Hang Seng Index Soars as US Tariff Concerns Ease, AI Stocks Lead Gains

US Markets Advance on New Tariff Timelines

US equity markets closed higher on Thursday, February 13, as US tariff developments boosted investor confidence. The Nasdaq Composite Index gained 1.50%, while the Dow and S&P 500 advanced by 0.77% and 1.04%, respectively.

President Trump held back from imposing reciprocal tariffs on nations levying US goods, fueling demand for risk assets. On social media, he stated:

“We want a level playing field for all American workers — I have instructed my Secretary of State, my Secretary of Commerce, Secretary of Treasury, and U.S. Trade Representative to do all necessary work to deliver reciprocity.”

Investigations into duties imposed on US goods may take time, allowing room for trade talks and potentially averting a global trade war.

In the bond markets, 10-year Treasury yields tumbled to a February 13 low of 4.515%, influencing risk sentiment.

US Producer Prices Offer Hope for a Fed Rate Cut

On February 13, US producer prices ex. Food, Energy, and Trade rose 3.4% year-on-year in January, down from 3.5% in December. The decline suggests a softer inflation outlook as producers pass cost savings on to consumers amid weakening demand.

The CME FedWatch Tool reflected the impact of the data on sentiment toward the Fed rate path. The probability of a 25 basis point June rate cut rose from 35.2% on February 12 to 40.0% on February 13.

Samuel Tombs, Chief US Economist at Pantheon Macroeconomics, commented:

“Those PPI numbers were a game-changer for the January core PCE print. We’re now tracking 0.28% m/m, 2.6% y/y (down from 2.8% in Dec.) All the healthcare and insurance PPI components were weak and airline fares prices fell sharply. About as good as the Fed could have hoped for.”

Trump’s tariff stance and US data bolstered sentiment heading into Friday’s Asian session.

Hang Seng Index Extends Gains as Tariff Jitters Ease

In Asian markets, the Hang Seng Index soared 2.21% on Friday morning. Easing fears of a US-China trade war and expectations of a less hawkish Fed boosted demand for Hong Kong-listed stocks. Tech stocks continued to lead the charge, fueled by the AI frenzy.

The Hang Seng Technology Index jumped 2.92%, with Alibaba (9888) and Tencent (0700) rallying 2.31% and 4.57%, respectively.

However, China’s Mainland equity markets saw modest gains as uncertainty about US tariffs lingered. The CSI 300 and the Shanghai Composite Index gained 0.35% and 0.06%, respectively.

Nikkei Index Dips on Yen Strength

Japan’s Nikkei Index declined by 0.44% on Friday morning amid expectations of a Bank of Japan rate hike. The USD/JPY pair tumbled 1.05% to 152.788 on February 13, impacting demand for Japanese stocks.

However, losses were limited, with Sony Corp. (6758) surging 10.23% on upbeat earnings from its music and games divisions. Nissan Motor Corp. (7201) rallied 5.85%, benefiting from easing tariff concerns, which helped counter the impact of a stronger yen.

ASX 200 Tracks Wall Street Higher

Australia’s ASX 200 Index rose 0.45% on Friday morning, briefly striking a record high of 8,615.2 before retreating. US tariff developments drove demand for mining stocks, while gold-related stocks contributed to the gains.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) gained 0.59% and 1.15%, respectively, as iron ore spot prices surged 1.88%. Northern Star Resources Ltd. (NST) advanced by 1.09%, benefiting from an overnight 0.83% increase in gold prices.

Outlook: Risks and Opportunities Ahead

Looking ahead, US tariff policy shifts and the AI sector’s growth will likely continue to drive markets. AI stocks could extend their gains as strategic partnerships and innovation boost optimism. That said, US tariff uncertainty may expose manufacturing and mining stocks to heightened volatility.

Meanwhile, hopes for US-China trade negotiations may support Australian, Hong Kong, and Mainland Chinese markets. The Hang Seng Index could further benefit from the AI-driven euphoria, while tariff risks underscore the need for caution.

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