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What’s happening: Hong Kong stocks climbed on Tuesday amid a rally in Chinese tech stocks.
What happened: China’s premier Xi Jinping met with several of the country’s business leaders, including Alibaba’s co-founder Jack Ma.
The meeting ignited hopes of the Chinese government shifting their stance towards private tech companies.
Why it matters: China’s President Xi Jinping met with leaders of the country’s major tech companies after around four years of launching a regulatory crackdown. Alibaba had been among the worst impacted by restrictions imposed by the Chinese government.
Apart from Jack Ma, the meeting was attended by leaders of smartphone makers Xiaomi and Huawei, electric car giant BYD, the new kid on the AI block DeepSeek and robotics startup Unitree.
The agenda of the meeting was to discuss ways in which China can reduce its reliance on US technology, after heightened concerns around President Donald Trump starting a trade war.
The news of the meeting sparked speculations of Beijing’s shift in stance from placing stumbling blocks to giving the private sector wider market access and greater support to flourish and innovate.
Shares of Alibaba jumped 3.4% on Tuesday, while Xiaomi’s stock rallied more than 7%. Shares of Tencent Holdings added 2% after WeChat integrated DeepSeek’s R1 large language model.
Meanwhile, data released by Hong Kong showed its unemployment rate remaining unchanged at 3.1% in the three months ending January. The figure came in-line with market expectations.
China also reported new home prices declined by 5.0% year-on-year in January. This marked an easing from the 5.3% decline in the previous month and was the smallest decline since July 2024.
Hong Kong’s Hang Seng Index climbed 1.59% to close at 22,976.81 on Tuesday. However, the Shanghai Composite Index shed 0.93% to settle at 3,324.49 due to trade tensions with the US.
What to watch: Investors will continue monitoring tariff announcements by the Trump administration.
The People’s Bank of China’s monetary policy decision, scheduled to be announced on Thursday, will also remain in focus.
Context: The GBP/USD fell slightly on Tuesday, after having climbed steeply last week.
Details: The British pound came under pressure after adding almost 1.3% over the past five trading days.
The UK reported that its unemployment rate held steady at 4.4% in the three months to December 2024. The figure came in better than market expectations of 4.5%. The report also showed that the number of employed individuals rose by 107,000 to 33.86 million, with growth in both full- and part-time jobs.
Bank of England Governor Andrew Bailey said in an interview on Tuesday that the persistence in inflation had ended, indicating his expectations of the inflation rate easing.
Strength in the US dollar exerted pressure on the GBP/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose around 0.44% to 107.04 on Tuesday.
The GBP/USD fell by 0.19% to 1.2602 on Tuesday. Despite this decline, the forex pair has gained around 2% over the past one month.
What to watch: Investors await the release of economic data on inflation rate (11:00 UAE Time) from the UK today. The annual inflation rate in the UK, which unexpectedly eased to 2.5% in December from 2.6% in the previous month, is widely expected to accelerate to 2.8% in January.
Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.29%, 0.04% and 0.30%, respectively.
US and Russian officials meet in Riyadh this morning to discuss plans to end the war with Ukraine and reestablish economic ties. The news sent the RUB/USD pair higher in forex trading this morning.
The Reserve Bank of New Zealand cut its official cash rate by 50 bps to 3.75% at its latest meeting. This coming in-line with market expectations lent support to the NZD/USD forex pair.
Australia’s seasonally adjusted wage price index rose by 3.2% year-over-year in the fourth quarter, slowing from the 3.6% growth in the previous quarter. The figure coming in-line with estimates sent the AUD/USD pair lower in forex trading this morning.
Japan’s trade deficit widened to ¥2,758.78 billion in January, from ¥1,766.54 billion in the year-ago month. The deficit was also worse than market expectation of ¥2,100 billion, with imports growing faster than exports. Despite this, the JPY/USD forex pair remained broadly stable.
Argentina’s trade surplus contracted to $142 million in January, from $784 million recorded a year earlier. The figure also came in significantly below estimates of $800 million. However, this being the 14th consecutive month of trade surplus sent the ARS/USD pair higher in forex trading this morning.
South Africa’s inflation rate (12:00 UAE Time), Eurozone’s current account (13:00 UAE Time), Italy’s current account (14:00 UAE Time), Ireland’s residential property prices (15:00 UAE Time), South Africa’s retail sales (15:00 UAE Time), Portugal’s current account (15:30 UAE Time), US building permits (17:30 UAE Time) and housing starts (17:30 UAE Time), Russia’s PPI (20:00 UAE Time) and Brazil’s business confidence (21:30 UAE Time).
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