Hang Seng Gains on Stimulus Hopes, ASX 200 and Nikkei Slump on Tariff Uncertainties

US Markets Slide on Economic and Tariff Uncertainties

US equity markets tumbled on March 6 as increasing tariff policy uncertainties and US economic jitters weighed on investor sentiment. The Nasdaq Composite Index dropped 2.61%, while the Dow and the S&P 500 fell 0.99% and 1.78%, respectively.

US labor market data fueled recession fears, with Kalshi raising the odds of a 2025 US recession from 17% in January to 39% in March. Meanwhile, President Trump’s tariff policy shifts added to market uncertainty, pressuring risk assets.

US Labor Market Indicators Flash Warning Signals

US initial jobless claims dropped from 242k (week ending February 22) to 221k (week ending March 1), signaling a tightening labor market. However, insured unemployment claims and the Challenger Gray Report raised concerns about the labor market.

Insured persons claiming benefits increased by 3.2% to 2.23 million in the week ending March 1. The Challenger Gray Report showed 172,017 job cuts in February, the highest monthly rise since 2009. Deteriorating labor market conditions may slow wage growth, curbing consumer spending, which accounts for over 60% of US GDP.

Thursday’s labor market data and US equity market losses set the tone for the Asian market session on Friday, March 7.

China’s Trade Data Signals Weakening Demand

Economic data from China tested risk sentiment on March 7. Exports rose 2.7% year-on-year in January and February (combined), down sharply from a 10.7% surge in December. Imports tumbled 8.4% year-on-year after a 1% rise in December.

The combined data reflected weakening overseas and domestic demand ahead of Trump’s March 4 tariff hike on Chinese goods. President Trump raised levies on China to 20%.

Hang Seng Index Advances on Stimulus Expectations

In Asia, the Hang Seng Index bucked the broader market trend, rising 0.55% on Friday morning. Investors brushed aside US tariff uncertainty and China’s weak trade data as Beijing’s policy pledges and focus on the tech sector resonated.

Tech stocks led the gains, with the Hang Seng Tech Index advancing 1.34%. Alibaba (9988) and Baidu (9888) extended their March 6 rally, rising 1.56% and 1.43%, respectively.

Meanwhile, Mainland China’s equity markets had a mixed morning session. The CSI 300 slipped by 0.14%, while the Shanghai Composite Index edged up 0.01%.

Nikkei Index Tumbles on Tariff Uncertainty and Yen Strength

The Nikkei Index tumbled 2.09% on Friday morning as US market losses and tariff uncertainty weighed on sentiment. A stronger Japanese Yen added pressure, with the USD/JPY pair falling 0.28% to 147.569. Yen strength could hurt demand for Japanese goods and corporate earnings.

Notable decliners included Sony Corp. (6758), down 4%, with Softbank Group (9984) and Tokyo Electron (8035) falling 2.90% and 3.24%, respectively.

ASX 200 Faces Four-Day Losing Streak

Australia’s ASX 200 Index extended its losses from Thursday, dropping 1.66% on Friday morning. While the pullback was broad-based, banking and tech stocks led the declines.

• Financials: Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) plunged 3.24% and 2.46%, respectively. Trump’s tariff policy shifts impacted the banking sector,. The recent upswing in 10-year US Treasury yields also weighed on demand for high-yielding Aussie banks.
• Tech Sector: The S&P/ASX All Technology Index tumbled 2.75%, tracking the Nasdaq’s overnight losses.

Outlook: Key Risks and Opportunities

Looking ahead, market sentiment remains tied to tariff developments, the US Jobs Report, China’s stimulus measures, and central bank guidance.

However, in Asia, escalating US-China trade tensions could weigh on stocks. However, Beijing’s stimulus efforts may cushion any economic drag.

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