Asian Stocks Rise Despite Trade Tensions and Market Volatility

Asian equity markets ended higher on Tuesday, although they surrendered some early gains as trade tensions between China and the U.S. escalated. China swiftly retaliated against a 10% tariff imposed by the Trump administration on Chinese imports, effective from 00:00 ET today, further fueling economic uncertainty.

China’s Finance Ministry announced a 15% tariff on U.S. imports of coal and liquefied natural gas. Additionally, a 10% tariff will be applied to crude oil, agricultural equipment, and automobiles starting February 10.

Meanwhile, China’s Commerce Ministry introduced export controls on critical rare earth materials, including tungsten, tellurium, molybdenum, bismuth, and indium, citing national security concerns. As a dominant producer of these strategic resources, China’s move raised fears of supply chain disruptions.

Adding to tensions, China blacklisted PVH Corp—the parent company of Calvin Klein—and biotechnology firm Illumina, labeling them as unreliable entities for allegedly implementing discriminatory measures against Chinese firms.

In another significant move, China’s regulatory authority announced an antitrust investigation into Google, citing concerns over anti-competitive practices. Notably, while Trump agreed to temporarily suspend tariffs on Mexico and Canada for one month, no similar relief was extended to China.

Currency and Commodities Market Reaction

The U.S. dollar rebounded after an initial dip, leading to a decline in gold prices during late Asian trade. Oil prices plunged, with WTI crude futures shedding nearly 2%, as supply concerns eased and trade war anxieties deepened.

Stock Market Performance Across Asia

Markets in mainland China remained closed for the Lunar New Year holidays, but Hong Kong’s Hang Seng Index surged 2.83% to 20,789.96, bolstered by strong gains in tech stocks. Shares of Baidu and Alibaba jumped 3-4%.

Japanese markets also performed well as the yen weakened, amid speculation that Japan could also face U.S. trade tariffs. The Nikkei 225 advanced 0.72% to 38,798.37, while the Topix Index climbed 0.65% to 2,738.02. Automakers Nissan, Honda, and Toyota saw gains of 1-2%.

South Korea’s Kospi Index added 1.13%, closing at 2,481.69, led by tech heavyweights. Samsung Electronics posted an impressive 3.3% rally.

Australia’s stock market erased early gains and ended flat after China’s tariff retaliation. Across the Tasman, New Zealand’s S&P/NZX-50 gained 0.74%, closing at 12,905.04.

U.S. Market Reaction and Economic Data

Wall Street struggled amid ongoing trade concerns. U.S. stocks pared steep losses but still ended lower overnight. The Nasdaq Composite slid 1.2%, the S&P 500 shed 0.8%, and the Dow Jones Industrial Average dipped 0.3%.

Adding to investor sentiment, U.S. manufacturing data revealed growth for the first time in over two years in January, providing a silver lining amid market turmoil.

In a post-market announcement, Canadian Prime Minister Justin Trudeau confirmed that U.S. tariffs on Canadian imports would be paused for at least 30 days, offering temporary relief in North America amid escalating global trade conflicts.