett emphasised the need for disciplined and creative investment strategies for 2025, cautioning against reliance on double-digit gains from S&P 500 staples.
Global credit markets have seen a brisk start to the year, with Asia Pacific issuers raising $7 billion in dollar-denominated debt on Monday, the highest single-day issuance since last June. With more issuers lining up for debt sales, the momentum is poised to extend into Tuesday.
In commodities, Bitcoin surged past $100,000, oil steadied after a six-session rally, and Fed officials signalled caution amid steady inflationary pressures. Fed Governor Lisa Cook reiterated a gradual approach to rate adjustments, supported by strong labour market performance. Investors are keenly watching Friday’s labour report, expected to reflect a temperate hiring pace as the economy moderates.
As markets digest geopolitical tensions, policy uncertainties, and resilient economic indicators, the narrative for 2025 demands vigilance and adaptability from investors navigating a rapidly shifting landscape.
Asian markets rallied on Wall Street’s momentum, buoyed by tech sector strength and tempered tariff concerns. Regional gains contrasted with mixed performances in China and Hong Kong, highlighting the impact of US-China tensions. Investors are preparing for a volatile year requiring creativity and discipline to navigate market complexities.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
