Asia report: Markets rise as traders assess US tariffs, Fed comments

Fed chair Jerome Powell reiterated overnight that controlling inflation remained a priority, and indicated that rate cuts were not imminent.

“As investors await the next US CPI data, bond yields rose as Fed chair Powell signalled a cautious approach to additional interest rate cuts,” said TickMill market strategy partner Patrick Munnelly.

“Alibaba and BYD's gains propelled Hong Kong equities higher.

“Futures for the US equities index fell, while contracts for Europe saw modest increases.”

Munnelly noted that, following Tuesday's general decline in treasuries, money markets were fully expecting the Fed to slash interest rates at least once this year.

“For the first time since 2008, the yield on Japanese five-year bonds has increased to 1%; the 10-year yields in Australia also increased.

“For three days in a row, the value of the yen has declined.

“Growing concerns that Trump's tariff approach may target Japan are causing the yen to plunge into its longest run of losses in more than a month.”

Most markets in the green on Wednesday, Wellington the exception

In Japan, the Nikkei 225 gained 0.42% to close at 38,963.70, with notable gains in M3, which surged 19.27%, while Fujikura and Taiheiyo Cement rose 10.35% and 9.89%, respectively.

The broader Topix index was nearly flat, edging up 0.01% to 2,733.33.

Chinese equities performed strongly, with the Shanghai Composite climbing 0.85% to 3,346.39 and the Shenzhen Component rising 1.43% to 10,708.88.

Leading gainers in Shanghai included Orient Group, Beijing Dynamic Power, and FangDa Carbon New Material, all rising by around 10%.

Hong Kong's Hang Seng Index posted the region's largest gain, jumping 2.64% to 21,857.92, bolstered by sharp increases in Alibaba Health Information Technology, BYD Electronic International, and Alibaba Group, which rose 10.83%, 9.98%, and 8.48%, respectively.

In South Korea, the Kospi 100 edged up 0.06% to 2,541.62, supported by a 15.36% surge in Hyundai Heavy Industries and double-digit gains in Hanwha Ocean and LS Industrial Systems.

Australia’s S&P/ASX 200 added 0.6% to close at 8,535.30, driven by a 15.49% rise in Computershare.

Mercury NZ and Dicker Data also contributed to gains, rising 5.09% and 3.26%, respectively.

Across the Tasman Sea, New Zealand's S&P/NZX 50 was the only major index to decline, slipping 0.03% to 12,913.95.

Ryman Healthcare, Sky Network Television, and Auckland International Airport all posted losses of around 1.5%.

In currency markets, the dollar was last 0.66% stronger on the yen to trade at JPY 153.50, while it advanced 0.27% against the Aussie to AUD 1.5930 and gained 0.25% on the Kiwi, changing hands at NZD 1.7731.

Oil prices declined, with Brent crude futures last down 1% on ICE at $76.23 per barrel, while the NYMEX quote for West Texas Intermediate slid 1.21% to $72.43.

China export sector set to drag economy, say analysts

In economic news, China’s export sector was expected to shift from a growth driver to a drag on the economy in 2025, according to analysts at Nomura.

In a note published overnight, the financial services group forecast that China’s export growth would stagnate at 0% next year, likely prompting Beijing to implement stronger policy measures to stimulate domestic demand.

The outlook came amid concerns over additional tariffs imposed by US president Donald Trump, which Nomura believed would contribute to persistent inflation and keep the Federal Reserve from cutting interest rates in 2025.

According to CNBC, that view contrasted with a Reuters poll median, which suggested that economists were anticipating two rate cuts from the Fed this year.

Meanwhile, Vietnam was poised to raise its GDP growth target to 8% for 2025, an increase from the previously estimated range of 6.5% to 7%, according to a report from Reuters.

The country’s Minister of Planning and Investment, Nguyen Chi Duong, told parliament on Wednesday that the revised outlook reflected expectations of stronger manufacturing output and increased foreign investment.

Vietnam’s imports and exports were projected to rise by 12% this year, with the trade surplus reaching around $30bn.

The country had benefited from the ‘China Plus One’ strategy, encouraging firms to diversify supply chains away from China.

In 2024, Vietnam’s economy grew by 7.09%, driven by broad-based expansion in its services, industrial, and agricultural sectors.

Reporting by Josh White for Sharecast.com.