Most Asian stocks fell on Thursday amid persistent concerns over high U.S. interest rates and increased trade tariffs, with Hong Kong markets clocking steep losses as an artificial intelligence-fueled rally lost steam.
Regional markets took a middling lead-in from Wall Street, which ended mildly positive overnight with the S&P 500 hitting a record high. But gains were limited amid deteriorating risk appetite.
U.S. stock index futures fell in Asian trade after President Donald Trump said his next round of tariffs- 25% duties on automobiles, pharmaceuticals, and semiconductors- will come within the next month. Trump also flagged duties on lumber imports.
Trade-sensitive Asian markets sink on Trump tariff talk
Trump’s comments on tariffs rattled trade-sensitive Asian markets, with Japan’s Nikkei 225 losing 1.7%. The TOPIX slid 1.5%.
Japanese automobile giants such as Toyota Motor (NYSE:TM) Corp (TYO:7203) and Honda Motor Co Ltd (TYO:7267) fell more than 2% each, given that they depend heavily on American sales. South Korea’s KOSPI fell 0.6% after a strong run-up in the past week, while Singapore’s Straits Times index shed 0.1%.
Australia’s ASX 200 slid 1.3%, with the country’s major commodity exports likely to face pressure from U.S. tariffs.
Australian shares also came under pressure from stronger-than-expected employment data for January.
While the print does signal continued resilience in some aspects of the economy, it also gives the Reserve Bank of Australia more impetus to remain hawkish. The central bank had earlier this week cut interest rates by 25 basis points, but warned that it will stay hawkish on future easing.
Futures for India's Nifty 50 index pointed to a flat open, as Indian markets were also walloped by recent threats of higher U.S. trade tariffs against the country.
Hong Kong stocks tumble as AI momentum fades; China eases
Hong Kong’s Hang Seng was the worst performer in Asia on Thursday, losing 2.2% as it retreated further from five-month highs.
Heavyweight internet and technology stocks were the biggest weights on the benchmark, as an AI-fueled rally in the sector ran out of steam.
While optimism over DeepSeek had fueled an extended rally in Chinese tech since late-January, weak earnings from internet giant Baidu (NASDAQ:BIDU), released earlier this week, served as a sobering reminder of weak economic conditions in China.
Baidu Inc (HK:9888) fell more than 2%, while peer Alibaba (NYSE:BABA) Group Holding Ltd (HK:9988), which will report earnings later on Thursday, shed 2.5%.
Mainland Chinese markets also retreated, albeit to a lesser extent, as focus remained on more stimulus measures from Beijing. The People’s Bank of China left its benchmark loan prime rate unchanged at record lows on Thursday.
Chinese markets also trimmed some losses after Trump said a trade deal with Beijing was possible.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes lost 0.4% and 0.2%, respectively. The two had also benefited to some extent from the AI rally, but traded rangebound in recent sessions.
China is also subject to more U.S. trade headwinds, after Trump imposed 10% tariffs on the country earlier in February.
Source: Investing