Chinese shares fall despite the Fed addressing tariff concerns

Asian stocks advanced on Wednesday. The central bank maintained its benchmark rate as expected, while Chair Jerome Powell offered measured remarks regarding the potential impact of President Donald Trump’s tariff policies. However, shares in China bucked the upward trend despite the Fed easing tariff concerns.

Powell cited the possibility that any increase in inflation would be transitory, noting that the risk of a recession was “not high,” a statement that helped calm investor nerves.

MSCI’s regional stock benchmark reached its highest level since early November as equities in Taiwan, Australia, and South Korea posted gains. US equity futures also rose in Asia after the Financial Times reported that Nvidia Corp. is planning to spend several hundred billion dollars over the next four years to procure US-made chips and electronics. The rally was tempered by a holiday closure in Japan, which kept its markets shut for the day.

Chinese shares, however, bucked the upward trend seen elsewhere in the region. The mainland benchmark CSI 300 Index fell for the first time in three days as technology companies, which had enjoyed a recent surge, posted significant losses. 

In Hong Kong, the Hang Seng Index declined by as much as 1.7%. “The risk-reward for China looks slightly less reasonable,” commented Sundeep Gantori, an analyst at UBS Global Wealth Management in Singapore, on Bloomberg Television. He added that the risk-reward appeared much better for US tech following the recent correction, though he did not rule out modest gains for China.

Tencent Holdings Ltd. saw its shares drop even after reporting its fastest pace of revenue growth since 2023 on Wednesday. In contrast, South Korea’s Samsung Electronics Co. experienced a rise in its share price after pledging to strengthen its position in the high-bandwidth memory chip market amid shareholder criticism.

The Fed’s decision to trim its growth assessments and hold rates boosted a bond rally and reinforced an outlook that supports rate cuts later in the year. Following the announcement, President Donald Trump urged Powell on Truth Social to “do the right thing” and cut rates, diverging from the Fed’s current stance. Meanwhile, Chinese banks held their benchmark lending rates for a fifth straight month without further monetary easing. 

Later Thursday, the Bank of England is forecast to leave interest rates unchanged, while the Swiss National Bank is tipped to nominally cut them by 25 basis points, according to consensus forecasts.

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