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StreetAccount Summary - Asian Market Recap: Nikkei (7.83%), Hang Seng (13.22%), Shanghai Composite (7.34%) as of 04:10 ET

Apr 07 ,2025

• Synopsis:

  • Asia equities ended steeply lower across the board Monday. The heaviest falls were in Hong Kong where its Tech index fell more than 17% and Enterprises index 13%; mainland boards led lower by ChiNext. Japan's boards finished in a technical bear market and at their lowest since Oct-23 following a nearly 8% fall. Taiwan's declines exacerbated by mark-to-market following last week's holiday but capped by a series of stock limit-downs. Australia, South Korea, India down around 5% each. Southeast Asia led lower by Singapore for second consecutive session. Hanoi, Jakarta and Bangkok all closed for a holiday.

  • US futures, Europe seeing sharp declines in the first hour of trade. US dollar lower but volatile, yen stronger, yuan notably weaker after higher fixing this morning by the PBOC. Treasury yields lower across tenors with 10Y below 4%, sharp declines in JGB yields, CGB yields back at near record lows on haven demand, other sovereign yields also steeply lower. Crude futures also sharply down with WTI below $60/bl; precious metals pared early declines, now higher. Industrial commodities lower with iron ore and copper under pressure. Cryptocurrencies lower but off troughs.

  • Asia's equity selloff deepened Monday after President Trump extinguished for the time being any hopes of a de-escalation over his tariff plans, and the announcement late Friday China would launch a program of retaliatory measures. This included a 34% tariff increase on US exports, extended export controls on rare earths, and more companies added to its entity list...far beyond what was expected. The MSCI Asia Pac-Ex Japan index fell more than 8% to a more than one-year low as Hong Kong closed for business with most other benchmarks also hitting multi-month or multi-year lows. Beijing also said to be considering bringing forward fiscal stimulus and monetary policy cuts to aid the economy. Growing speculation over whether Beijing will allow devaluation of the yuan but no sign yet despite noticeably higher fixing point by PBOC this morning.

  • Ex-China, no sign of any Asia nation deploying retaliatory measures. India, Indonesia and Japan among nations to reiterate over the weekend there would be no reciprocal tariffs imposed while Vietnam offered to remove all import tariffs on US goods. Several authorities also pledged to support business and industries affected by tariffs including those in Japan, South Korea and India. Others said they would give market support: Taiwan imposed a one-week short-selling ban after many of its large-cap tech stocks traded limit-down at the open, China's sovereign funds said to have bought local ETFs, Bank Indonesia said it was intervening to support the rupiah and would take measures to support markets Tuesday when they reopen after Eid. In separate news, South Korea's government provisionally set 3-Jun as its presidential election date with the possibility of a referendum on presidential power to take place simultaneously.

  • Dai-ichi Life (8750.JP) is to buy a 15% minority stake of Australian insurer Challenger (CGF.AU). Horizon Robotics (9660.HK) said it had reached an agreement with Volkswagen on advanced smart driving technology development. A BHP (BHP.AU) executive said the company saw China demand for iron ore remaining strong for several years. Woodside Energy (WDS.AU) is to sell 40% of its Louisiana-based LNG project to Stonepeak.

• Digest:

  • Asia markets end sharply lower after Trump refuses to cede ground on tariffs:

    • Asia equities ended lower across the board Monday following weekend comments from President Trump and Treasury Secretary Bessent that indicated there would be no concession to their global tariff plan (Reuters). Hang Seng ended almost 14% lower, mainland China benchmarks ended 6-12% lower as sovereign funds stepped in to support, Japan's Nikkei and Topix fell into bear market after more than 7% rout having triggering circuit breaker early on. Taiwan's Taiex more than 9% lower as it returned from holiday with many large-cap chip stocks hitting their limit downs within minutes of opening (TaipeiTimes) becomes benchmark's highest one-day trading loss in 35 years. Singapore STI down 8%, Kospi and ASX down 4-5%, India's main boards more than 4% down. US futures down 4-5% and at their day's trough. Sovereign bond yields also under severe pressure: CGBs back near record low amid easing speculation, JGBs yields pared year's gains to trade with 1.1% yield, Australia, New Zealand, Singapore yields down across the curve. Currencies relatively calm with modest yen strength while onshore and offshore yuan weakened amid devaluation speculation and highest mid-point fixing since December.

  • China policymakers discuss stimulus amid tariff fallout:

    • Bloomberg cited people familiar with the matter who said Chinese policymakers engaged in weekend talks about economic support measures focused on increasing consumption, boosting birth rates and providing subsidies for some exports. Regulators also debated details of stockmarket stabilization fund. Scale and timing of stimulus yet to be finalized with officials believing China has sufficient policy tools in place to support its economy. Follows earlier People's Daily editorial that reinforced expectations of policy easing, noting there is sufficient room for further cuts to RRR and interest rates, as well as accelerating rollout of fiscal measures with room for expansion of bond issuance. In terms of policy specifics, piece noted 'extraordinary' efforts will be made to boost consumption with measures to raise incomes and reduce cost burdens. State-run media commentaries signaling message of defiance with Xinhua piece warning against efforts to thwart China and vowing further resolute action to safeguard its interests. China's retaliation against US seen further eroding prospect of negotiations towards a deal amid breakdown of trust. Press also highlighted how prior to the latest round of tariffs Chinese efforts to engage with Trump administration officials often proved fruitless (link).

