Global shares traded mixed Wednesday as investors weighed the impact of tariffs imposed by the United States and China. The flare-up raised concerns of another debilitating trade war between the economic superpowers. Shares in ecommerce firms fell notably in Hong Kong after the US Postal Service announced a suspension of inbound parcels from China and Hong Kong.
Shanghai, which reopened after a week-long Lunar New Year break, and Hong Kong were among the main losers. The suspension targeted small packages worth less than $800, which had previously been exempt from duties. Despite a positive lead from Wall Street following a deal by US President Donald Trump to delay 25 percent duties on imports from Canada and Mexico, the trade spat between China and the US has heightened volatility in global markets.
Disappointing earnings from major tech firms like Alphabet and Advanced Micro Devices added to the unease. China responded to the tariffs by expressing “resolute opposition” and calling for “dialogue” to resolve trade differences. Kai Wang, Asia equity market strategist at Morningstar, observed that China’s countermeasures appeared less severe than anticipated, covering only about 12% of total imports from the US.
Asian market volatility and US tariffs
“A key takeaway from this development so far is that fundamentally there is less risk implied than expected before,” Wang said. “However, escalation of the trade war remains a risk given Trump’s history of unpredictable behavior.”
Economists at HSBC Global Research noted that China’s response, which was less aggressive compared to the universal 10 percent tariff imposed by the US, suggested a potential deviation from a tit-for-tat strategy, though the risk of escalation persists.
In Hong Kong, e-commerce giant JD.com sank nearly four percent, and rival Alibaba also saw a decline following the Postal Service announcement. Tokyo’s Nikkei index reversed earlier losses, although Nissan shares dived 4.9 percent after reports of the carmaker withdrawing from merger talks with Honda. Honda shares, in contrast, surged 8.2 percent.
Gold reached a fresh peak above $2,866 as investors flocked to the safe-haven asset. Additionally, Alphabet shares fell 7.5 percent in after-hours trading in New York due to disappointing revenue growth and ambitious 2025 capital spending forecasts. Advanced Micro Devices also experienced declines.
On currency markets, the yen strengthened against the dollar following data showing nominal wages in Japan rose far more than expected last month, fostering expectations that the country’s central bank would continue to hike interest rates this year. Investors will continue to keep a close eye on developments between the US and China as the potential for further escalation remains a significant risk for global markets.