Hang Seng Index Rallies 3.38% Amid US Tariff News and Stimulus Hopes

US Markets Soar as Trump Announces Tariff Pause

US equity markets soared on Wednesday, April 9, following President Trump’s announcement of a 90-day pause of tariffs on numerous countries, excluding China. The Nasdaq Composite Index surged 12.16%, while the Dow and the S&P 500 posted gains of 7.87% and 9.52%, respectively.

President Trump announced a 90-day pause on new tariffs for non-retaliating countries, reducing them to a blanket 10% while increasing tariffs on Chinese imports to 125%,.

In the bond markets, 10-year US Treasury yields briefly reached a session high of 4.513 before settling at 4.328%, indicating a stabilization after recent volatility caught Trump’s eye.

Despite the market reaction to tariff developments, inflation and recession risks remained elevated, signaling choppy market conditions.

Peter Berezin, Chief Global Strategist and Director of Research at BCA Research, commented:

“I like to look at CPI swaps to gauge what sort of tariffs the market is expecting. The 1y swap fell from 3.9% to 3.5% today. However, it remains about one percentage point above where it was in early 2025, foreshadowing a significant amount of tariff-induced inflation ahead.”

According to Kalshi, the chances of a 2025 US recession stand at 55%, down from 69.3% on April 9.

Hang Seng Index Rallies on Trade Relief

In Asia, the Hang Seng Index rallied 3.38%, tracking Asian markets higher, as Trump announced lower tariffs on non-retaliating countries while hiking tariffs on China to 125%. Easing fears of a US recession and stimulus hopes boosted demand for Hong Kong and Mainland China-listed stocks. According to CN Wire, Chinese leaders are set to meet on stimulus measures following Trump’s tariff announcement.

Auto and tech stocks saw substantial gains, driving the Index higher.

• The Hang Seng Technology Index jumped 4.34%.
• Tech giants Alibaba (09988.HK) and Baidu (09888.HK) rallied 4.34% and 4.76%, respectively.
• Li Auto Inc. (02015.HK) surged 6.63%, while NIO Inc. (09866.HK) gained 5.69%.

Mainland China’s indices also posted gains, with the CSI 300 and Shanghai Composite Index advancing by 1.70% and 1.57%, respectively.

Nikkei 225 Soars on Tariff Respite

The Nikkei 225 soared 8.44% on Thursday morning, following the US tariff reduction on Japan from 24% to 10%. Lower tariffs eased recession concerns, weakening demand for the Japanese Yen. The USD/JPY rose 1.02% on April 9 to close at 147.707. A weaker Yen and lower tariffs could bolster Japanese exports to the US and corporate earnings.

Gains were broad-based on hopes of Japan reaching a trade agreement with the US.

• Softbank Group Ltd. (9984) and Tokyo Electron (8035) jumped 10.53% and 10.54%, respectively.
• Sony Corp. (6758) and Fast Retailing Co. Ltd. (9983) advanced 12.91% and 7.81%, respectively.
• Nissan Motor Corp. (7201) and Honda Motor Co. (7267) posted gains of 8.99% and 7.04%, respectively.

ASX 200 Rebounds as Banks, Mining, and Tech Stocks Lead the Charge

Australia’s ASX 200 rallied 4.77% on Thursday morning, boosted by lower US tariffs. Bank, mining, and tech stocks led the rebound.

• Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) posted gains of 3.81% and 5.55%, respectively.
• Mining heavyweights BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) rose 6.09% and 6.42%, respectively. Iron ore spot prices jumped 1.62% in the morning session on easing demand jitters.
• The S&P/ASX All Technology Index surged 6.83%, tracking the Nasdaq’s overnight gains.

Outlook: Trade Tariffs and Central Bank Signals in Focus

Moving forward, markets should remain attentive to further trade developments and potential responses from Washington, as well as possible countermeasures. Fiscal stimulus measures from Beijing could help mitigate the impact of tariffs on Chinese and Hong Kong equities.

Additionally, investors should monitor central bank commentary, as tariff developments may influence the Fed’s policy direction.

A range of market scenarios is possible, including:

• Hang Seng Index and Mainland China Markets: An escalation in the US-China trade war could trigger a sell-off, while a de-escalation in the trade war may boost sentiment. However, stimulus measures from Beijing and a softer USD/CNY could soften the impact of tariffs on market sentiment.
• Nikkei 225: A stronger Japanese Yen and failed US-Japan trade talks would weigh on the Index.
• ASX 200: Global recession risks and US-China developments are key drivers of ASX 200 performance.

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