Hang Seng Index and Mainland China Markets Drop on Trump’s BRICS Threat

US Markets: Nasdaq Rallies as Super Micro Computer Soars

How did the US markets perform at the start of the week, and are new highs in sight? Here’s what US equity markets revealed.

On Monday, December 2, US equity markets had a mixed start to December. The Nasdaq Composite Index rallied 0.97%, the S&P 500 gained 0.24%, while the Dow fell 0.29%.

Super Micro Computer (SMCI) stole the show, soaring 28.68% on news of an independent review finding no evidence of fraud. Upbeat US manufacturing sector data further boosted demand for riskier assets.

US Manufacturing PMI Signals a Robust US Economy

The US ISM Manufacturing PMI increased from 46.5 in October to 48.4 in November, indicating a recovering manufacturing sector. Notably, the New Orders Index rose to 50.4, up from 47.1 in October, pointing to improving demand. The slower manufacturing sector contraction coincided with stronger services sector activity, suggesting a robust US economy.

According to preliminary data, the S&P Global Services PMI advanced from 55.0 in October to 57.0 in November.

Nevertheless, the continued manufacturing sector contraction supported bets on a December Fed rate cut. According to the CME FedWatch Tool, the probability of a Fed rate cut increased from 66.0% on November 29 to 75.1% on December 2.

Rising bets on a December Fed rate cut and tech sector gains set a positive tone for the Tuesday Asian session.

China’s Yuan Weakens Amid Tensions and Economic Uncertainty

CN Wire, covering China’s business and market, reported the offshore Yuan dropping below 7.31 against the dollar on Tuesday. The almost 300 pips drop reflected concerns about US-China relations and China’s economic outlook. The weaker Yuan impacted buyer demand for Mainland China and Hong Kong-listed stocks.

President-elect Trump’s threat of 100% tariffs on BRICS nations weighed on market sentiment, overshadowing hopes for Beijing stimulus measures.

Expert Views on US Trade Policies and China

On Tuesday, Stanberry Editor/Analyst Brian Tycangco commented on US trade policies on China, stating,

“It’s amazing how they can say such things when a market that used to account for 50% of sales will suddenly drop to 20% because of ongoing export restrictions. How do they make up for the remaining 30%? It’s that easy? I doubt it. ASML says US chip curbs on China won’t affect 2025 sales forecast.”

Hang Seng Index and Mainland China Markets React to Tariff Warnings

In Asian markets, the Hang Seng Index declined by 0.28% on Tuesday morning. Trump’s tariff threat impacted demand for tech and real estate stocks.

The Hang Seng Mainland Properties Index dropped by 0.17%, while the Hang Seng Tech Index slid by 0.99%. Tech giants Tencent (0700) and Alibaba (9988) were down by 0.75% and 0.95%, respectively.

Mainland China’s equity markets also reacted to Trump’s threat. The CSI 300 and the Shanghai Composite saw losses of 0.37% and 0.11%, respectively.

Punitive tariffs on Chinese goods could impact demand, company earnings, and stock prices.

Nikkei Rallies on Tech Stocks and a Weaker Yen

Japan’s Nikkei Index rallied 1.73% on Tuesday morning. The USD/JPY advanced by 0.20% to 149.872, supporting export-linked stocks. Overnight gains on the Nasdaq drove demand for tech stocks.

Notably, Softbank Group Corp. (9984) and Tokyo Electron (8035) jumped by 3.41% and 4.02%, respectively. Nissan Motor Corp. (7201) gained 1.33%.

The Nikkei Index advanced despite rising bets on a December Bank of Japan rate hike. A rate hike could drive Japanese Yen demand, potentially impacting buyer appetite for export-linked stocks.

ASX 200 Hits Record High as Tech Stocks Rally

Meanwhile, Australia’s ASX 200 Index rose 0.67% on Tuesday morning. Tech stocks drove the Index to a record high, countering gold-related stock losses. The S&P/ASX All Technology Index rallied 1.21%, tracking the Nasdaq’s overnight gains.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) advanced by 0.12% and 0.34%, respectively.

Iron ore spot prices surged by 2.16% on Monday, supported by China’s manufacturing sector data. However, a pullback in iron ore prices on Tuesday limited the gains amidst renewed concerns about US tariffs on China. Punitive tariffs may impact the Chinese economy and demand for iron ore.

Northern Star Resources Ltd. (NST) was down by 3.16% as gold prices declined by 0.44% on Monday.

Outlook

Investors will focus on developments in Chinese stimulus, central bank guidance, and US trade policies. Positive updates from Beijing could temper tariff concerns, while policy signals from the Fed, RBA, and BoJ will play a pivotal role in shaping global market trends.

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