Hang Seng Index Climbs as Alibaba, NIO Rally; ASX 200 Hit by US Trade Policies

US Markets Extend Losses as Bear Grip Tightens

US equity markets extended their losses on Tuesday, March 11, as recession jitters overshadowed hopes for a ceasefire in the Ukraine war. President Trump announced 50% tariffs on aluminum and steel imports from Canada before backing down. Meanwhile, previously planned sweeping 25% tariffs on aluminum and steel imports are set to take effect on Wednesday, March 12.

The Dow and the S&P 500 ended the Tuesday session down 1.14% and 0.76%, respectively, while the Nasdaq Composite Index slipped by 0.18%.

US JOLTS Job Openings Rise Amid Economic Uncertainty

The JOLTS job openings report showed an increase to 7.74 million in January, up from 7.508 million in December. Higher job openings could signal lower unemployment, supporting wage growth and consumer spending. Upward consumer spending trends may fuel demand-driven inflation, supporting a more hawkish Fed rate path.

However, the job opening data followed Friday’s more influential US Jobs Report, which showed rising unemployment and slowing wage growth. The US Jobs Report bolstered bets on a June Fed rate cut.

Parker Ross, Global Chief Economist at Arch Capital, commented:

“Key Takeaway: Decent Feb. payroll gains offset by higher unemployment rate and a further reduction in average weekly hours worked. Macro Implications: Fed will retain its easing bias but will not act until June unless there is a material labor market deterioration.”

Asian Market Implications: Trump’s tariff policies and concerns about the US economy set a cautious tone for Asian markets on Wednesday, March 12.

AI Developments Drive Alibaba Shares Higher

Alibaba shares surged following fresh AI developments, with CN Wire reporting a new strategic partnership in China’s AI space.

“Manus announced on March 11 its strategic partnership with Alibaba’s Tongyi Qwen team. They will implement all Manus features using Tongyi Qwen’s open-source models and Chinese computing platforms. Both teams are collaborating to develop more creative AI agent products for Chinese users.”

The partnership aligned with Beijing’s commitment to AI advancements. In response, Alibaba (9988) rose 2.10% in early trading on March 12.

Hang Seng Index Advances on AI and EV Optimism

In Asia, the Hang Seng Index gained 0.33% on Wednesday morning. The latest AI-related news and electronic vehicle (EV) sector momentum contributed to the early gains.

• The Hang Seng Technology Index rose 0.91% on Alibaba’s gains.
• NIO Inc. surged 8%, extending its 9.81% rally from Tuesday, following record monthly EV deliveries in December.
• Li Auto (2015) rose 3.27% in early trade.
• NIO’s deliveries increased 39% year-on-year in 2024, signaling rising dominance in the EV market.

Mainland China’s equity markets dipped as investors considered the impact of looming tariffs on aluminum and steel exports. The CSI 300 and Shanghai Composite Index fell 0.39% and 0.18%, respectively.

Nikkei Index Edges Higher on Yen Weakness

The Nikkei Index gained 0.13% on Wednesday morning, supported by a softer Japanese Yen demand. The USD/JPY pair rose 0.17% to 148.021 in the morning session, extending its gains from March 11.

Softer producer prices from Japan followed a slump in household spending and weaker-than-expected Q4 2024 private consumption data from Tuesday, which eased expectations for a Bank of Japan rate hike in H1 2025.

Notable moves included Sony Corp. (6758), which rallied 3.72%, while Nissan Motor Corp. (7201) rose 0.11%. However, tech stocks had a mixed morning after the Nasdaq’s overnight retreat. Softbank Group (9984) dipped by 0.27%, while Tokyo Electron (8035) gained 0.30%.

ASX 200 Tumbles in Broad-Based Sell-Off

Meanwhile, Australia’s ASX 200 bucked the broader Asian market trend, sliding 1.63% on Wednesday morning. Investors reacted to overnight tariff developments. The US rejected a tariff exemption for Australian steel and aluminum exports to the US, rattling investor confidence. The rejection brought Australia into Trump’s global trade war arena.

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented:

“No exemption for Aust for Trumps 25% tariffs on steel & alum. Bad for industry but only 0.03% of GDP so no big econ impact. Pharmaceuticals & meat/ag exports are a much bigger risk with Trump threatening both. Real risk for Aust is global trade war & less demand for our exports.”

Key market reactions:

• US tariffs on steel weighed on mining stocks, causing BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) to slide 1.12% and 1.58%, respectively.
• The S&P/ASX All Technology Index traced the Nasdaq lower, falling 0.83%.
• Aussie Banks faced heavy losses, with the Commonwealth Bank of Australia (CBA) falling 1.31%.

Outlook: Key Risks and Opportunities

Global markets remain sensitive to a combination of economic risks and policy shifts:

• US-China Trade Tensions: A key driver of Asian market sentiment.
• US CPI Data: A crucial indicator for Fed rate expectations.
• China’s Stimulus Measures: Beijing’s policies may help counterbalance global economic uncertainty.
• Central bank guidance: Investors will closely monitor monetary policy updates from global policymakers.

Despite ongoing risks, China’s stimulus efforts could offset tariff risks, providing a stabilizing force for global markets.

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