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Investing.com– Most Asian stocks fell on Monday after U.S. President Donald Trump’s imposition of trade tariffs on Colombia rattled risk appetite with the possibility of more such moves.
Chinese markets were a mixed bag, as investors bought some local technology names on optimism over DeepSeek R1- a new artificial intelligence model that could potentially disrupt development in the sector.
But further gains in China were stymied by weaker-than-expected purchasing managers index data, which highlighted a sustained decline in China’s economy.
Regional markets took a weak lead-in from Wall Street, with U.S. stock index futures falling in Asian trade as speculation over DeepSeek battered major technology stocks, especially Nvidia (NASDAQ:NVDA). The stock sank over 5% in 24 hour markets, RobinHood data showed.
China tech rises on DeepSeek hype, but PMIs disappoint
Hong Kong’s Hang Seng index was an outlier among its Asian peers on Monday, rising 0.6% on gains in heavyweight internet stocks.
Majors Baidu (NASDAQ:BIDU) Inc (HK:9888), Alibaba Group Holding Ltd (HK:9988) and Tencent Holdings Ltd (HK:0700) rose between 0.9% and 3.5%.
Sentiment towards Chinese internet stocks was boosted by the release of DeepSeek R1, a large-language model that claimed to rival offerings from OpenAI and Meta (NASDAQ:META) at a fraction of the cost.
The LLM ramped up hopes that Chinese firms could offer competitive AI products despite a lack of access to cutting-edge AI tech from majors such as Nvidia.
Major Chinese chipmaking stocks- such as Semiconductor Manufacturing International Corp (HK:0981) and Sunny Optical Technology Group Co Ltd (HK:2382) had rallied last week on this notion, although they fell amid some profit-taking on Monday.
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were less upbeat, rising only marginally. Sentiment towards broader Chinese markets was dented by softer-than-expected PMI data for January, which showed an unexpected contraction in manufacturing activity and a sharp slowdown in non-manufacturing growth.
The reading indicated that China’s economy was struggling despite recent supportive measures from Beijing, and that the government will likely have to dole out more support. The prospect of higher U.S. trade tariffs also bodes poorly for China.
Chinese markets will be closed for the week-long Lunar New Year holiday from Tuesday.
Asia stocks rattled by Trump jitters, Fed caution
Broader Asian markets retreated on Monday, although regional trading volumes were muted before several regional holidays this week. Beyond China, markets in Singapore, South Korea, and Hong Kong will also be closed this week.
Risk appetite was rattled by Trump imposing 25% trade tariffs on Colombia, which spurred fears that he could also make good on his tariff threats against Canada, Mexico, and China.
Japan’s Nikkei 225 fell 0.4%, while the TOPIX rose 0.5%.
Singapore’s Straits Times index fell 0.3%, while South Korea’s KOSPI was flat.
Futures for India’s Nifty 50 index pointed to a weak open, as local markets face several key events this week, including major earnings and the Union Budget.
Australian markets were closed for a holiday.
Broader market focus is also on a Federal Reserve meeting this week, where the central bank is widely expected to keep rates steady.