Hang Seng Index, Nikkei 225, and ASX 200: Trade Buzz Fuels Diverging Moves

US Markets Rally as US and UK Sign a Trade Deal

Wall Street rallied on Thursday, May 8, after news of a US-UK trade agreement sparked market excitement. The Nasdaq Composite Index jumped 1.07%, while the Dow and the S&P 500 rose 0.62% and 0.58%, respectively.

President Trump announced the trade deal, stating:

“The Deal I made today with the United Kingdom is GREAT for our FARMERS and RANCHERS! It’s also wonderful for the United Kingdom. Everybody benefits, that’s the way it should be!”

The deal came ahead of US-China trade talks, which will likely start on Saturday, May 10, and potentially conclude on Monday, May 12. Significantly, the US-UK trade pact fueled hopes for broader trade agreements with other key economies, including China, Japan, and the EU.

Expectations of future tariff reductions also eased concerns over inflation and recession, setting a bullish tone for Friday’s Asian session.

China Trade Data Supports Global Demand Narrative

China’s economy was under the spotlight early in the Friday session. Exports rose 8.1% year-on-year in April, down from 12.4% in March, while imports rose 0.8% after sliding 4.3% in March. The April numbers signaled resilient global demand and improving domestic demand despite ongoing US-China trade tensions. Economists expected imports to fall 5.9% and exports to rise 1.9%.

Market reaction to the numbers was positive, with the AUD/USD pair rising from $0.63957 to $0.64046 after the data release.

Hang Seng and Mainland China Markets Tread Carefully Ahead of Trade Talks

On Friday, May 9, Asian equity markets had a mixed morning session. The Hang Seng Index fell 0.11% in the morning session, with real estate and tech stocks leading the losses. Investors turned cautious, with the US maintaining 10% tariffs on UK goods as part of the new trade deal.

Markets could grow skeptical about a US-China trade deal if the US refuses to remove existing tariffs on Chinese goods.

• The Hang Seng Tech Index slid 1.72% while the Hang Seng Mainland Properties Index fell 1.88%.
• Despite the pullback, Alibaba (09988.HK) gained 0.58%, while Baidu (09888.HK) fell 1.24%.
• EV stocks also trended lower. Li Auto (02015.HK) fell 3.12%, with BYD Electronic International (00285.HK) falling 1.78%.

Mainland China’s CSI300 and Shanghai Composite declined 0.39% and 0.46%, respectively.

Expert Views on Upcoming US-China Trade Talks

Brian Tycangco, editor at Stansberry Research, commented on the upcoming US-China trade talks:

“Giving out feelers that Washington is willing to lower China tariffs to 50% from 145% is a good first step ahead of trade talks this weekend in Switzerland. But it takes two to tango. If China doesn’t like what it hears from Sec. Bessent and USTR Greer, it will walk and wait for empty store shelves to hit US consumers.”

Nikkei 225 Rallies on Trade Optimism

Japan’s Nikkei 225 rallied 1.49% on Friday morning after the USD/JPY pair rose 1.44% overnight to close Thursday’s session at 145.894. Hopes for an imminent US-Japan trade deal and a weaker Yen drove demand for Nikkei-listed stocks. A softer Yen typically boosts demand for Japanese exports and lifts corporate earnings expectations..

Notable movers included Nissan Motor Corp. (7201), up 1.43%, while Sony Corp. (6758) gained 2.23%.

ASX 200 Mirrors Wall Street Gains

Australia’s ASX 200 rose 0.40% in morning trade, supported by banking and tech stocks.

Commonwealth Bank of Australia (CBA) gained 1.17%, while Westpac Banking Corp (WBC) rallied 1.70% on improving sentiment toward the economic outlook. Tech stocks tracked the Nasdaq higher, with the S&P/ASX All Tech Index climbing 1.28%.

Meanwhile, the US-UK trade deal sank gold prices overnight, leaving Northern Star Resources (NST) down 0.58%.

Outlook: Focus Shifts to Trade Talks and Policy Direction

Markets will closely watch the US-China trade talks this weekend. A breakthrough could lift risk appetite and reduce demand for safe havens. However, if talks falter, the People’s Bank of China may step in with stimulus. With uncertainty still elevated, traders should stay nimble and responsive to developments in trade and monetary policy.

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