Chinese Assets Outperform Global Markets Amid Trump Tariff Threats

In the late hours of the trading day, a notable divergence emerged between global stock markets and Chinese assets. While global markets experienced a significant downturn due to threats from former U.S. President Donald Trump, Chinese assets showed relative strength. The Nasdaq Golden Dragon China Index, which tracks the performance of Chinese companies listed on U.S. exchanges, managed to turn positive, outperforming the three major U.S. indices. Similarly, the FTSE China A50 Index also saw a V-shaped recovery. Individual stocks such as Niu Technologies, Tencent Music, and Bilibili experienced gains of over 6%, nearly 3%, and over 2% respectively.

The broader market downturn was triggered by Trump's threat to impose a 50% tariff on the European Union and a 25% tariff on Apple Inc. This announcement led to a decline in Apple's stock price, U.S. stock index futures, and the euro, reigniting concerns among investors about the potential impact of tariffs on the global economy and trade. The European Commission declined to comment on the new U.S. tariff measures until further discussions with U.S. Trade Representative Katherine Tai. Meanwhile, Federal Reserve official Christopher Waller expressed that businesses are seeking policy consistency before making major decisions. He noted that a 50% tariff on the EU is unprecedented and could severely disrupt supply chains, leading to price increases. Waller suggested that the Fed may need to wait for the situation to clarify before taking action, and there is a possibility of rate cuts within the next 10 to 16 months if the tariffs lead to economic stagnation.

As global markets reacted to the geopolitical tensions, investors sought safe-haven assets. Gold prices surged by over 1.4%, reflecting the increased demand for safe assets amidst market uncertainty. The cryptocurrency market also experienced significant volatility, with Bitcoin dropping below $110,000, leading to over 160,000 liquidations within a 24-hour period. This shift in investor sentiment highlighted the broader impact of geopolitical risks on financial markets, with Chinese assets standing out as a relative safe haven amidst the global turmoil.