Hang Seng Index Gains on Tech Rally; Nikkei Slips Ahead of Trump’s Tariff Reveal

US Markets Mixed as Trump’s Liberation Day Tariffs Loom

US equity markets posted mixed results on Tuesday, April 1. The Dow slipped by 0.03%, while the Nasdaq Composite Index and the S&P 500 advanced 0.87% and 0.38%, respectively. Notably, on the eve of President Trump’s Liberation Day tariff announcement, the Nasdaq snapped a four-day losing streak.

Risk assets gained support after the White House stated that Trump ‘takes swings in the market seriously,’ marking a shift in tone. Trump had previously said he does not watch the stock market when considering tariff policies.

US Economic Indicators Signal Dovish Fed Outlook

While tariff tensions dominated headlines, US economic data supported a dovish Fed stance. JOLTS Job Openings fell from 7.762 million in January to 7.568 million in February, signaling weaker labor market conditions. A cooling labor market may constrain wage growth and consumer spending, easing inflationary pressures.

Adding to the dovish narrative, the ISM Manufacturing PMI dropped below the neutral 50 level in March, reinforcing multiple Fed rate cut bets.

Asian Market Implications: Asian markets opened mixed on Wednesday, April 2, as investors await Trump’s tariff announcement set for 1600 Eastern Time.

Hang Seng Index Tracks Wall Street Gains

In Asia, the Hang Seng Index gained 0.55% on Wednesday morning. Tech stocks led the gains, with China’s automakers benefiting from robust car sales data.

The Hang Seng Mainland Properties Index added 0.42%, while the Hang Seng Technology Index rallied 1.38%.

CN Wire Reported that China encourages banks to increase credit and medium-to-long-term loans for tech companies, potentially boosting demand for tech stocks.

• Tech giants Alibaba (09988.HK) and Baidu (09888.HK) rose 1.62% and 1.80%, respectively.
• Li Auto Inc. (02015.HK) advanced 1.92%, while NIO Inc. (09866.HK) gained 1.54% after reporting Q1 2025 vehicle delivery increases of 15.5% and 40.1% YoY, respectively.

Mainland China’s equities also advanced, with the CSI 300 and Shanghai Composite Index up 0.07% and 0.19%, respectively, as markets assessed looming tariff risks.

Nikkei 225 Dips as Export Risks Rise

The Nikkei Index slipped 0.09% on Wednesday morning despite the USD/JPY rising 0.17% to 149.844. Typically, a weaker Yen supports exporters. However, concerns over a 25% tariff on all car imports into the US weighed on sentiment. Investors also faced the prospect of broader tariff risks, a threat to Japan’s exports.

Nissan Motor Corp. (7201) fell 1.76%, Sony Corp. (6758) slid 1.94%, and Softbank Group (9984) dropped 2.26%, reflecting investor caution ahead of the tariff announcement.

ASX 200 Edges Higher, Led by Banks and Tech

Australia’s ASX 200 rose 0.12% on Wednesday morning, tracking Wall Street’s gains. Banking and tech sector gains offset losses across gold, mining, and oil stocks. Gold snapped a three-day winning streak on April 1 despite hitting a record high of $3,149 earlier in the session.

• Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) climbed 0.39% and 0.84%, respectively. Falling US Treasury yield boosted demand for high-yielding banking stocks.
• The S&P/ASX All Tech Index rose 0.41%, mirroring the Nasdaq’s gains.

Outlook: Tariff Uncertainty and Central Bank Commentary Key

Tariff-related headlines will impact market sentiment and monetary policy expectations. Any escalation in auto and reciprocal tariffs could trigger retaliatory measures, dampening risk appetite. China may soften the blow with fresh stimulus.

Investors should also monitor central bank commentary. Recent US inflation data, has fueled speculation about fewer Fed rate cuts.

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