Asian markets mixed after Trump inauguration

Asian markets experienced mixed reactions on the first trading day following Donald Trump's second presidential inauguration, as investors balanced optimism about his pro-business agenda against concerns over potential trade tensions. Markets initially showed positive momentum, with Japan's Nikkei 225 gaining 261.03 points to 39,163.53, and Hong Kong's Hang Seng Index rising 1 percent to 20,128 points.
However, market sentiment shifted after Trump's announcement of possible 25 percent tariffs on Canada and Mexico as early as February 1, citing concerns over immigration and fentanyl trafficking. This news triggered currency market volatility, particularly affecting the Mexican peso and Canadian dollar, with the latter reaching its weakest level since early 2020.
The new president's inaugural address emphasized his "America First" trade policy, stating his intention to "tariff and tax foreign countries to enrich our citizens." Trump also signed several executive orders indicating a potential return to his previous tough stance on global diplomacy and trade, including possible withdrawals from the Paris climate accord and the World Health Organization. Additionally, he extended the deadline for TikTok's Chinese owner ByteDance to sell its US operations.
Asian markets showed mixed performance following these developments. While some markets maintained gains, with Tokyo slightly higher and Hong Kong edging up, others including Shanghai, Singapore, Seoul, Wellington, and Taipei declined. The dollar recovered against major currencies after weakness, particularly against the Mexican peso and Canadian dollar.
Charu Chanana from Saxo Markets noted that while tariff threats have materialized as expected, China appears to be temporarily spared from immediate action, potentially supporting Chinese markets. Previous positive discussions between Trump and Chinese President Xi Jinping had contributed to market optimism.