Asian stock markets struggled for direction on Friday, as ongoing concerns over U.S. trade tariffs and high-interest rates kept investors on edge. However, Hong Kong’s Hang Seng index saw a strong rebound, driven by Alibaba’s robust quarterly earnings.
Asian Markets React to U.S. Trade Tariff Fears
Most Asian stock indices traded within a narrow range as investors weighed President Donald Trump’s latest tariff threats against key industries. Uncertainty over potential 25% tariffs on automobiles and semiconductors dampened sentiment, while Wall Street’s weak close overnight added to the cautious market mood.
Despite global trade worries, Hong Kong markets surged, led by Alibaba’s earnings-driven rally, while Japanese stocks remained flat following strong inflation data.
Alibaba’s Strong Earnings Spark a Tech Rally in Hong Kong
Shares of Alibaba Group (NYSE:BABA) (HK:9988) jumped 8.5% in Hong Kong after the Chinese e-commerce giant posted stronger-than-expected earnings for the December quarter.
The positive momentum extended to other tech stocks:
- Tencent Holdings (HK:0700) climbed 3.6%
- Baidu Inc. (NASDAQ:BIDU) (HK:9888) gained 1.9%
- JD.com added 2.5%
This AI-driven rally has fueled renewed optimism in Chinese technology stocks. The release of DeepSeek AI boosted confidence that Chinese firms remain competitive in the global AI sector, drawing increased foreign investment into local markets.
China’s Stock Markets Pause After Recent Gains
Unlike Hong Kong, mainland China’s Shanghai Composite and CSI 300 indices traded flat on Friday, as the recent AI-fueled rally showed signs of exhaustion. Investors remained cautious amid ongoing U.S.-China trade tensions, fearing that further tariff hikes could negatively impact economic growth.
Japan’s Nikkei 225 Flat Despite Strong Inflation Data
Japan’s Nikkei 225 and TOPIX indices remained unchanged, despite consumer inflation accelerating beyond expectations in January.
- Japan’s headline CPI surged to a two-year high, reinforcing expectations that the Bank of Japan (BOJ) could continue raising interest rates.
- The BOJ has already hiked rates by 25 basis points in January, with policymakers signaling a “wait-and-watch” approach before making further moves.
- However, manufacturing activity contracted for the eighth consecutive month, indicating economic uncertainty.
Broader Asian Markets Struggle Amid U.S. Trade Tariff Uncertainty
Concerns over Trump’s aggressive trade policies cast a shadow over the broader Asian markets.
- South Korea’s KOSPI fell 0.2% as political tensions resurfaced following reports that impeached President Yoon Suk Yeol had been booked by the police.
- Australia’s ASX 200 declined 0.2%, extending losses for the fifth consecutive session. Investors continued to lock in profits after recent record highs.
- India’s Nifty 50 futures pointed to a weak open, as the Indian stock market has been on a downward trend amid concerns over slowing economic growth and the potential impact of U.S. tariffs on Indian exports.
Conclusion: Uncertainty Looms Over Asian Markets
The Asian stock markets remain volatile, with traders closely monitoring Trump’s tariff announcements, AI-driven stock movements in China, and central bank policies in Japan and Australia.
While Alibaba’s strong earnings fueled a tech surge in Hong Kong, the broader market sentiment remains cautious due to trade tensions and high-interest rates globally.