On Friday, Asian stocks showed a muted response as concerns over U.S. trade tariffs and the prospect of higher-for-longer interest rates continued to weigh on investor sentiment. However, a strong earnings report from Alibaba Group provided a bright spot, driving a renewed rally in Hong Kong.
Key Market Movements:
Japanese Stocks: The Nikkei 225 and TOPIX indexes were flat after stronger-than-expected consumer inflation data for January. This fueled expectations of further interest rate hikes by the Bank of Japan (BOJ). While headline CPI reached a two-year high, core CPI remained above the BOJ’s target, suggesting the central bank may maintain its tightening stance.
Chinese Markets: Mainland China’s markets were largely muted, with both the Shanghai Composite and Shanghai Shenzhen CSI 300 showing little movement. Despite the cooling of the artificial intelligence-driven rally in mainland stocks, investor sentiment remained cautious, especially as U.S. tariffs loom.
Hong Kong Markets: Hong Kong’s Hang Seng surged more than 2%, largely driven by an 8.5% jump in Alibaba’s shares. The e-commerce giant posted strong earnings for the December quarter, sparking optimism in the technology sector. Baidu, Tencent, and JD.com also saw significant gains, following Alibaba’s positive momentum. The AI model DeepSeek AI also contributed to renewed confidence in Chinese tech stocks, encouraging foreign investment, particularly in Hong Kong.
Other Market Developments:
Australia: The ASX 200 fell 0.2%, continuing a five-day losing streak as investors took profits after recent highs. However, Domain Holdings saw an almost 50% surge on the back of a $1.7 billion takeover offer from U.S. peer CoStar Group.
South Korea: The KOSPI dropped 0.2% amid political uncertainty, with reports that impeached President Yoon Suk Yeol had been booked by police.
Singapore: The Straits Times Index remained flat.
India: Indian stocks were expected to open weak, with Nifty 50 futures showing a downtrend. Indian markets have faced a sustained decline since mid-2024 due to concerns about slowing economic growth and looming threats of U.S. tariffs.
Global Influences:
The U.S. markets provided a weak lead, as trade tariff threats from President Trump and weak earnings from Walmart led to losses on Wall Street. U.S. stock futures were flat during Asian trade, reflecting broader market uncertainty. These geopolitical concerns, along with concerns over trade tariffs on automobiles and semiconductors, continue to impact investor sentiment, especially in Asian markets.
Conclusion:
While the broader Asian markets faced muted performance, the strong earnings from Alibaba sparked renewed optimism, particularly in Hong Kong. However, uncertainty over U.S. trade tariffs and interest rate hikes kept most regional stocks within a tight range. Investors will be closely monitoring these factors in the coming weeks, especially as political and economic pressures persist across various regions.
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