FX.co ★ Asian Shares Pare Early Gains As China Retaliates With Tariffs On US Goods

Asian stock markets started strong but eventually gave back some advances, still concluding on a positive note Tuesday. This came as China implemented retaliatory tariffs on U.S. goods in response to the 10 percent trade duty imposed by the Trump administration on Chinese imports, effective from midnight Eastern Time.

The Chinese Finance Ministry announced a 15 percent tariff on imports of coal and liquefied natural gas from the United States. Additionally, a 10 percent duty will be applied to U.S. imports of crude oil, agricultural equipment, and automobiles from February 10.

China's Commerce Ministry also introduced export controls on critical materials like tungsten, tellurium, molybdenum, bismuth, and indium, citing national security concerns. Notably, China is a leading producer of rare earth metals and other specialized materials.

In a further development, Calvin Klein owner PVH Corp and biotechnology firm Illumina were added to a list of unreliable entities. These companies were accused of discriminatory practices against Chinese firms and harming their legitimate interests.

China's regulatory agency also announced it would investigate Google for potential anti-competitive practices. Meanwhile, the Trump administration decided to pause tariffs on Mexico and Canada for a month, offering no such reprieve to China.

Despite an initial dip, the U.S. dollar regained its footing, leading to lower gold prices in late Asian trading. Oil prices saw a sharp decline, with WTI crude futures dropping nearly 2 percent as supply disruption concerns diminished but trade war jitters persisted.

Lunar New Year holidays kept mainland Chinese markets closed, but Hong Kong's Hang Seng Index surged 2.83 percent to 20,789.96, driven by technological heavyweights like Baidu and Alibaba, which rose 3 to 4 percent.

Japan's markets gained as the yen drew fresh sellers amid apprehensions that Japan might eventually face U.S. trade tariffs. The Nikkei index rose 0.72 percent to 38,798.37, while the broader Topix index increased by 0.65 percent to close at 2,738.02. Automakers Nissan, Honda, and Toyota advanced between 1 and 2 percent.

In South Korea, the Kospi index climbed 1.13 percent to close at 2,481.69, bolstered by tech stocks, with Samsung Electronics leading the charge with a 3.3 percent rally.

Australian markets initially showed gains but finished flat after China's tariff retaliation. Across the Tasman, New Zealand's S&P/NZX-50 index edged up 0.74 percent to finish at 12,905.04.

On the U.S. front, stocks regained ground after steep losses but still ended lower following President Trump's announcement of a one-month suspension of tariffs on Mexico, linked to a border security agreement aimed at curbing fentanyl and illegal migration.

Investors also processed data indicating U.S. manufacturing growth in January, marking the first expansion in over two years. The tech-heavy Nasdaq Composite fell 1.2 percent, the S&P 500 declined 0.8 percent, and the Dow slipped 0.3 percent.

Post-market, Canadian Prime Minister Justin Trudeau confirmed the U.S. would postpone proposed tariffs for at least 30 days.