Hang Seng Index Jumps 2% on AI Sentiment as ASX 200 Dips on RBA Outlook

US Futures Advance on Fed Rate Cut Expectations

On Tuesday, February 18, US futures trended higher, setting a positive tone for the Asian market session. The Dow Jones and Nasdaq 100 mini were up 58 and 45 points, respectively, while the S&P 500 mini climbed 11 points.

With the US markets closed on February 17 for President’s Day, expectations for a June Fed rate cut supported risk assets. According to the CME FedWatch Tool, the chances of a 25-basis point June Fed rate cut rose from 61.7% on February 14 to 62% on February 18.

In the bond markets, 10-year Treasury yields were up modestly in Tuesday morning’s session after sharp declines on February 13 and 14.

Hang Seng Index Rallies after Monday’s Symposium

In Asian markets, the Hang Seng Index rallied 2.02% on Tuesday morning. Investors reacted to updates from Monday’s Symposium on private enterprises and hopes for economic reforms to accelerate AI development and boost the Chinese economy.

The tech sector led the charge, with the Hang Seng Technology Index advancing by 3.18%. Tech giants Alibaba (9988) and Tencent (0700) surged 4.26% and 3.77%, respectively.

Brian Tycangco, editor and analyst at Stansberry Research, remarked on China’s focus on the tech space, stating:

“Just as 2021 divergence was set in motion by Xi’s tech crackdown, this gap could very well be closed by Xi’s publicized support for the tech industry amidst DeepSeek AI revolution this 2025.”

However, Baidu (9888) lagged ahead of its earnings report, rising 1.11%.

Meanwhile, Mainland China’s equity markets had a choppy morning amid ongoing threats of US tariffs. The CSI 300 rose 0.24%, while the Shanghai Composite Index edged 0.08% higher.

Nikkei Index Advances on Economic Optimism

Japan’s Nikkei Index advanced by 0.67% on Tuesday morning as Monday’s GDP numbers showed Japan’s economy gathered momentum in Q4 2024.

Despite the stronger-than-expected GDP readings, concerns over inflation stability and global uncertainties lead markets to expect a cautious BoJ policy stance, cushioning the downside for the USD/JPY pair. The USD/JPY pair rose 0.38% to 152.067 in the morning session, supporting demand for export-linked stocks.

Notable movers included Nissan Motor Corp. (7201), which rallied 3.92%, alongside gains in the tech sector.

ASX 200 Falls as the RBA Impacts Sentiment

Australia’s ASX 200 Index fell 0.66% on Tuesday morning. A more hawkish RBA policy outlook weighed on sentiment. Banking and gold-related stocks led the losses.

Westpac Banking Corp. (WBC) extended its earnings-fueled sell-off from Monday, sliding 2.61%, while National Australia Bank (NAB) dropped by 2.25%.

Meanwhile, Northern Star Resources Ltd. (NST) fell 2.18% after gold remained below recent highs after the February 14 reversal.

Outlook: Key Risks and Opportunities

Looking ahead, upcoming corporate earnings, central bank guidance, US tariff policies, and AI developments will remain key drivers. AI stocks could extend their gains as strategic partnerships and technological advancements fuel optimism. Meanwhile, US tariff uncertainty may continue to heighten volatility across targeted sectors.

Discover key strategies to navigate these market risks here.