Asian stock markets generally advanced on , buoyed by the return of Chinese markets after the Lunar New Year break and growing optimism surrounding potential tariff relief. However, Hong Kong’s technology sector experienced losses, creating a mixed picture across the region. The gains came despite a weak handover from Wall Street, where concerns about tariffs and disruptions in the artificial intelligence sector had triggered a sell-off on .
China’s onshore CSI 300 Index rose as much as 1.5% following the holiday, with investors prioritizing growth prospects linked to artificial intelligence over weaker-than-expected holiday spending data. A Hong Kong gauge of Chinese shares initially advanced, reversing a prior decline recorded while mainland markets were closed. The onshore yuan weakened slightly against the dollar, while yields on China’s 10-year government benchmark bond experienced a minor decrease.
The rally was particularly evident in gold and chip stocks. Advanced Micro-Fabrication Equipment Inc. Saw a record surge, contributing significantly to the tech subindex’s gains. Gold stocks also benefited from record bullion prices reached the previous day. Materials companies, including Jiangxi Copper Co. And Shandong Gold Mining Co., both reached their daily trading limits.
Despite signs of continued economic sluggishness, reflected in underwhelming holiday spending figures, investor enthusiasm for AI remained strong. Analysts suggest that positive news surrounding OpenAI during the holiday period, which wasn’t yet reflected in Chinese share prices, is now being factored in. Xin-Yao Ng, a fund manager at Aberdeen Investments, noted that “There’s been a bunch of news around OpenAI that’s positive on AI sentiment that happened during the China holiday that isn’t reflected in share prices,” and predicted a period of “catching up.”
The market’s focus is now shifting towards policy signals expected from the Communist Party’s meeting scheduled for , where the outline for the 15th five-year plan will be presented. The upcoming APEC summit in South Korea next month, and the potential for a meeting between the leaders of the United States and China, offers a potential catalyst if tariff negotiations are resumed.
Elsewhere in Asia, the broader regional picture was more nuanced. While China’s reopening provided a positive impulse, concerns about global economic growth and the potential for further interest rate hikes continued to weigh on investor sentiment. The rebound on Wall Street, with the Dow Jones Industrial Average jumping 600 points and the S&P 500 and Nasdaq also posting significant gains, offered some support, but the underlying uncertainties remained.
The strength of the US rebound was largely attributed to a lessening of immediate fears surrounding tariffs, coupled with a recovery from the AI-driven losses experienced the previous day. This suggests a continued sensitivity to developments in US trade policy and the rapidly evolving AI landscape.
Copper prices also experienced a rally, driven by expectations of lower US tariffs and increased demand from China. TradingView reported gains in copper, aluminium, and nickel, indicating a broader positive sentiment towards industrial metals. This reflects the expectation that a resumption of trade talks could alleviate some of the pressure on global supply chains and boost economic activity.
The reopening of Chinese markets also provided a boost to commodity prices, as traders anticipated increased demand from the world’s second-largest economy. However, the tepid holiday spending data served as a reminder of the challenges facing the Chinese economy, including weak consumer confidence and a slowdown in the property sector.
The performance of Hong Kong’s technology sector, which lagged behind the broader market rally, highlights the ongoing regulatory risks and geopolitical uncertainties facing Chinese tech companies. Investors remain cautious about the potential for further crackdowns and the impact of US sanctions.
Looking ahead, the market will be closely watching for further policy signals from Beijing and Washington. The outcome of the APEC summit and the Communist Party’s five-year plan meeting will be key determinants of market sentiment in the coming months. The continued evolution of the AI sector and its impact on global growth will also be a major focus for investors.
