Asian stock markets showed mixed results as economic concerns persist, particularly regarding U.S. trade policies. The Hang Seng index fell by 1.75% amid deflation fears in China, while Tokyo’s Nikkei index saw a slight gain of 0.38%. Investor caution is heightened due to uncertainties in the trade conflict and weaker U.S. employment data. The Japanese yen strengthened as oil prices declined, reflecting a cautious approach towards risk assets in light of potential economic challenges.
Asian Stock Markets Experience Mixed Trends Amid Economic Concerns
On Monday, Asian stock markets displayed a blend of cautious rises and significant declines, influenced by ongoing worries about the global economy. These anxieties were exacerbated by uncertainties surrounding U.S. trade policies, especially following the implementation of Chinese retaliatory measures.
Chinese Market Declines Amid Deflation Fears
At the Hong Kong Stock Exchange, the Hang Seng index dropped by 1.75%, settling at 23,806 points. Similarly, the Shanghai composite index saw a minor decline of 0.16%, while the Shenzhen index fell by 0.04%. Investors reacted to recent data showing a decline in consumer prices in China for the first time in a year. This development raises concerns about persistently weak demand, potentially leading to a deflationary spiral.
According to Stephen Innes from SPI Asset Management, “These figures reinforce the existing deflationary pressures. The real estate sector is struggling, domestic demand is weak, and even though tech stocks have rebounded, this has not translated into increased consumer spending.” After a surge in Chinese stock markets since mid-January, retail investors may have capitalized on the recovery, but the sluggish household spending indicates a persistent caution.
Investor anxiety is further fueled by uncertainties in the ongoing trade conflict with the United States. Following a 20% tariff increase on Chinese goods by Donald Trump, Beijing’s retaliatory duties on American agricultural products came into effect.
Market participants are closely monitoring the possibility of new stimulus measures from China, especially after the announcement of an ambitious economic growth target of approximately 5%. Michael Wan from MUFG Bank emphasized that “the scale and effectiveness of these stimulus measures will significantly influence market trends.” He noted that Beijing has already adjusted its budget deficit targets.
Moreover, the rise of artificial intelligence, which has invigorated the tech sector, could be the catalyst the Chinese economy needs.
Tokyo Sees Slight Gains Despite U.S. Employment Data
In Tokyo, the Nikkei index experienced a slight increase of 0.38%, reaching 37,028.27 points, while the broader Topix index rose by 0.29% to 2,700.76 points. The Seoul Stock Exchange also saw a gain of 0.27%, and Sydney’s market increased by 0.18%, although Taipei faced a decline of 0.52%.
Asian markets remain vigilant amid the looming threat of escalating trade tensions, particularly as Trump continues to advocate for “reciprocal” tariffs aimed at all U.S. trading partners starting in early April. Analysts from Tokai Tokyo Intelligence expressed that “the uncertainty surrounding the U.S. economy and Trump’s tariff discussions will be a significant concern moving forward.”
Within this context, only semiconductor-related stocks, like Advantest, which rose by 3.74%, showed robust performance in Tokyo following a rebound in the sector on Wall Street, prompting bargain hunting after several sessions of declines.
Investors in Asia approached the U.S. employment figures released on Friday with caution, as the data revealed fewer job additions than anticipated in February and a slight uptick in unemployment. Ray Attrill from the National Australia Bank commented, “Labor demand in the private sector remained strong ahead of this period of economic policy uncertainty, causing a notable decrease in business and consumer confidence.”
Yen Strengthens as Oil Prices Decline
Amid rising uncertainties, the Japanese yen, a preferred safe-haven asset, appreciated by 0.22%, reaching 147.72 yen per dollar. Analysts from JPMorgan Chase acknowledged a “tactical caution toward risk assets,” as the oil market faced renewed pressure due to concerns about global economic health and energy consumption.
As of 06:30 GMT, U.S. WTI crude prices fell by 0.46% to $66.72, while North Sea Brent crude dropped by 0.40% to $70.08.