Hang Seng Index Falls 1.38% as Trump’s Tariff Threats Hit Tech Stocks

US Markets Edge Higher on FOMC Meeting Minutes

US equity markets advanced on Wednesday, February 19, as investors digested the FOMC Meeting Minutes. The S&P 500 gained 0.24%, while the Nasdaq Composite Index and the Dow gained 0.07% and 0.16%, respectively.

In the bond markets, 10-year Treasury yields dipped as investors interpreted the FOMC Meeting Minutes as less hawkish than feared.

FOMC Meeting Minutes Highlight Tariff Concerns

On February 19, the Fed released the minutes from its January meeting. The minutes revealed that policymakers saw the economy well placed, allowing them time to assess labor market conditions and inflation. There were no surprises to spook investors, with the minutes aligning with Fed Chair Powell’s recent testimony, reinforcing a wait-and-see approach.

A key takeaway was the Fed’s intent to evaluate the potential impact of US tariffs on the economy and inflation.

Despite the less hawkish-than-expected minutes, the Fed’s plans to maintain interest rates steady impacted risk sentiment on Thursday, February 20.

Tariff Fears Rattle Asian Markets

In Asia, investor fears over a potential global trade war weighed on risk assets. President Trump announced plans for sweeping tariffs of 25% or higher, targeting autos, chips, and pharmaceuticals.

Sweeping tariffs could drive US import prices higher, fueling tariff-driven inflation. A higher inflation outlook would support a more hawkish Fed rate path, raising borrowing costs. An increase in borrowing costs may affect corporate earnings and investor sentiment.

Hang Seng Index Falls as Trade Tensions Rise

Asian markets continued reacting to Trump’s latest tariff warnings. The Hang Seng Index dropped 1.38% on Thursday morning. Real estate and tech stocks faced heavy selling pressure.

The Hang Seng Technology Index slid by 1.85%, with tech giants Alibaba (9988) and Baidu (9888) tumbling by 2.66% and 2.72%, respectively. The Hang Seng Mainland Property Index was down 1.85%.

Mainland China’s equity markets saw smaller losses, cushioned by Beijing’s recent pledges to boost domestic consumption. The CSI 300 and the Shanghai Composite Index fell 0.42% and 0.16%, respectively.

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

“Mainland tech concepts pushing higher despite market correction today. Likely driven by yesterday’s announcement of stronger consumption subsidies for electronics and EVs. BYD and Xiaomi smash through record highs while Lenovo hits new 3-year peak.”

Nikkei Slides as Yen Strengthens

Japan’s Nikkei Index slid by 1.57% on Thursday morning. Trump’s tariff threats impacted demand for export-linked stocks.

Moreover, risk aversion drove demand for the Japanese Yen, contributing to the pullback. The USD/JPY pair fell 0.79% in the morning session to 150.265, extending its losses from Wednesday. A stronger Japanese Yen could impact overseas earnings, weighing on export-linked stocks.

Nissan Motor Corp. (7201) slid by 3.71%, while tech conglomerate Softbank Group Ltd. (9984) fell by 2.13%.

ASX 200 Extends Losses Amid Banking and Mining Sell-Off

Australia’s ASX 200 Index tumbled 1.32% on Thursday morning, putting the Index on track for a four-day losing streak. While the losses were broad-based, banking and mining stocks bore the brunt of the sell-off.

ANZ (ANZ) and National Australia Bank (NAB) slid by 3.19% and 3.60%, respectively. The banking sector remained under pressure after weak earnings reports from the major Aussie banks.

The mining sector also faced a challenging session after Fortescue Ltd. reported a slump in profits and slashed its dividend. Fortescue Ltd. (FMG) tumbled 5.91%, while BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) fell 2.26% and 1.86%, respectively.

Meanwhile, fears of a less dovish RBA rate path added to negative sentiment. A surge in full-time employment and a higher participation rate tempered bets on a near-term RBA rate cut.

Outlook: Key Risks and Opportunities

Looking ahead, corporate earnings, central bank policy signals, and US tariff developments will be key drivers.

While AI-driven innovation and strategic partnerships could support growth, ongoing tariff uncertainty may fuel further volatility.

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