Hang Seng Index and ASX 200: Markets Cheer Tariff Relief, Tech Stocks Surge

US Futures Advance on Trump’s Inauguration

Market optimism surged as President Trump’s inauguration sparked fresh hopes for a shift in US trade policies, driving futures and global equities higher.

US futures markets climbed overnight on Monday, January 20, and extended gains into the Asian session on Tuesday, January 21. The Nasdaq Composite mini and S&P 500 mini advanced by 33 and 12 points, respectively, while the Dow jumped by 139 points.

In the bond markets, 10-year US Treasury yields tumbled to a Tuesday morning low of 4.532%. President Trump’s softer stance on US tariffs eased inflation fears and concerns about a hawkish Fed, driving demand for riskier assets.

The positive sentiment set the tone for Tuesday’s Asian session.

US-China Trade War: A Potential Tariff U-Turn?

US President Trump’s inauguration on January 20 took center stage. Tariffs were the focal point for the Asian markets amid potential threats of tariffs on Chinese goods.

However, contrary to expectations, Trump targeted Canada and Mexico instead of China. CN Wire reported,

“Trump: We are thinking in terms of 25% tariffs on Mexico and Canada. I think we will do it on Feb 1.”

Trump’s silence on China tariffs raised hopes of improving US-China trade relations.

Bob Elliott, Chief Investment Officer and Portfolio Manager at Unlimited Funds remarked on Trump’s initial policy statements, saying,

“Didn’t learn too much incremental today when it comes to economic policy ahead. Out of all the executive orders, seems modest macro impact so far. Likely working on more in the future.”

Hang Seng Index Gains on Tariff Optimism

The Hang Seng Index advanced by 1.12% on Tuesday, January 21. Trump’s silence on China tariffs boosted demand for Hong Kong and Mainland China-listed stocks. Real estate and tech stocks led the gains.

The Hang Seng Tech Index jumped 2.49%, with tech giants JD.com (9618) and Baidu (9888) advancing by 0.70% and 1.11%, respectively. Similarly, the Hang Seng Mainland Properties Index climbed 2.19%.

Mainland China’s equity markets recovered from early losses, with the CSI 300 and the Shanghai Composite rising 0.39% and 0.17%, respectively. However, lingering uncertainty about Trump’s long-term tariff plans and China’s stimulus measures capped the morning gains.

Nikkei Edges Higher as the Yen Strengthens

Japan’s Nikkei Index rose 0.13% on Tuesday morning. Optimism over easing US tariff threats supported the morning gains despite pressure from a strengthening Yen. The USD/JPY pair fell 0.29% to 155.166 amid expectations of a Bank of Japan rate hike. A stronger Yen could weaken overseas earnings and valuations.

Major gainers included Tokyo Electron (8035), up 1.37%. Uniqlo owner Fast Retailing Co. Ltd. (9983) and Nissan Corp. (7201) gained 0.60% and 0.43%, respectively.

ASX 200 Follows US Futures Higher

Australia’s ASX 200 Index advanced by 0.66% on Tuesday morning, tracking gains in Dow futures. Banking, mining, gold, and tech stocks contributed to the gains.

National Australia Bank (NAB) rallied 2.05%, with ANZ (ANZ) advancing by 1.76%. Bank stocks benefited from falling US Treasury yields, which increased demand for high-yielding Australian banks.

Mining giant BHP Group Ltd. (BHP) gained 0.87% as iron ore spot prices rose 0.38% on Tuesday. Hopes of the US and China averting a trade war bolstered iron ore’s demand outlook.

Outlook: Risks and Opportunities

Global markets remain sensitive to geopolitical and economic uncertainties after Trump’s inauguration. Key factors include:

• US-China trade relations and tariff announcements.
• Strong US economic data could challenge market expectations for Fed rate cuts.
• China’s stimulus measures to sustain domestic growth.

While central banks’ cautious policies may provide stability, investors should closely monitor trade policies, inflation trends, and monetary signals to navigate market volatility. Discover strategies to navigate this week’s market trends here.