Hang Seng Index and Nikkei Climb While ASX 200 Slumps on Tariff Woes

US Markets Rally on Trump’s AI Focus and Earnings

On Wednesday, January 22, US markets extended their gains from Tuesday, driven by optimism surrounding President Trump’s AI initiatives and strong corporate earnings. The Nasdaq Composite Index rallied 1.28%, while the Dow and the S&P 500 gained 0.30% and 0.61%, respectively.

President Trump unveiled an AI joint venture named Stargate. This initiative brings OpenAI, Oracle (ORCL), and Japan’s SoftBank together. The JV will build data centers and create over 100,000 US jobs. ARM Holdings (ARM) soared 15.93% in response to the announcement, reflecting strong investor optimism about the initiative.

Meanwhile, Netflix (NFLX) surged 9.69% after reporting a record number of subscribers, also boosting investor sentiment.

Wednesday’s gains set the tone for Thursday’s Asian market session, with Beijing’s policy measures also in focus.

PBoC Stimulus Eases Concerns Over Tariffs

On Thursday, January 23, the People’s Bank of China (PBoC) eased stock repurchase financing terms, fueling a rally in Mainland China-listed stocks.

The PBoC reportedly cut the downpayment for stock repurchase financing from 30% to 10% and extended loan terms to 3 years, up from 1 year.

CN Wire reported:

“Over 300 listed companies disclosed plans to apply for stock buyback loans, with maximum amount exceeding 60 billion Yuan. Over 40% of companies applying for buyback loans have market cap above 10 billion Yuan.”

The PBoC’s latest move countered market concerns about US tariffs on Chinese goods. On Wednesday, January 22, news of the Trump administration planning 10% tariffs on China, potentially effective February 1, left Mainland China’s equity markets in negative territory.

Hang Seng Index Advances on PBoC Maneuvers

The Hang Seng Index gained 0.24% on Thursday morning,  benefiting the PBoC’s buyback announcement for Mainland China. However, ongoing threats of US tariffs on Chinese goods capped the upside. Tech stocks contributed to the morning gains, countering a pullback in real estate stocks.

The Hang Seng Tech Index advanced by 0.10%. Tech giants Alibaba (9988) and Tencent (0700) were up 1.09% and 0.39%, respectively. However, the Hang Seng Mainland Properties Index slid by 1.39%.

Meanwhile, Mainland China’s equity markets rallied in response to the PBoC announcement. The CSI 300 and the Shanghai Composite rose 1.01% and 1.37%, respectively.

Nikkei Index Gains on Yen Weakness

Japan’s Nikkei Index extended its gains from Wednesday, rising 0.73% on Thursday morning. Trump’s AI initiatives and a weaker Japanese Yen drove demand for Japanese stocks. The USD/JPY pair advanced by 0.66% to 156.503 on Wednesday. A weaker Yen could boost overseas earnings and valuations.

Major gainers included Softbank (9984), which rallied 4.40% on news of the company entering the Stargate JV. Sony Corp. (6758) and Nissan Corp. (7201) gained 2.32% and 1.00%, respectively, reflecting investor confidence in export-driven sectors.

ASX 200 Slides Amid Tariff Jitters

Australia’s ASX 200 Index slid by 0.60% on Thursday morning. While losses were broad-based, mining stocks led the losses.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) dropped by 1.76% and 1.36%, respectively. Concerns over the impact of US tariffs on China’s iron ore demand pressured mining stocks. Iron ore spot prices were down 0.38% on Thursday.

Outlook: Risks and Opportunities

Geopolitical tensions and economic uncertainty continue to influence global markets. Key areas of focus include US-China trade relations, central bank policies, and AI-related investments.

Technology and AI-related stocks could outperform given policy support, while sectors exposed to trade risks, like mining, may remain volatile. Nevertheless, positive outcomes to US-China trade negotiations could boost trade-related stocks.

While China’s stimulus measures may stabilize regional markets, investors should remain cautious, monitoring trade developments, inflation, and monetary signals. Discover strategies to navigate this week’s market trends here.