Asian markets had one of their best rallies on Tuesday, as Hong Kong technology stocks led the regional charge. It was the Hang Seng Index that was first out of the gates, gaining 2.29%. Baidu stocks surged almost 10% following the launch of its new generative artificial intelligence models. U.S. futures fell back as analysts warned of caution. They underscored the potential economic impact of instituting new tariffs just days before current exemptions for a variety of goods from Canada and Mexico are set to expire.
The S&P 500 ended the day up 0.64% and closed at 5,675.12. The Nasdaq Composite followed suit with bullish strength, rising 0.31% to close at 17,808.66. The Dow Jones Industrial Average gained ground Friday, climbing by 353.44 points, or 0.85% to close at 41,841.63. Swiss investment bank Julius Baer has reduced its rating on U.S. equities. They are proactively repositioning themselves to see where the next opportunities lie outside of U.S. shores.
President Trump’s temporary tariff exemptions expire on April 2. This has created legitimate concern over new source of market volatility given the backdrop of recent events.
“Absolutely, between now and April 2, there’ll be some uncertainty,” – Kevin Hassett.
Market analysts are understandably watching closely, especially as the tit-for-tat tariff imposition has eroded a once-pretty scenery for investors.
“The surprising thing and the challenge for the market has been the fluctuation of tariffs with our biggest trading partners,” – Rob Haworth.
“Volatility will likely continue in the weeks ahead as the market adjusts to these uncertainties,” Haworth added.
“Volatility is probably in the cards for at least the next couple of weeks and could extend beyond that depending upon what the back-and-forth looks like when it comes to tariffs,” – Rob Haworth.
Despite headwinds in U.S. markets, spot gold did manage to set a new record high, up 0.39% to $3,013.35 per ounce. This milestone is a testament to investors’ continued search for safe-haven assets tied to economic uncertainty.
In Asia, mainland China’s CSI 300 index gained 0.27%, finishing the day at 4,007.72. Japan’s Nikkei 225 shot up, ending the day 1.20% up at 37,845.42. At the same time, the wider Topix index rose 1.29% to finish at 2,783.56.
Hong Kong’s financial markets recently received a major lift from a large influx of technology stocks, notably Alibaba. Baidu continued its momentum after the company unveiled two new artificial intelligence models, jumping as much as 9.94% in pre-market trading hours.
Nio, another major electric vehicle maker, posted spectacular gains, soaring 17.24% on Tuesday. This latest flood is the tangible result of massive and sustained investor excitement for companies in the technology and clean energy space.
Julius Baer’s recent downgrade of U.S. equities underscores a broader shift among investors who are seeking diversification in light of potential economic challenges.
“With U.S. equities in oversold territory and a short-term countertrend bounce likely, we see this as an opportunity to further diversify into non-U.S. markets in the coming weeks,” – Mathieu Racheter.
Racheter noted that the sustainability of this market divergence will depend significantly on whether the current slowdown in the U.S. economy remains contained or escalates into more severe conditions.
“Whether this divergence is sustainable hinges on whether the U.S. slowdown remains contained or escalates into a full-blown recession,” – Mathieu Racheter.
Global markets are jittery in response to these unfolding drama. Investors are continuing to look out for domestic and international economic indicators that might set the stage for their future trading strategies.
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