HONG KONG — Asian stock markets experienced a mixed outcome on Wednesday, influenced by U.S. President Donald Trump’s recent remarks on tariffs, which have generated some uncertainty within Chinese financial circles.
U.S. futures traded with slight increases, while oil prices saw a decline. Investors had initially felt a sense of relief on Monday when Trump refrained from implementing major tariffs against China. However, his statement on Tuesday, where he mentioned the consideration of a 10% tariff on Chinese imports due to issues related to fentanyl trafficking to the U.S. from China via Mexico and Canada, brought back concerns.
In Hong Kong, the Hang Seng index fell by 1.7%, settling at 19,755.11, and the Shanghai Composite experienced a 0.9% decrease to 3,213.62. Conversely, the Nikkei 225 in Tokyo climbed 1.6% to 39,646.25 after Trump’s announcement of a collaborative project aimed at investing up to $500 billion in artificial intelligence infrastructure. Shares of Softbank Group Corp. skyrocketed by 10.6% on this news.
Taiwan’s Taiex also recorded a gain of 1% following Trump’s AI investment initiative, with the Taiwan Semiconductor Manufacturing Corp. experiencing a 1.3% rise. Other markets showed positive trends as well; South Korea’s Kospi increased by 1.2% to reach 2,547.06, while Australia’s S&P/ASX 200 edged up by 0.3% to 8,429.80.
Meanwhile, in the U.S., futures rose slightly, and oil prices were on a downturn. On Tuesday, the S&P 500 added 0.9% to 6,049.24, and multiple global markets took cautious steps following Trump’s return to the White House. The Dow Jones Industrial Average increased by 1.2% to 44,025.81, and the Nasdaq composite saw a 0.6% rise to 19,756.78.
Trump has made bold promises that could significantly alter global trade and economic policies, often to the detriment of other nations. Despite this, stock indexes across Asia and Europe have shown only marginal movements. In the bond markets, U.S. Treasury yields retracted some of their significant prior gains that had pressured stock markets worldwide, with bitcoin showing a decline from its recent high.
In currency markets, both the Mexican peso and Canadian dollar weakened against the U.S. dollar following Trump’s declaration of a potential 25% tariff on imports from Canada and Mexico, slated to start on February 1. The looming threat of widespread tariffs, coupled with the potential for additional policies that could exacerbate U.S. government debt, had contributed to rising Treasury yields, further impacting stock prices. To counteract such downward trends, corporations are tasked with delivering robust earnings growth to bolster share prices.
Treasury yields eased to relinquish some of the gains they had amassed recently amid persistent inflation concerns. The yield on the 10-year Treasury fell to 4.56% from 4.62% late Friday. Similar to equity markets, bond trading remained closed on Monday in honor of Martin Luther King Jr. Day. The 10-year Treasury yield, although retracting since a positive inflation update last week, remains significantly higher than its sub-3.65% position in September.
Strategist Michael Wilson from Morgan Stanley indicated that movements in long-term interest rates are pivotal in driving the broader U.S. stock market. He anticipates a continuation of the trend where stock prices decline as yields rise and vice versa, at least until the 10-year Treasury yield falls sustainably below 4.50% among other factors.
In crypto markets, which have seen a surge due to optimism that Trump will create a favorable environment for the industry, bitcoin realigned from a record peak above $109,000 set on Monday to $105,742 on Wednesday, according to CoinDesk.
On the commodity front, benchmark U.S. crude dropped by 39 cents to $75.44 a barrel mid-Wednesday, while Brent crude, the international benchmark, lost 26 cents and traded at $79.03 a barrel.
The U.S. dollar strengthened against the Japanese yen, moving up to 155.83 from 155.46 yen, while the euro decreased to $1.0410 from $1.0433.
