Most Asian markets saw a continuation of the global rally on Wednesday, with investors cautiously optimistic about Donald Trump’s first full day in office. Hopes are growing that the new administration may take a less aggressive approach to trade, compared to earlier fears of another trade war. While some markets faced setbacks, overall sentiment remained positive across the region.
SoftBank Leads Tokyo’s Strong Performance
Tokyo’s Nikkei 225 emerged as the standout performer on Wednesday, posting a significant gain of over one percent. A major contributor to this surge was SoftBank, which saw its shares rise more than nine percent. This uptick followed news that the software investment giant would be part of a major $500 billion venture focused on artificial intelligence infrastructure in the United States, alongside Oracle and OpenAI, creators of ChatGPT. Trump confirmed the project at the White House, stating it would invest heavily in AI infrastructure, providing a boost to SoftBank and related sectors.
Asian Chipmakers Benefit from SoftBank’s Rise
The positive momentum extended to Japanese chipmakers, with Advantest climbing over four percent, and Tokyo Electron and Lasertec each gaining more than two percent. Taipei also saw a notable jump, led by Taiwan Semiconductor Manufacturing Company (TSMC), which rose over two percent. South Korea also benefited from significant gains in major companies such as SK hynix and LS Electric, further contributing to the region’s rally.
Hong Kong and Shanghai Suffer Setbacks Amid Tariff Fears
However, not all markets experienced gains. Hong Kong’s Hang Seng Index dropped by over one percent following a six-day rally, with concerns about fresh tariffs on China dampening investor confidence. Shanghai also faced a sharp decline as concerns over the potential for new tariffs on China, especially with Trump’s remarks about targeting the country, led to caution among traders.
Trump’s warning that China could be added to a list of countries to face tariffs starting on February 1st due to fentanyl shipments to Mexico and Canada spooked the markets. This came on top of his previous comments on Monday targeting Canada and Mexico for tariffs, with the potential for the European Union also to be affected.
China Braces for Potential Tariff Impacts
China’s trade dynamics continue to be a key focus, with Vice Premier Ding Xuexiang warning at the World Economic Forum in Davos that protectionism is detrimental to global trade. Despite China seeing record exports in 2024, experts predict that the potential tariffs could slow down exports this year. Frederic Neumann, chief Asia economist at HSBC, stated that China would need to prepare for the economic impact of possible tariffs, particularly in light of Trump’s renewed stance on trade.
Optimism Continues on Wall Street and Global Markets
Despite the concerns over trade, broader global market performance has remained strong. U.S. markets saw a rally, with the Dow Jones rising by 1.2 percent, reflecting positive economic indicators and strong earnings reports. Investors are also looking to the possibility of lower borrowing costs and increased capital inflows throughout 2025, offering some reassurance.
Oil Prices Stabilize Amid Trump’s Energy Emergency Declaration
In commodities, oil prices stabilized after a significant drop on Tuesday. The decline was linked to Trump’s announcement of a “national energy emergency” aimed at ramping up drilling in the United States. West Texas Intermediate oil fell by 0.1 percent, while Brent North Sea Crude remained flat.
Market Performance Around the World
Here’s a snapshot of key market figures around 0230 GMT:
- Tokyo – Nikkei 225: Up 1.5% at 39,604.71
- Hong Kong – Hang Seng Index: Down 1.4% at 19,821.12
- Shanghai – Composite: Down 0.9% at 3,214.00
- Euro/Dollar: Down at $1.0412 from $1.0426
- Pound/Dollar: Down at $1.2336 from $1.2342
- Dollar/Yen: Up at 155.67 yen from 155.50 yen
- West Texas Intermediate: Down 0.1% at $75.73 per barrel
- Brent North Sea Crude: Flat at $79.27 per barrel
- New York – Dow: Up 1.2% at 44,025.81 (close)
- London – FTSE 100: Up 0.3% at 8,548.29 (close)
As traders brace for potential tariff changes, global markets remain on edge, but investor sentiment is cautiously optimistic. The delay in the imposition of new tariffs has been seen as a positive sign, with analysts forecasting a continued upward trend in U.S. stocks in 2025, barring any unexpected escalations in trade tensions.
