Asian and Chinese shares gain as Trump’s lack of day-one China tariffs sparks cautious optimism

“Trump’s start to his presidency is better than I expected,” said Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management Co., as quoted by Reuters. However, he added, “You don’t expect Trump’s inauguration to trigger a big rally, as it’s unrealistic for Sino-U.S. ties to suddenly reverse.”

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Cautious optimism in global markets

Market sentiment was a mix of cautious optimism and looming uncertainty. “Be flexible, is the only thing I can think of right now as it’s too hard trying to predict the uncertainty,” said to Bloomberg. She added that Trump’s tariff threats could be a negotiation tool for better terms with Beijing.

Analysts also noted the divergence in mainland stocks, with sectors such as technology and consumer goods gaining traction. “The only policies China can adopt to cushion the impact of Trump’s tariff and tech curbs are to boost consumption, deepen reforms, and upgrade technology,” stock trader Wen Hao told Reuters.

Tech shares, including chipmakers and artificial intelligence companies, rose on hopes that Beijing’s self-sufficiency drive would support these industries. Shares of home appliance and car manufacturers also gained, reflecting expectations of government-led consumption stimulus.

Chinese markets led gains in Asia, but the region’s overall performance reflected mixed reactions to Trump’s inauguration. Global stocks rallied on Monday amid relief that Trump had not immediately implemented sweeping tariffs. Bloomberg’s dollar gauge climbed 0.7 percent on Tuesday, while 10-year U.S. Treasury yields fell by nine basis points to 4.54 percent.

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Investors brace for volatility as Trump threat continues to loom

The Canadian dollar and Mexican peso tumbled 1.4 percent each after Trump threatened 25 percent tariffs on imports from the two countries by February 1. “The most important conclusion from President Trump’s initial actions is a more tentative and drawn-out approach to tariffs than threatened, at least for now,” said Mark Cudmore, a strategist at Bloomberg.

However, Nomura’s Chetan Seth warned that markets should brace for volatility. “We believe investors would need to brace for bouts of volatility and whipsaw trading driven by news reports, market chatter, and social media posts,” Seth told Bloomberg.

While Trump’s initial actions provided temporary relief for Chinese markets, investors remain wary of future developments. Trump’s administration has already initiated a review of the Phase 1 trade deal with Beijing, and further tariff announcements could weigh on the Chinese economy, which is already grappling with a property crisis and weak consumer demand.

“Dodging tariffs right now does not mean it will not happen in the future,” Gary Ng, economist at Natixis, told Reuters. “China-related assets will still be pressured by geopolitics and U.S. domestic policies.”

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