Asia report: Markets mixed as Trump threatens 10pc China tariffs

(Sharecast News) - Asia-Pacific markets saw mixed performance on Wednesday, with Chinese stocks falling following comments from US president Donald Trump regarding potential tariffs on Beijing.

Trump indicated that a 10% tariff on China could take effect as early as next month if the country did not approve a deal related to TikTok.

He also mentioned plans for 25% tariffs on Mexico and Canada due to border policies.

"Asian markets posted gains as optimism over increased AI investments under Trump's administration outweighed concerns about potential tariffs on Chinese imports," said TickMill market strategy partner Patrick Munnelly.

"OpenAI, SoftBank Group, and Oracle announced the formation of a venture named Stargate, with a plan to invest $500bn in AI infrastructure in the United States.

"While it is unclear how much of this investment was already planned, the initiative is likely to bolster the US's competitive edge over China in the race for AI technological supremacy."

Munnelly noted that the market reacted positively, with SoftBank's stock surging, contributing to gains in the Nikkei.

"Stocks in South Korea, and Taiwan also rose, buoyed by Trump's commitment to an AI investment initiative, which boosted regional tech companies.

"However, Chinese stocks lagged behind, with the CSI 300 Index declining up to 1.3% after Trump suggested he was still considering a 10% tariff on all Chinese imports.

"The contrasting performances across Asian markets reflect the challenges investors are likely to face as the Trump administration introduces significant policy changes in the coming months."

Markets mixed, with China and Hong Kong in the red

In China, the Shanghai Composite fell 0.89% to close at 3,213.62, while the Shenzhen Component declined 0.77% to 10,225.87.

Major decliners in Shanghai included Jiangsu High Hope International Group, Everbright Jiabao, and China Reform Culture Holdings, all of which dropped by around 10%.

Hong Kong's Hang Seng Index also struggled, falling 1.63% to 19,778.77, driven by sharp losses in New Oriental Education And Tech, which plummeted 24.2%, alongside declines in Alibaba Health Information Technology and JD.com.

Japan's Nikkei 225 outperformed, rising 1.58% to 39,646.25, buoyed by a surge in SoftBank Group shares.

SoftBank gained 10.62% after Trump announced the company would partner with OpenAI and Oracle to invest up to $500bn in artificial intelligence infrastructure in the US.

Other notable gainers in Japan included Fujikura and Furukawa Electric, while the broader Topix index also rose, gaining 0.87% to 2,737.19.

South Korea's Kospi 100 gained 1.34% to close at 2,554.37, with Hanmi Semiconductor, Hyundai Engineering & Construction, and Doosan Bobcat posting solid gains.

In Australia, the S&P/ASX 200 edged up 0.33% to 8,429.80, with Paladin Energy leading the gains, rising over 10%.

Other notable performers included Netwealth Group and Genesis Minerals.

New Zealand's S&P/NZX 50 slipped 0.12% to 13,037.14, with declines led by KMD Brands, Synlait Milk, and Fonterra Shareholders Fund, each falling by more than 2%.

In currency markets, the dollar was last up 0.16% on the yen, trading at JPY 155.77, as it weakened 0.27% against the Aussie to AUD 1.5895, and retreated 0.1% from the Kiwi, changing hands at NZD 1.7591.

Oil prices advanced, with Brent crude futures last rising 0.5% on ICE to $79.69 per barrel, and the NYMEX quote for West Texas Intermediate increasing 0.55% to $76.25.

Malaysia central bank holds interest rates for 10th month in a row

In economic news, Malaysia's central bank maintained its benchmark interest rate at 3% for the 10th consecutive policy meeting on Wednesday, citing steady inflation and robust economic growth.

Bank Negara Malaysia signalled that the current monetary policy stance remains conducive to economic expansion and aligns with inflation and growth projections.

The decision, which met market expectations, suggests the rate will likely remain unchanged until at least the end of 2025.

It highlighted that domestic economic strength is expected to persist into 2025, supported by resilient consumer spending driven by higher minimum wages and civil servant salaries, increased investment activity, and improved export performance.

However, it warned that external risks, such as slower growth among key trading partners and potential trade and investment restrictions, could pose challenges.

Malaysia's economy was forecast to grow 5.1% in 2024, accelerating from 3.6% in the previous year and falling within the government's projected range of 4.8% to 5.3%.

Preliminary estimates showed that fourth-quarter growth likely slowed to 4.8% year-on-year, compared to 5.3% in the prior quarter.

Looking ahead, the economy was expected to expand between 4.5% and 5.5% in 2025.

Reporting by Josh White for Sharecast.com.