Asian Stocks Give Up Tariff-Led Gains, China Drags: Markets Wrap

(Bloomberg) -- Chinese shares led losses in Asia, with regional markets struggling to build on the risk-on momentum driven by earlier bets of less expansive tariffs in April.

A widely watched gauge of Chinese technology shares in Hong Kong slumped as much as 3.8%, the most in three weeks, with Alibaba Group Holding Ltd. and Xiaomi Corp. among the biggest losers. US and European equity-index futures edged lower. Cryptocurrencies declined and Treasuries ticked up in Asian trading after gains in the prior session.

Trading in Chinese shares has been choppy in recent sessions as investors become more vigilant toward corporate developments following a world-beating rally. Global markets, gripped by anxiety about the economic impact of an all-out trade war, got relief from signs the coming wave of US tariffs is shaping up as more focused than what President Donald Trump had occasionally threatened. 

“Investors remain cautious about the forthcoming tariff policies,” said Graham Chin, investment strategist at EBSI Private. “The lack of detailed information contributes to ongoing uncertainty, leaving many investors on the sidelines.”

Beijing-based Xiaomi fell as much as 6.6% after it raised funds selling shares at a discount. The stock had more than tripled from a low in August, making it the best performer on Hong Kong’s Hang Seng Index. Alibaba slid more than 3% after its chairman warned of a potential bubble forming in datacenter construction.

“China investors are trading more cautiously heading into next week with the upcoming April 2 tariff announcement,” said Gary Tan, a portfolio manager at Allspring Global Investments. The implementation of reciprocal tariffs has “potential spillover to a global trade war.”

The moves in China contrast with Wall Street’s risk-on bid lifting shares of nearly all stripes Monday in a rebound from a sharp selloff. Trump twice on Monday signaled trading partners would receive possible exemptions or reductions.

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Trump has touted his April 2 announcement as a “Liberation Day”, heralding the start of a more protectionist policy meant as retribution against trading partners he has long accused of “ripping off” the US. Trump on Monday issued an order allowing a 25% tariff to be imposed on any nation purchasing oil and gas from Venezuela, ratcheting up his dispute with the Latin American country.

“The markets are pricing out the most extreme downside risks of US tariffs,” said Kyle Rodda, a senior market analyst at Capital.com. “It could be entirely too premature.”

Blackstone Inc. President Jon Gray warned investors against making knee-jerk decisions around Trump’s tariff moves and instead advised waiting to see how the underlying negotiations play out. 

“Have a little bit of patience,” Gray told the Asia Pacific Financial and Innovation Symposium in Melbourne on Tuesday. “Watch this tariff diplomacy evolve and make your investment decisions over a longer period of time. I think the danger in a period like this is you do something short term and you lose opportunity.”

China’s 30-year bond futures advanced after the country’s central bank unveiled a new method for pricing its one-year loans to banks, the latest move in policymakers’ efforts to revamp their monetary toolkit. The People’s Bank of China announced that banks will be able to bid for different prices on its one-year loans, known as the medium-term lending facility.  

Later Tuesday, Australia’s Treasurer Jim Chalmers is due to unveil the government budget. Economists reckon it will show an underlying cash deficit in the 12 months through June 2026 of A$40 billion ($25.1 billion), slightly better than the A$46.9 billion predicted in Treasury’s mid-year review in December.

In Indonesia, the currency declined to its weakest level since the Asian Financial Crisis as fears mounted over the nation’s fiscal trajectory.

Federal Reserve Bank of Atlanta President Raphael Bostic on Monday cited the impact of tariff hikes impeding progress on disinflation for why he now sees just one interest-rate cut as likely this year, rather than two.

In commodities oil held gains and gold stayed steady near a record high.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 2:02 p.m. Tokyo time
• Japan’s Topix rose 0.2%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng fell 2.2%
• The Shanghai Composite fell 0.2%
• Euro Stoxx 50 futures fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0803
• The Japanese yen was little changed at 150.56 per dollar
• The offshore yuan was little changed at 7.2669 per dollar

Cryptocurrencies

• Bitcoin fell 1.6% to $86,504.01
• Ether fell 1.9% to $2,045.47

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.32%
• Australia’s 10-year yield advanced two basis points to 4.42%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold rose 0.1% to $3,015 an ounce

This story was produced with the assistance of Bloomberg Automation.

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