Investing.com– Asian stocks were a mixed batch in volatile trade on Tuesday after U.S. President Donald Trump did not impose steep tariffs on China in his first day in office, as feared, although he still raised the possibility of future tariffs.
Risk-driven assets saw increased volatility as investors still remained largely on edge over Trump’s policies. The U.S. President signed a flurry of executive orders on his first day in office, ranging from decrees on increasing U.S. oil production to postponing a ban on social media app TikTok.
U.S. stock index futures were mildly positive in Asian trade, but also saw increased volatility as Trump outlined plans to impose tariffs on China, Mexico and Canada.
Asian stocks were nursing a weak start to 2025, although they gained some ground in recent sessions on hopes that Trump’s tariffs would not be as strict as initially feared. Uncertainty over the tariffs remained in play, keeping investors to the sidelines.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell slightly, while Hong Kong’s Hang Seng index added 0.8%.
Australia’s ASX 200 rose 0.6%, while Singapore’s Straits Times index fell 0.6%.
South Korea’s KOSPI fell 0.3%, while futures for India’s Nifty 50 index pointed to a negative open.
Trump does not sign day-1 tariffs, but considering more duties
Trump did not impose any trade tariffs on China, Mexico, and Canada- three countries that had been the subject of his ire in recent months- on the first day of his Presidency.
But Trump signaled that he was re-evaluating U.S. trade, specifically that he would impose 25% tariffs on imports from Canada and Mexico.
Trump also signed an order calling for an America First trade policy, instructing federal agencies to look into unfair trade practices by other countries while also reviewing current trade agreements.
Trump’s orders spurred bets that he was still on track to impose higher trade tariffs against major economies, especially China. This came even as Trump held positive dialogue with his Chinese counterpart Xi Jinping last week.
Increased trade tariffs stand to disrupt global trade, and could also draw retaliatory measures from major economies, sparking a renewed global trade war between the U.S. and other major economies.
But in Asia, China is expected to unlock even more stimulus in the face of a U.S. trade war, which could boost local growth.
Japan shares muted as BOJ looms
Japan’s Nikkei 225 and TOPIX indexes moved little on Tuesday, with investors turning even more cautious towards the country before a Bank of Japan meeting later in the week.
The BOJ is expected to potentially hike interest rates further this week, especially as policymakers flagged the possibility of such a move in recent comments.
While higher rates herald more pressure on Japanese markets, they also reflect increased BOJ confidence in the Japanese economy, which could make domestically-exposed sectors appear more attractive.
But strength in the yen, amid recent speculation over rate hikes, is expected to pressure export-oriented sectors.