Stock markets in Asia opened the midweek trading session on a muted note, struggling to mirror Wall Street’s recent rally.
The lackluster start came as fresh economic data revealed that China’s manufacturing sector contracted in April at its sharpest pace in nearly two years—a clear signal that the ripple effects of the ongoing US-China trade tensions are starting to materialize.
According to figures released Wednesday, China’s factory activity declined at the fastest rate since July 2023. This comes just a month after the sector saw its strongest growth in a year, highlighting the abrupt turnaround driven by escalating trade pressures.
The downturn follows a surge in Chinese exports last month, as manufacturers rushed to ship goods ahead of punitive US tariffs of up to 145% that took effect after President Donald Trump’s dramatic “Liberation Day” announcement on April 2.
In response, Beijing retaliated with tariffs as high as 125%, choosing not to engage in immediate negotiations with Washington.
READ ALSO: Trump Moves to Ease Tariff Pressure on U.S. Automakers Ahead of Detroit Rally
“The weak manufacturing PMI in April is driven by the trade war,” noted Zhiwei Zhang, chief economist at Pinpoint Asset Management. “We expect macroeconomic data from both China and the US to weaken further, as the uncertainty around trade policy causes delays in business decision-making.”
Equity markets across Asia reflected investor unease. Benchmarks in Hong Kong, Shanghai, Seoul, Wellington, and Jakarta recorded losses, weighed down by fears of a deeper global slowdown.
However, Tokyo’s Nikkei bucked the trend, buoyed by a surge in Sony shares amid reports the company is considering spinning off its semiconductor division—a move investors believe could unlock significant value.
Other markets, including Sydney, Singapore, Taipei, and Manila, edged higher, offering some relief amid the broader regional jitters.
Despite the volatility, global stocks have managed to recover a portion of the steep losses incurred earlier in the month. This partial rebound has been fueled by signs of diplomatic movement, with President Trump showing some willingness to negotiate.
READ ALSO: Novak Djokovic Withdraws from Italian Open in Rome
US Commerce Secretary Howard Lutnick hinted at a new trade deal with an undisclosed nation, while Treasury Secretary Scott Bessent cited progress in talks with India, South Korea, and Japan.
However, analysts warn that the worst may still be ahead. Charu Chanana, chief investment strategist at Saxo, stated, “We’ve likely hit peak tariff rates, but not peak tariff uncertainty.”
She emphasized that recent data still reflects preemptive buying ahead of expected price hikes, and the full impact of the tariffs on production, hiring, and investment is yet to unfold.
Investors now turn their attention to key economic indicators due later this week. US inflation and GDP data are set to be released, followed by the all-important jobs report on Friday. In addition, Wall Street’s biggest names—Microsoft, Apple, Meta, and Amazon—are expected to release their quarterly earnings.
These reports will not only offer insights into corporate America’s resilience amid tariff headwinds but also help gauge how the broader economy is responding to the uncertainty surrounding US trade policy.
As markets digest the latest data and brace for upcoming announcements, one thing is clear—uncertainty remains the dominant force. While diplomacy may yet ease tensions, the real economic consequences of the trade war are beginning to surface. For investors and policymakers alike, the coming weeks will be crucial in determining just how deep the damage runs.
Discover more from Scoop Hub
Subscribe to get the latest posts sent to your email.