Asian Markets Rally Amid Positive China Data and Tariff Uncertainty

Asian markets gained ground on Monday, buoyed by strong Chinese manufacturing data and renewed diplomatic efforts from European leaders to mediate the Russia-Ukraine conflict. However, investor sentiment remained cautious amid concerns over impending U.S. tariffs.

In trade developments, speculation continues over U.S. President Donald Trump’s planned tariffs set to take effect on Tuesday. U.S. Commerce Secretary Howard Lutnick stated that while Canada and Mexico have made efforts to secure their borders, fentanyl still flows into the U.S. The President will decide whether to maintain the planned 25% tariff level, Lutnick mentioned on Fox News.

Despite uncertainties, Trump is expected to proceed with tariff hikes on China. Meanwhile, gold prices inched higher in Asia due to a weaker U.S. dollar, following data indicating a slowing American economy. Oil prices also saw a modest rise, driven by strong Chinese economic indicators and ongoing uncertainty over the Ukraine conflict.

China’s Shanghai Composite slipped 0.12% to 3,316.93, as upbeat factory activity data was overshadowed by tariff concerns. China’s key political event, the "Two Sessions," begins this week, where economic targets and consumption-boosting measures will be unveiled. Hong Kong’s Hang Seng climbed 0.28% to 23,006.27 amid reports of potential Chinese retaliation against U.S. agricultural and food product tariffs.

Japanese markets rallied as long-term U.S. Treasury yields fell, easing inflation worries. Japan’s PMI improved slightly to 49.0 from January’s 48.7. The Nikkei surged 1.70% to 37,785.47, while the broader Topix index gained 1.77% to 2,729.56.

Australia’s S&P/ASX 200 rose 0.90% to 8,245.70, supported by strong manufacturing data and easing inflation. The broader All Ordinaries climbed 0.89% to 8,478.80. New Zealand’s S&P/NZX-50, however, dipped 0.41% to 12,550.05.

On Wall Street, U.S. stocks ended higher on Friday as cooling inflation outweighed AI spending concerns and geopolitical uncertainty. PCE inflation rose 2.5% year-on-year in January, in line with expectations, though consumer spending saw its biggest drop since early 2021. The S&P 500 and Nasdaq surged about 1.6%, while the Dow added 1.4%.