Hang Seng Index and Nikkei 225 Rally on Tariff U-Turn and Tech Surge

US Markets End the Week on a High Note

US equity markets rose on April 11 as softer-than-expected producer prices raised hopes for a June Fed rate cut. The Nasdaq Composite Index advanced 2.06%, while the Dow and the S&P 500 gained 1.56% and 1.81%, respectively.

In the bond markets, 10-year US Treasury yields climbed for a fifth consecutive session, briefly hitting a high of 4.590 before settling at 4.497%.

Peter Schiff, Chief Economist and Global Strategist at Europac, warned:

“Long before the harmful effects of tariffs have a chance to negatively impact the U.S. economy, the anticipation of those effects in the currency and bond market could spark a financial crisis worse than 2008. It’s the risks that no one is worried about that do the most damage.”

US Producer Prices and Michigan Consumer Survey Send Mixed Signals

US producer prices increased 2.7% year-on-year in March, following February’s 3.2% rise. March’s print suggested a softer demand environment, potentially easing inflationary pressures and supporting a dovish Fed stance.

However, consumer sentiment data delivered a mixed message. The Michigan Consumer Sentiment Index dropped from 57.0 in March to 50.8 in April, while the Inflation Expectations Index jumped from 5% in March to 6.7% in April. Waning sentiment and higher inflation expectations are troubling signs for inflation dynamics.

Tariff U-Turn Boosts Risk Sentiment

While US economic data and market trends typically influence the Asian markets, tariff developments continue taking center stage.

On April 12, CN Wire reported that selected electronics, including computers and laptops, routers, and smartphones, would be exempt from reciprocal tariffs. The Kobeissi Letter reacted to the news, stating:

“The US imports approximately $100 billion of computers, smartphones, and chip-making equipment from China PER YEAR. A total of $439 billion of goods were imported from China into the US in 2024. This means about 23% of ALL Chinese imports coming into the US are now exempt from ‘reciprocal tariffs.’ This is a massive U-turn in tariff policy.”

On Sunday, April 13, President Trump labeled the tariff exemption reports as ‘fake news,’ elaborating that the electronic goods would still face 20% tariffs. Nonetheless, the tariffs are significantly lower than the 145% tariff on Chinese imports.

China Export Surge Signals Front-Loading

Alongside tariff headlines, trade data from China also drew interest. Exports soared 12.4% year-on-year in March, up sharply from 2.3% in February, suggesting rushed shipments ahead of US tariffs. Meanwhile, imports were down 4.3% year-on-year, following an 8.4% drop in February. China customers reportedly attributed the drop in imports to falling global product prices and few working days.

Brian Tycangco, editor and analyst at Stansberry Research, observed:

“China’s exports continue to grow in 1Q25 while imports decline due to weaker demand and trade tensions with the US. What are the odds China’s trade surplus with the US shot up again as US buyers rushed to beat Trump’s tariffs?”

Hang Seng Index Rallies on Trade Developments

In Asia, the Hang Seng Index rallied 2.47% on Monday morning amid the latest tariff news. Tech stocks led gains, with the Hang Seng Tech Index jumping 3.31%.

• Tech giants Alibaba (09988.HK) and Baidu (09888.HK) soared 6.12% and 5.12%, respectively.
• The EV sector also posted strong gains, with NIO Inc. (09866.HK) up 5.37%.

Mainland China’s equity markets edged higher, with the CSI 300 and Shanghai Composite Index rising 0.52% and 0.86%, respectively. However, the gains were capped after Trump warned of looming tariffs targeting semiconductors and the entire electronics supply chain.

Adding to market headwinds, China reportedly halted shipments of rare earth materials to the US, raising the risk of retaliatory measures.

Nikkei 225 Gains on Tariff Shift but Faces Yen Pressure

The Nikkei 225 climbed 1.58% on Monday morning, buoyed by trade developments. However, ongoing dollar weakness pushed the USD/JPY pair down 0.38% to 142.891, limiting further gains. A stronger Yen could affect demand for Japanese goods and corporate earnings.

Electronics firms outperformed, with Murata Manufacturing (6981) up 1.58% and TDK Corp. (6762) surging 5.58%. Conversely, Nissan Motor Corp. (7201) extended its losses, falling 1.73% on the stronger Yen and US tariffs on Japanese goods.

ASX 200 Tracks Wall Street Higher

Australia’s ASX 200 rebounded, advancing 1.27% on Monday morning. While gains were broad-based, mining and tech stocks led on hopes of easing US-China trade tensions.

• BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) rallied 2.37% and 1.39%, respectively, as iron ore spot prices advanced in early trading.
• The S&P/ASX All Technology Index advanced by 1.71%, tracking the Nasdaq 100 Futures higher.

Outlook: Trade and Central Bank Commentary in Focus

Looking ahead, US-China trade developments will remain a key driver of market sentiment. While escalating tensions pose risks, fiscal support from Beijing could limit the impact on Hong Kong and Mainland China-listed stocks. Central bank commentary will also influence market sentiment as investors assess how tariffs may affect the US economy and Fed rate path.

Investors may explore strategies here to shield portfolios from trade-related volatility.