Hang Seng Index and Nikkei 225: China’s PMI and Trade Tensions Weigh on Sentiment

US Equities Advance on Trade News and Economic Data

US equity markets posted gains on April 29, buoyed by trade developments and economic indicators. The Nasdaq Composite Index gained 0.55%, while the Dow and the S&P 500 advanced 0.75% and 0.58%, respectively, extending their winning streaks to six sessions.

US President Trump announced a rollback of tariffs on car components, giving US car makers a two-year window to ramp up domestic production of parts. However, tariffs on car imports remain intact. Despite the tariff news and upbeat quarterly earnings, General Motors (GM) fell 0.64% after pulling its annual forecast amid tariff-related uncertainty.

Meanwhile, US economic indicators highlighted the effect of US tariffs on the economy, raising hopes for a Fed rate cut.

US Consumer Sentiment Slumps

The US CB Consumer Confidence Index slid from 93.9 in March to 86 in April, fueling recession fears. The pullback in consumer sentiment could signal a marked drop in spending, dampening inflationary pressures and impacting the US economy. A softer inflation and economic outlook could enable the Fed to cut interest rates, bolstering demand for risk assets.

Labor market data also supported a more dovish Fed stance. JOLTS job openings fell from 7.48 million in February to 7.192 million in March. A weaker labor market could slow wage growth and affect consumer sentiment.

Tuesday’s data raised the odds of a US economic recession. According to Polymarket, the odds of a 2025 US recession increased to 64%, up from 27% on Trump’s Inauguration Day and near the April 7 peak of 66%.

China Private Sector PMIs Send Early Warning Signals

On April 30, investor focus shifted to China amid rising concerns over the effect of tariffs on demand. The NBS Manufacturing PMI dropped from 50.5 in March to 49 in April, crucially falling below the neutral 50 level. Services sector activity also waned. The NBS Non Manufacturing PMI fell to 50.4 in April, down from 50.8 in March.

The Caixin Manufacturing PMI declined to 50.4 in April, down from 51.2 in March. The April report revealed a drop in overseas orders and job cuts. Deteriorating labor market conditions could affect domestic consumption and pressure Beijing to deliver fresh stimulus.

Hang Seng Index Falls on China PMI Trends

Asian markets had a choppy Wednesday morning. The Hang Seng Index fell 0.41% in the morning session, with April’s PMI data signaling a loss of economic momentum.

Despite gains in auto and tech stocks, broader losses in other sectors pulled the Index lower.

• Alibaba (09988.HK) rose 0.17%, while EV maker Li Auto Inc. (02015.HK) gained 0.74%.

Brian Tycangco, editor and analyst at Stansberry Research, remarked on tariffs and China’s economic outlook, stating:

“Manufacturing slips back into contraction mode (49.0) after two months of expansion. Start of reciprocal tariffs (rising to 145%) impacting the sector. […] A prolonged trade war will likely result in even worse numbers in May unless Beijing unleashes a bigger stimulus in the coming weeks.”

Mainland China’s equity markets had a mixed morning session. The CSI 300 edged 0.08% higher, while the Shanghai Composite Index fell 0.06% in morning trading. Investors remained cautious amid tariff uncertainties and a lack of stimulus from Beijing.

Nikkei 225 Edges Higher as the BoJ Begins Rate Hike Debate

Japan’s Nikkei 225 gained 0.09% on Wednesday morning. Hopes for a US-Japan trade deal supported demand for Japanese stocks. However, uncertainty surrounding the Bank of Japan’s monetary policy decision capped gains. The BoJ kicked off its two-day monetary policy meeting, sending the USD/JPY pair 0.06% higher to 142.384 on expectations of a less hawkish near-term outlook.

While a trade deal could improve export competitiveness, a hawkish BoJ stance may drive Yen demand. A stronger Yen could counter the effects of a trade deal.

Nissan Motor Corp. (7201) fell 1.08% in morning trade, while Sony Corp. (6758) soared 5.03%. Sony rallied after announcing it would not spin off its semiconductor unit Sony Semiconductor Solutions Group.

ASX 200 Eyes Five-Day Winning Streak

Australia’s ASX 200 advanced 0.21% in morning trade. Banking and tech stocks led the way.

• The S&P/ASX All Technology Index rose 0.43%, mirroring gains on Wall Street.
• Commonwealth Bank of Australia (CBA) rallied 1.25%, while Westpac Banking Corp. (WBC) advanced 0.61%. Softer Aussie inflation figures fueled bets on an RBA rate cut, potentially supporting the Aussie economy and boosting demand for bank stocks.
• Meanwhile, Northern Star Resources (NST) slid 3.35% as gold extended its losses from Tuesday’s session.

Outlook: Trade, Stimulus, and Central Bank Cues

Looking ahead, global market sentiment will hinge on trade negotiations, Beijing’s policy response, and signals from central banks.

Easing trade tensions, fresh stimulus from Beijing, and dovish central bank stances could drive demand for risk assets. Conversely, an escalation in the US-China trade war, stimulus silence, and hawkish central bank guidance could impact risk sentiment.

Amid persistent tariff uncertainty, traders may find opportunities in strategies aligned with monetary and trade policy shifts. For deeper analysis, please refer to our latest market coverage.