Asian stocks track US higher, China set to reopen

Asian stocks track US higher, China set to reopen

Asian stocks rose as traders navigated their way through a US-China trade war and earnings from Wall Street’s big tech companies. Chinese markets are set to reopen.

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Shares in Australia and Japan rose along with stock futures for Hong Kong. Contracts for US equities edged lower as Google’s parent Alphabet Inc. and Advanced Micro Devices Inc. tumbled in extended trading. Treasury yields edged higher.

Investors are focused on how China’s markets will open after the first volleys in the latest US-China trade war made clear that Xi Jinping is taking a more cautious approach than during Donald Trump’s first term. Beijing’s swift retaliation to the US’s 10% tariff is seen by some investors as a measured response to avoid a full-blown standoff. Also, optimism is rising around Chinese technology shares given the breakthroughs made by artificial intelligence startup DeepSeek.

“The uncertainty that was bothering the market about tariffs is now gone and we have clarity,” said Kenny Ng, a strategist at China Everbright Securities International. “This actually brings a clearer outlook for the market. I expect Chinese stocks to see a relatively strong open.”

Volatility in China market is set to stay high as investors brace for an escalation, while also hedging against the odds of a sudden breakthrough. While some analysts see Beijing’s calculated retaliation as positive for market sentiment, others are concerned that the weaker-than-expected manufacturing activity data and yuan’s depreciation could weigh on Chinese stocks.

Chinese shares may open up over 1% and any rise over 2% may fuel a profit-taking sale, said Jason Chan, senior investment strategist at Bank of East Asia.

After Trump gave a last-minute reprieve to both Canada and Mexico, his tariffs on China took effect after midnight Washington time on Tuesday. Within seconds, Beijing announced additional tariffs on roughly 80 products to take effect on Feb. 10, launched an antitrust investigation into Google, tightened export controls on critical minerals, and added two US companies to its blacklist of unreliable entities.

Chinese stocks in Hong Kong have displayed resilience, while a gauge of US-listed Chinese companies rose 2.7%. The offshore yuan recovered after a knee-jerk slide on Tuesday.

Trump told reporters there’s no rush to talk to Xi and he’ll speak to the Chinese president at the appropriate time.

Elsewhere, the Bank of Japan is likely to keep raising its benchmark rate to a level exceeding the current market consensus, according to a former executive director at the central bank. The yen advanced to around 154 per greenback on Tuesday.

In commodities, oil edged lower as concerns that the trade war would hurt global growth outweighed the announcement of reinforced sanctions on Iran.

US stock indexes had earlier rebounded after a wave of dip-buying with a Bloomberg gauge of the “Magnificent Seven” megacaps advancing 1.7%.

Also Read: Trade Setup for February 5: Will Nifty move towards 24,050 and higher now?

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