Hang Seng Rallies on Tariff Hopes, Nikkei Dips on BoJ Rate Hike Bets

US Markets Mixed on Corporate News and Earnings

US equity markets had a mixed Thursday, February 6 session. Corporate news weighed on the Dow, which declined by 0.28%. Honeywell (HON) slid by 5.64% after announcing plans to break into three separate entities. Despite posting better-than-expected earnings results, the company’s full-year guidance fell short of expectations, contributing to the decline.

Meanwhile, the Nasdaq Composite Index and S&P 500 gained 0.51% and 0.33%, respectively.

US Jobless Claims Rise

The US labor market was under the spotlight ahead of Friday’s all-important Jobs Report. Initial jobless claims increased from 208k (week ending January 25) to 219k (week ending February 1).

A continued upward trend in jobless claims could affect wage growth, potentially curbing consumer spending. A pullback in consumer spending may dampen inflationary pressures, supporting a more dovish Fed rate path.

Japan Household Spending Fuels BoJ Rate Hike Bets

Economic indicators from Japan boosted expectations of another Bank of Japan rate hike. Household spending jumped 2.3% month-on-month in December, following a 0.4% rise in November.

Rising household spending could fuel consumer demand-driven inflationary pressures, supporting the BoJ’s recent forward guidance on policy. A more hawkish BoJ rate path could drive Japanese Yen demand, potentially weighing on stocks, as a stronger Yen could impact corporate earnings.

Hang Seng Index Rallies on Tariff Hopes

Turning to the Asian equity markets, the Hang Seng Index rallied 1.21% in Friday morning’s session. Investors’ hope of the US and China avoiding a full-blown trade war boosted demand for real estate and tech stocks.

The Hang Seng Mainland Property Index advanced by 1.81%, while the Hang Seng Technology Index surged by 2.56%. Tech giants Alibaba (9988) and Tencent (0700) posted gains of 1.88% and 2.51%, respectively.

China’s Mainland equity markets also moved higher on trade sentiment. The CSI 300 and Shanghai Composite Index gained 1.58% and 1.27%, respectively.

Nikkei Index Dips on BoJ Rate Hike Expectations

Japan’s Nikkei Index declined by 0.59% on Friday morning. A stronger Japanese Yen weighed on market sentiment. The USD/JPY pair fell 0.80% on February 6, impacting Japanese stocks.

Tokyo Electron (8035) and Softbank Group (9984) dropped by 3.44% and 1.17%, respectively. Meanwhile, Nissan Motor Corp. (7201) soared 9.06% as news that Nissan’s board members rejected a Honda merger resonated.

ASX 200 Slips Ahead of US Jobs Report

Australia’s ASX 200 Index slipped by 0.09% on Friday morning, tracking weakness in US futures. The Dow Jones mini was down 39 points after Thursday’s pullback as investors shifted their attention to the US Jobs Report.

Gold and oil-related stocks offset gains across the banking, mining, and tech sectors.

Northern Star Resources Ltd. (NST) slid by 2.15% after gold prices fell 0.39% to $2,856 on February 6. Woodside Energy Group (WDS) declined by 0.64% as oil prices trended lower.

Outlook: Risks and Opportunities Ahead

Looking ahead, geopolitical tensions, US-China tariff developments, and the global AI race remain pivotal market drivers. AI stocks could extend their rally as competition in the sector heats up, while trade-sensitive industries, including mining and manufacturing, may face heightened volatility.

If China advances trade talks with the US and expands AI initiatives, Hong Kong, mainland China, and Australian markets could benefit. However, escalating trade tensions could overshadow AI-driven optimism, contributing to broader market uncertainty.

Discover strategies to navigate this week’s market trends here.