Hang Seng Tumbles on Trade War Jitters; Nasdaq Soars on Tariff U-Turn – Weekly Recap

US Markets Rally Amid Tariff-Fueled Volatility

US markets soared in the week ending April 11 as President Trump flip-flopped on tariffs. The Nasdaq Composite Index jumped 7.29%, while the S&P 500 and the Dow gained 5.70% and 4.95%, respectively.

In the bond markets, 10-year US Treasury yields climbed 50 basis points, closing the week at 4.497%. A broad sell-off in Treasuries and the US dollar reflected deepening concerns over Trump’s policies and the economic fallout from escalating trade tensions.

US Tariff Pause Boosts Risk Sentiment

President Trump’s sweeping tariffs took effect on April 9, initially triggering a flight to safety.

However, the US President U-turned on tariffs, announcing a 90-day pause on reciprocal tariffs for non-retaliating countries. Trump lowered tariffs on these countries to 10% while hiking tariffs on China to 145% in response to Beijing’s countermeasures.

Tariff developments overshadowed US economic indicators, including inflation and consumer sentiment data.

China Signals Willingness to Negotiate

Beijing initially responded by raising tariffs on US goods to 84%, then lifting them to 125% on April 11. The escalation in the US-China trade war raised fears for a US recession, driving demand for safe-haven assets, including the Japanese Yen, the Swiss Franc, and gold.

Despite the tit-for-tat moves on tariffs, Beijing refrained from devaluing the Yuan, bolstering hopes for trade negotiations. The USD/CNY pair rose 0.14% in the week, closing at $7.2911.

Robin Brooks, Senior Fellow at the Brookings Institute, commented on Beijing’s moves in the global markets to bolster the Yuan, stating:

“A tariff of 145% means depreciation expectations will inevitably be building in China’s population. That means capital flight will be rising, so China will be intervening increasingly to stop the Yuan from falling. That means Treasury sales, which may explain rising US yields…”

He also said that China’s reluctance to devalue signals its willingness to negotiate—whereas any sharp devaluation would likely mark a dramatic escalation.

The US-China trade war overshadowed key inflation data from China that signaled persistent deflationary pressures.

Hang Seng Index Plunges on Trade War Fears

The Hang Seng Index extended its losing streak to a fifth week, plummeting 8.47%. Worsening trade tensions dampened the appetite for Hong Kong and mainland-listed stocks, especially in the tech and auto sectors.

• The Hang Seng Technologies Index plunged 7.77% as tech stocks bore the brunt of the market rout.
• Tech giants Alibaba (09988.HK) and Baidu (09888.HK) posted weekly losses of 16.6% and 9.91%, respectively.
• Automakers also struggled, with Li Auto (02015.HK) and NIO Inc. (09866.HK) sliding 7.54% and 9.39%, respectively. EV manufacturers faced selling pressure, even though Beijing stated that China does not export EVs to the US. However, US pressure on trade partners to target China with tariffs added to the sector woes.

Meanwhile, Mainland China’s equity markets saw relatively modest losses. The CSI 300 dropped 2.87%, while the Shanghai Composite Index fell 3.11%. Hopes for further stimulus from Beijing and trade negotiations cushioned the downside.

Brian Tycangco of Stansberry Research noted that Beijing’s tariffs remain below the US level and that its restraint may offer a window for renewed negotiations.

For more analysis on the Hang Seng Index and global market trends, click here.

Commodities Diverge on Tariff News

• Gold soared to a record high of $3,245 before closing the week up 6.61% at $3,238. The US bond market and dollar sell-off drove demand for safe-haven assets as the US-China trade war heated up.
• WTI crude oil prices fell 1.84% to $60.78, while iron ore spot prices slid 5.36% amid fears of weakening global demand.

ASX 200 Edges Lower Despite Tech Resilience

The ASX 200 slipped 0.28% in the week ending April 11. Trump’s tariff flip-flop prevented heavier losses, with the Index recovering from a low of 7,160 to close at 7,647.

• Mining sector: BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) slid 3.80% and 3.03%, respectively.
• Energy sector: Woodside Energy Group Ltd. (WDS) dropped 3.92%.

Meanwhile, tech and gold stocks limited the losses.

• Tech Sector: The S&P/ASX All Technology Index rallied 4.89%, tracking the Nasdaq higher.
• Northern Star Resources Ltd. (NST) soared 13.53% as risk aversion drove demand for gold.

Nikkei Rises on Tariff Relief for Japan

The Nikkei Index gained 1.30% in the week, bucking the broader Asian market trend. Trump cut levies on Japanese goods from 24% to 10%, boosting demand for Nikkei 225-listed stocks. However, a stronger Japanese Yen capped gains as USD/JPY dropped 2.36% to 143.437 in the week.

• Auto Sector: Nissan Motor Corp. (7201) dropped 6.76%, while Suzuki Motor Corp. (7269) tumbled 7.84%.
• Sony Corp. (6758) ended the week down 2.36%.

Looking Ahead: Key Events on the Radar

Investors should closely monitor Beijing’s stimulus announcements, trade developments, economic data, and central bank commentary. Key stats include China’s GDP, US retail sales, and Fed chatter.

In a volatile environment, traders should remain vigilant and monitor geopolitical and policy shifts closely. Get in-depth insights on Hang Seng movers here.