Asian stock markets climbed as investors assessed the latest developments in the US-China trade conflict and key earnings reports from Wall Street’s tech giants. The reopening of Chinese markets added another layer of anticipation for traders, with expectations of a strong start.
Australian and Japanese equities saw gains, while futures for Hong Kong stocks also indicated an upward trend. However, US stock futures edged lower as Alphabet Inc., the parent company of Google, and Advanced Micro Devices Inc. experienced declines in extended trading. Meanwhile, US Treasury yields saw a slight increase.
Investors closely monitored China’s market movements following the latest round of trade tensions, which underscored President Xi Jinping’s more measured response compared to previous disputes. Beijing’s swift but calculated retaliation to Washington’s 10% tariff hike signalled a strategic approach aimed at preventing further escalation. The growing optimism surrounding Chinese technology stocks, particularly after artificial intelligence startup DeepSeek’s advancements, contributed to market confidence.
Kenny Ng, a strategist at China Everbright Securities International, noted that the recent clarity on tariffs has removed a key source of market uncertainty. He anticipates a robust opening for Chinese stocks, as investors gain a clearer outlook on trade policies and economic strategies.
Despite expectations of strong gains, market volatility remains high as traders prepare for potential shifts in the trade conflict. Some analysts view China’s measured response as a stabilising factor, while others express concerns over weaker-than-expected manufacturing data and the yuan’s depreciation, which could put pressure on Chinese equities. Jason Chan, senior investment strategist at Bank of East Asia, predicted that Chinese shares could rise by over 1%, with any increase beyond 2% possibly triggering profit-taking.
Following the expiration of Donald Trump’s tariff exemptions for Canada and Mexico, the new levies on China took effect at midnight Washington time on Tuesday. Beijing responded almost immediately by imposing additional tariffs on approximately 80 products, launching an antitrust investigation into Google, tightening export controls on critical minerals, and blacklisting two US firms. Despite these actions, Chinese stocks listed in Hong Kong have demonstrated resilience, while a US index tracking Chinese firms gained 2.7%. The offshore yuan also recovered after an initial dip.
Trump stated that there is no urgency for discussions with Xi Jinping, suggesting that a dialogue would occur at an appropriate time. Meanwhile, in Japan, the Bank of Japan is expected to continue raising its benchmark interest rate beyond current market expectations, leading to a strengthening yen, which traded around 154 per US dollar on Tuesday.
In commodities, oil prices declined as concerns over the impact of trade tensions on global economic growth outweighed the influence of newly reinforced sanctions on Iran. US equities had previously rebounded amid a surge in dip-buying, with Bloomberg’s “Magnificent Seven” index of tech megacaps advancing by 1.7%.
With global markets navigating a complex mix of trade policies, economic data, and corporate earnings, investors remain watchful for further developments that could shape market sentiment in the coming weeks.
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.
