Hang Seng Index: AI Rally Lifts US Markets, but US Tariff Jitters Hit Asia

US Markets Bounce on AI Rally and Earnings as Powell Looms

On Monday, February 10, US equity markets rebounded from Friday’s sell-off as investors brushed aside tariff jitters. The Nasdaq Composite Index advanced by 0.98%, while the Dow and S&P 500 gained 0.38% and 0.67%, respectively.

On February 9, Trump announced plans to impose 25% tariffs on aluminum and steel imports. He also threatened reciprocal tariffs on certain nations. The move heightened concerns over a potential escalation in the US-China trade war.

Despite inflationary fears tied to higher import duties, Nvidia (NVDA) advanced by 2.87%, fueling gains across the AI sector. Meanwhile, the prospect of import duties on aluminum and steel drove demand for US metal producers. US Steel (X) rallied 4.65%, while Century Aluminum (CENX) soared 10.22%.

In earnings, McDonalds (MCD) gained 4.80% after announcing better-than-expected global sales.

Monday’s gains came ahead of Tuesday’s crucial US CPI Report and Fed Chair Powell’s testimony, which could influence the market’s rate outlook.

Beijing Reinforces Commitment to Economic Stimulus

On February 10, Beijing reiterated its pledge to boost China’s economy through domestic consumption. CN Wire reported that China plans to better fulfill housing and consumption needs and place a greater emphasis on boosting consumption. Beijing also aims to increase residential income and promote reasonable wage growth to fuel household spending.

These measures could counter the potential effects of an escalation in the US-China trade war on the economy. Meanwhile, China’s retaliatory tariffs on US goods took effect on February 10.

Hang Seng Index Drops Amid Tariff Jitters

Turning to the Asian equity markets, the Hang Seng Index declined by 0.59% on Tuesday day morning’s session. Concerns about US reciprocal tariffs, potentially targeting China’s auto, semiconductor chips, and pharma sectors, weighed on investor sentiment. However, expectations of fresh stimulus measures helped limit broader losses.

Auto stocks led the declines, with Geely Automobile Holdings Ltd. (0175) and Great Wall Motor Co. Ltd. (2333) plunging 10.05% and 6.34%, respectively. Tech stocks also struggled, with the Hang Seng Technology Index sliding 1.55%. Notable movers included Tencent (0700), which dropped by 1.72%.

China’s Mainland equity markets also faced selling pressure as US reciprocal tariffs loomed. The CSI 300 fell 0.36%, while the Shanghai Composite Index dipped 0.16%.

ASX 200 Edges Higher Amid Tariff Uncertainty

Australia’s ASX 200 Index edged 0.04% higher on Tuesday morning, tracking Wall Street’s overnight gains. Banking, gold, and tech stocks offset losses in the mining sector.

Gold prices surged 1.66% on Monday as investors sought safe-haven assets amid trade concerns, driving Northern Star Resources (NST) up 4.24%. Gold extended its rally on February 11, reaching a record high of $2,943.

Meanwhile, US tariff jitters weighed on mining stocks, with BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) trending lower. Iron ore spot was down 0.85% on Tuesday morning.

Nikkei Index: Japan’s Market Closed for Foundation Day

Japan’s Nikkei Index was closed on Tuesday in observance of National Foundation Day.

Outlook: Risks and Opportunities Ahead

Looking ahead, US-China trade tensions, geopolitical risks, and the global AI sector will continue to influence market trends. AI stocks may extend their rally as competition in the sector intensifies. However, manufacturing and mining stocks remain exposed to tariff-driven volatility.

Progress in US-China trade negotiations could lift Australian, Hong Kong, and Mainland Chinese markets. The Hang Seng Index may benefit from AI-driven momentum. Nevertheless, Asian markets remain at risk of further trade-related setbacks.

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