  • China launches barrage of responses to US tariffs:

    • Flurry of China announcements in response to last week's reciprocal tariffs. Main headline was a 34% tariff on US imports effective 10-Apr with no exemptions (Xinhua). Statement urged US to immediately lift unilateral tariffs and return to the negotiating table. Export controls imposed on rare earths related to seven types of medium and heavy categories (Xinhua). Reuters cited analysts saying restrictions include not only mined minerals but permanent magnets and other finished products that will be difficult to replace. Also banned exports of dual-use items to 16 US entities (Xinhua). Reuters noted they include 15 firms in industries including defense and aerospace, as well as non-profit group Coalition For A Prosperous America, which in the past had advocated for the Trump administration to decouple the US economy from China. Ministry of Commerce added 11 US firms to its unreliable entities list for undertaking military technology cooperation with Taiwan (Xinhua). Imports of poultry, sorghum suspended from certain US companies citing food safety risk (Xinhua). China measures provoked a Truth Social post from President Trump decrying that "China played it wrong" without elaborating (Reuters). Trump later told reporters on Air Force One that he wouldn't make a deal unless it drives down the US trade deficit with China (Bloomberg).

  • Trade war stimulates elevated yuan devaluation speculation:

    • Bloomberg discussed growing speculation of potential yuan devaluation as another response from Beijing to the deepening trade war. Noted FX strategists globally game-planning whether this could be on the cards after Beijing warned of a "resolute" response to Trump tariffs, while noting this would be a controversial and non-consensus move which would theoretically make Chinese exports cheaper but at the risk of capital flight. However, suggested scenarios vary widely. Wells Fargo sees the risk of devaluation up to 15% over two months. Jeffries suggested an aggressive move could be up to 30%. But Mizuho was far more conservative, acknowledging the chance for a 3% move. Article recalled that Chinese authorities have so far maintained their yuan stability stance, consistent with their longstanding promotion of yuan internationalization. Yet some strategists suggested latest tariffs may offer justification for a rethink given the levies stand to exacerbate deflation risk. Case for a moderate response considers the shock from the 2015 devaluation, favoring Beijing's 2018 FX strategy. Any devaluation measure also risks increased currency manipulation scrutiny from the Trump administration.

  • Asian countries prefer talks over retaliation, but it may not be enough for Trump:

    • No signs of de-escalation from weekend tariff headlines with Trump and White House officials digging in (Axios, Bloomberg). Several countries across Asia holding off on retaliation in favor of negotiations and willingness to offer concessions. Taiwan President pledged to remove trade barriers with 'zero tariffs' serving basis for negotiations (Reuters). Japan PM Ishiba reiterated willingness to engage with Trump on mutually beneficial outcomes for Japan and US (Nikkei). Trump noted Vietnam, which was hit with 46% tariffs, offered to eliminate all tariffs on US products (Bloomberg). Bloomberg and Reuters sources highlighted India's focus on avoiding retaliation in favor of progressing US trade talks, having previously expressed willingness to reduce tariffs on select US products. Meanwhile, Indonesia to send high-level delegation to US for talks (Reuters). However, it's unclear whether offers will be enough to placate Trump, who at times has talked about tariffs as structural measure to rebalance trade and provide a new source of government funding. Bloomberg highlighted influence of White House trade hawks on Trump, including Trade Adviser Navarro who played down Vietnam's tariff offer and instead criticized its non-tariff trade barriers.

  • Notable Gainers:

    • +20.7% ASK.AU (Abacus Storage King REIT): receives indicative takeover proposal from Ki Corporation and Public Storage at A$1.47/security

    • +8.3% CGF.AU (Challenger): confirms Dai-ichi Life subsidiary to acquire 15.1% minority interest in Challenger from MS&AD for ¥763/sh (A$8.46/sh)

  • Notable Decliners:

    • -20.2% 6506.JP (YASKAWA Electric): reports FY net income attributable ¥56.99B vs guidance ¥63.00B and FactSet ¥58.99B

    • -10% 2330.TT (Taiwan Semiconductor): Rapidus Corp reportedly in talks with Apple, Google, and dozens of others to mass produce chips by 2027

    • -6.5% 066570.KS (LG Electronics): reports preliminary Q1 operating profit KRW1.259T vs StreetAccount KRW1.267T

    • -2.1% LIC.AU (Lifestyle Communities): reports YTD (to 31-Mar) new home settlements completed 190

    • -1.8% 373220.KS (LG Energy Solution): reports preliminary Q1 revenue KRW6.265T vs StreetAccount KRW6.075T

• Data:

  • Economic:

    • Japan February

      • Average nominal wages +3.1% y/y vs consensus +3.0% and revised +1.8% in prior month

        • Real wages (1.2%) y/y vs consensus (1.3%) and revised (2.8%) in prior month

  • Markets:

    • Nikkei: (2,644.00) or (7.83%) to 31136.58

    • Hang Seng: (3,021.51) or (13.22%) to 19828.30

    • Shanghai Composite: (245.43) or (7.34%) to 3096.58

    • Shenzhen Composite: (215.01) or (10.79%) to 1777.37

    • ASX200: (324.50) or (4.23%) to 7343.30

    • KOSPI: (137.22) or (5.57%) to 2328.20

    • SENSEX: (3,201.32) or (4.25%) to 72163.37

  • Currencies:

    • $-¥: (1.12) or (0.76%) to 145.8680

    • $-KRW: +3.04 or +0.21% to 1462.5500

    • A$-$: (0.00) or (0.28%) to 0.6025

    • $-INR: +0.31 or +0.37% to 85.7762

    • $-CNY: +0.03 or +0.39% to 7.3102