Investing.com – Most Asian stocks rose on Monday on hopes that U.S. President-elect Donald Trump will not use as harsh rhetoric against China as feared when he takes office later in the day.
Regional stocks followed a positive lead from Wall Street on Friday as a string of upbeat bank earnings and growing interest rate cut hopes sparked strong gains in US stocks.
U.S. stock futures were less positive in Asian trading on Monday, falling slightly amid some caution toward Trump. US markets will also be closed on Monday for Martin Luther King Jr. Day.
Asian stocks rise on Trump speculation
Most Asian stocks rose, with Japanese and Hong Kong stocks leading the way. Japan and the indexes each gained 1.5%, while the Hong Kong index gained 1.6%.
Hopes for less harsh rhetoric against China grew after Trump made no mention of his plans for trade tariffs during a victory lap in Washington on Sunday. However, the president-elect reiterated his plans to crack down on immigration and limit government oversight of domestic companies.
Fox News Digital reported that Trump plans to sign a record number of executive orders when he takes office on Monday, some of which could include even higher trade tariffs against China.
The president-elect had promised to impose a tariff of up to 60% on all Chinese imports, while also imposing increased tariffs on Mexico and Canada.
Such a move could potentially disrupt global trade and does not bode well for export-oriented economies.
Chinese stocks rise as PBOC leaves interest rates unchanged
China and the indices rose 0.8% and 0.5%, respectively.
The People’s Bank of China left its benchmark lending rate unchanged on Monday, as widely expected, with Beijing appearing to keep its stimulus package dry while seeking greater clarity on Trump’s plans for trade tariffs.
China is expected to take even more aggressive stimulus measures to offset economic headwinds from possible tariff increases. Trump’s tariffs are expected to put even more pressure on the Chinese economy as the country grapples with persistent disinflation and a prolonged housing market crash.
Still, data released last week showed some improvement in China’s economy after Beijing released its most aggressive round of stimulus yet in late 2024.
Chinese markets also got a boost from recent gains in chipmaker stocks, as increased U.S. export controls in the sector sparked bets that local foundries will benefit from increased domestic demand.
Broader Asian markets were mostly higher on Monday, although gains were largely limited by caution over Trump. In addition to the inauguration of the US President, the focus this week is also on a number of key economic data and a meeting of the Bank of Japan.
Australia’s index rose 0.2% while India’s index pointed to a slightly positive opening after the index posted a series of sharp losses last week.
Singapore’s index lagged, falling 0.3%, while South Korea’s index traded sideways. Any disruption in global trade could have a significant impact on both economies, as they rely on exports.
