Asia Stocks Rebound Despite U.S.-China Trade Tensions as Investors Bet on Economic Resilience

Asian markets rallied on Wednesday, defying Wall Street’s overnight losses as investors brushed off escalating tensions between the United States and China. The gains came even after U.S. President Donald Trump criticized Beijing for halting soybean purchases and threatened economic retaliation, including a potential embargo on cooking oil imports. The sharp divergence in performance underscored investors’ growing confidence in Asia’s market resilience despite renewed trade hostilities between the world’s two largest economies.

Japan’s benchmark Nikkei 225 climbed 1.76% to close at 47,672.67, while the Topix advanced 1.58% to 3,183.64. South Korea’s Kospi surged 2.68%, boosted by tech and manufacturing stocks, while the Kosdaq added 1.98%. In Australia, the S&P/ASX 200 gained 1.03%, reflecting optimism about a potential rebound in commodity demand. Meanwhile, Hong Kong’s Hang Seng Index jumped 2.06%, and the mainland’s CSI 300 rose 1.48%, signaling renewed investor appetite for Chinese equities despite weak economic data.

India’s Nifty 50 also joined the rally, rising 0.74%, supported by strength in banking and energy stocks. The broad-based regional recovery contrasted sharply with the decline seen on Wall Street, where the S&P 500 fell 0.2% and the Nasdaq Composite dropped 0.8%. The Dow Jones Industrial Average was the exception, closing 0.4% higher as investors weighed Federal Reserve Chair Jerome Powell’s remarks suggesting that the central bank may be nearing the end of its balance sheet reductions and could consider more rate cuts.

Adding to the complex market backdrop, new data from China showed deeper-than-expected weakness in consumer prices. The Consumer Price Index (CPI) fell 0.3% in September compared to a year earlier, according to the National Bureau of Statistics — a steeper drop than economists’ forecast of 0.2%. Producer price deflation also persisted, signaling that sluggish domestic demand and trade uncertainty continue to weigh heavily on China’s economic recovery. On a monthly basis, prices edged up just 0.1%, below expectations for a 0.2% gain.

Market analysts say the region’s resilience may reflect growing optimism that central banks across Asia could adopt more accommodative policies to cushion their economies. “Volatility remains elevated, and the best explanation is the strained relationship between the U.S. and China,” said veteran investor Louis Navellier in a Wednesday note. Still, investors appear cautiously optimistic, betting that stimulus measures and regional cooperation could help offset the fallout from the renewed U.S.-China trade feud.

source: cnbc