Investing.com — Asian stocks were mostly higher on Monday on some hopes that US President-elect Donald Trump will not adopt harsh rhetoric against China as feared when he takes office later in the day.
Regional stocks took a positive lead from Wall Street on Friday, as a series of positive bank earnings and rising hopes for interest rate cuts led to strong gains in US stocks.
US stock futures were less optimistic in Asian trading on Monday, falling slightly amid some caution about 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. The Japanese index and its indices rose by 1.5% each, while the Hong Kong index added by 1.6%.
Hopes for a less harsh rhetoric against China rose after Trump made no mention at all of his plans to impose trade tariffs during a victory rally in Washington on Sunday. But the president-elect reiterated his plans to eliminate immigration and reduce government oversight of local businesses.
Fox News Digital reported that Trump was planning to sign a record number of executive orders when he takes office on Monday, some of which may include increasing tariffs against China.
The president-elect has pledged to impose tariffs of up to 60% on all Chinese imports, while also targeting Mexico and Canada with tough tariffs.
Such a move would disrupt global trade and does not bode well for export-based economies.
Chinese stocks rose as the People's Bank of China kept interest rates unchanged
China and its indices rose 0.8% and 0.5%, respectively.
The People's Bank of China kept its key loan rate unchanged as widely expected on Monday, with Beijing expected to maintain its stimulus powder while seeking more clarity on Trump's plans on trade tariffs.
China is expected to take more aggressive stimulus measures to offset economic headwinds from any potential tariff increases. Trump's tariffs are expected to put further pressure on the Chinese economy, as it grapples with persistently low inflation and a prolonged real estate market collapse.
However, data released last week showed some improvement in the Chinese economy, after Beijing issued its boldest round of stimulus measures yet in late 2024.
Chinese markets were also boosted by recent gains in chipmaking stocks, as more US export controls on the sector raised bets that local foundries would benefit from increased domestic demand.
Broader Asian markets were mostly higher on Monday, although gains were largely limited by pre-Trump caution. Aside from the US President's inauguration, the focus this week is also on a series of key economic readings, as well as the Bank of Japan meeting.
Australia's index rose 0.2%, while India's index indicated a somewhat positive opening, after the index recorded a series of sharp losses last week.
Singapore's index lagged, falling 0.3%, while South Korea's index traded sideways. Any disruptions in global trade would greatly affect both economies, given their dependence on exports.
