Market conditions have been seen tilting toward caution with escalation expected in the China market following the U.S. move to restrict Chinese investments in American technology and infrastructure, causing Hong Kong's Hang Seng Index to open almost 3% lower today. Alibaba Group was hit the most, closing 10% lower on Monday after announcing a massive investment of at least 380 billion yuan in cloud computing and AI infrastructure over the next three years. The Hang Seng Tech Index opened 4.4% lower and recovered to only losing 1.6%. Analysts warn that geopolitical risks, along with China’s low inflation and weak consumer confidence, remain primary concerns for market stability. Meanwhile, the People's Bank of China injected CNY 300 billion via a one-year medium-term lending facility, although this fell short of offsetting maturing loans, tightening overall liquidity. There are hopes of fewer regulatory crackdowns on tech following President Xi Jinping’s meeting with business leaders like Alibaba co-founder Jack Ma Yun.
EQUITY
Stocks opened the week lower, with growing concerns over tariff impacts and a contraction in Texas manufacturing activity. The Nasdaq was hit the most with a 1.2% drop, while the Dow is up slightly by 0.1% with gains in healthcare and real estate sectors while tech suffers. Palantir continued its downfall, fearing revenue hit from reduction in government spending.
GOLD
Gold turned consolidative, unable to break above $2,950 level, with concerns over U.S. President Donald Trump's tariff plans remaining uncertain, and traders may have overshot in pricing it in. The possibility for profit-taking is present after gaining 12% since the start of the year, given even stocks have not made that much. Meanwhile, Fed's favourite Personal Consumption Expenditures report are monitored for clues on interest rate trajectories.
OIL
Crude oil prices recovered higher after Friday's scare with fresh U.S. sanctions on over 30 entities and vessels tied to Iran's oil trade, slowing supply. Brent and WTI futures both gained around 1%, putting oil at an average price within its consolidative range. However, impending U.S. tariffs on Canadian and Mexican imports threaten to weigh on global oil consumption growth. Additionally, the U.S. and Russia warming relations could lift sanctions and supply.
CURRENCY
The dollar index saw limited recovery from a two-month low, unsure of tariffs involving the U.S., Mexico, and Canada. The euro initially tracked higher from Germany's election results but pulled back as focus shifted to coalition talks. Asian currencies generally weakened against the dollar as global trade issues remain vague, with South Korea’s won remaining stable following a rate cut. Investors are now closely watching the PCE price index and GDP figures before placing their bets.
