Asia stocks muted amid rate, tariff jitters; Alibaba fuels Hong Kong rally

Investing.com-- Most Asian stocks moved in a tight range on Friday amid persistent concerns over U.S. trade tariffs and high for longer interest rates, while strong earnings from e-commerce giant Alibaba sparked a renewed rally in Hong Kong.

Japanese stocks were flat following stronger-than-expected consumer inflation data for January, which lent further credence to more interest rate hikes by the Bank of Japan. 

Markets in China were muted, lagging Hong Kong as an artificial intelligence-driven rally in mainland stocks cooled.

Asian markets took a weak lead-in from Wall Street, as threats of more trade tariffs from U.S. President Donald Trump and weak earnings from Walmart Inc (NYSE:WMT) sparked overnight losses on Wall Street. U.S. stock futures were flat in Asian trade. 

Alibaba leads Hong Kong rally on strong earnings

Hong Kong shares of Alibaba Group (NYSE:BABA) (HK:9988) surged 8.5%, underpinning gains on the Hang Seng after the e-commerce giant clocked stronger-than-expected earnings for the December quarter. 

Gains in Alibaba spilled over into other major technology stocks, helping the Hang Seng rise more than 2%. Alibaba peers Baidu (NASDAQ:BIDU) Inc (HK:9888) and Tencent Holdings Ltd (HK:0700) rose 1.9% and 3.6%, respectively, while rival JD.com added 2.5%. 

Alibaba’s earnings helped spark renewed confidence in China’s major technology stocks, which were already sitting on strong gains over the past month, especially after the release of DeepSeek AI.

The AI model drummed up bets that Chinese companies remained in the AI race, drawing a barrage of foreign buyers back into local stocks. Hong Kong markets were a main beneficiary of this trend, while mainland markets also saw some buying. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes moved little on Friday. 

Japan stocks flat amid strong CPI, weak PMIs 

Japan’s Nikkei 225 and TOPIX indexes were flat, as stronger-than-expected consumer price index inflation data for January drummed up expectations of more interest rate hikes by the BOJ.

Headline CPI hit a two-year high in January, while core CPI remained well above the BOJ’s 2% annual target. 

The reading lent more credence to the BOJ’s forecast of a virtuous cycle of strong wage growth and rising inflation this year, which gives the central bank more headroom to hike interest rates. The BOJ had hiked rates by 25 basis points in January.

But Japanese business activity remained mixed, with purchasing managers index data showing factory activity shrank for an eighth consecutive month in February. Services activity, however, remained comfortably in expansion, keeping overall activity in growth territory. 

Broader Asian markets were in a tight range amid continued uncertainty over Trump’s trade tariffs. The U.S. President warned that higher duties on sectors such as automobiles and semiconductors could come as soon as early-April. 

Australia’s ASX 200 fell 0.2%, extending losses into a fifth straight session as investors continued to lock-in profits from recent record highs. But Domain Holdings (ASX:DHG) was an outperformer in local markets, rising nearly 50% on a $1.7 billion takeover offer from U.S. peer CoStar Group Inc (NASDAQ:CSGP).

South Korea’s KOSPI fell 0.2% amid some political jitters, as local media reported that impeached President Yoon Suk Yeol had been booked by the police. 

Singapore’s Straits Times index was flat, while futures for India’s Nifty 50 pointed to a weak open. Indian markets have been on a sustained decline since mid-2024, amid persistent concerns over slowing economic growth.

Threats of U.S. tariffs against the country further rattled Indian markets.