Investing.com-- Most Asian stocks rose sharply on Wednesday, tracking an overnight rally on Wall Street after U.S. President Donald Trump flagged an eventual lowering in steep trade tariffs against China.
But mainland Chinese stocks were little enthused by his comments, and traded sideways on Wednesday. Hong Kong stocks, however, rallied with their Asian peers.
Regional markets took a positive lead-in from Wall Street after Trump’s comments. The President also downplayed his recent tirade against Federal Reserve Chair Jerome Powell, granting markets more relief.
U.S. stock index futures rose in Asian trade, with S&P 500 Futures rising 1.4%.
Hong Kong, Japan, lead Asia stock gains on Trump comments
Hong Kong’s Hang Seng index and Japan’s Nikkei 225 were among the top performers in Asia on Wednesday, rising between 1.7% and 2%.
Japan’s TOPIX also added about 1.8%, while South Korea’s KOSPI rose 1.4%. Japanese shares rose past mixed purchasing managers index data, which showed strength in services and a prolonged decline in manufacturing in April.
Asian technology shares were the best performers on Wednesday, benefiting greatly from bargain buying after suffering outsized losses in recent weeks.
But other sectors also rose. Australia’s ASX 200 soared 1.6% on gains in mining and bank stocks, while Singapore’s Straits Times index added 0.7% on sustained gains in local financial stocks.
Futures for India’s Nifty 50 index pointed to a strong open.
Asian markets surged as Trump said he wanted a deal with China where trade tariffs against the country will be well below current levels of 145%. This came after Treasury Secretary Scott Bessent reportedly said that the ongoing Sino-U.S. trade war was unsustainable, and that he expected a de-escalation soon.
Trump and Bessent’s comments drove up hopes that the president will walk back further on his tariff agenda, lessening or even completely negating the potential impact of steep U.S. trade tariffs on major economies.
Chinese stocks lag, trade war impact in focus
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes moved in a flat-to-low range on Wednesday, lagging their regional peers.
While Trump’s recent comments on China presented some potential improvement in relations, the President also said that any trade deal with China will be contingent on Beijing coming to the negotiating table.
China has so far shown little intent of backing down, having slapped retaliatory tariffs of 125% on American goods.
Markets are concerned over the impact of a dire trade war on China’s economy, given that the country was already struggling even before Trump took office.
BofA downgraded its China gross domestic product outlook to 4% growth in 2025, below the government’s 5% target. BofA’s cut also comes after a chorus of downgrades by other brokerages.
Still, Beijing is expected to dole out even more stimulus to offset the impact of a trade war- a trend that could support domestically exposed sectors.