Asia stocks drop on Trump’s China restrictions, Europe futures up after German elections
Asian shares declined, breaking a blistering rally in technology stocks after an executive order from President Donald Trump restricting Chinese spending on some strategic US sectors.
The euro rose.
Shares in mainland China and a gauge of technology stocks in Hong Kong reversed after a surge on Friday, led by declines in Alibaba Group Holding Ltd. and Tencent Holdings Ltd. US equity index futures advanced, as did contracts on Germany’s benchmark stock index after the conservative party came in first in the country’s federal election, News.Az reports, citing Bloomberg.
Trump directed the Committee on Foreign Investment in the United States to restrict Chinese spending on technology, energy and other strategic US sectors, his administration’s latest salvo against the world’s second-largest economy. The move may trigger a reversal in Chinese stocks after a strong rally, according to JPMorgan Chase & Co. strategists.
While not as enforceable as an executive order, the memo sets key “implementation guidelines to ensure that US investments and US investors are advancing US security and prosperity,” strategists including Wendy Liu write in a note.
In a separate note, analysts including Rebecca Wen said the “development raises questions about whether it builds upon the US Department of Defense’s recent decision” to add Tencent and battery maker CATL to the Chinese military companies’ list on January 7.
Trump laid out the plan in a national security presidential memorandum signed Friday that commits to using “all necessary legal instruments” to bar Chinese affiliates from investing in US technology, critical infrastructure, health care, agriculture, energy, raw materials and other industries. The directive sets the stage for a more muscular use of CFIUS, a secretive panel that scrutinizes proposals by foreign entities to buy US companies or property, to thwart Chinese investment.
Chinese tech shares have staged a bull run this year, driven by optimism over DeepSeek and President Xi Jinping’s meeting with major business leaders, including Alibaba co-founder Jack Ma. The euro area’s leading blue-chip index gained nearly 12% during that time span, outperforming the S&P 500.
The prospects for artificial intelligence offsetting the risks from US tariffs and shifting wagers on Federal Reserve policy easing.
Treasury futures slipped on Monday. There was no cash Treasuries trading in Asia, as Japan’s markets were closed for a holiday on Monday.
A gauge of the dollar weakened during early Asian trading. The euro outperformed among Group of 10 currencies, up 0.5% against the dollar after Germany’s conservative leader Friedrich Merz said he’ll move quickly to form a new government following Sunday’s federal election victory.
European equity futures index gained 0.5% in Asian trading.
In Asia, diagnostic kits and vaccine maker shares climbed as researchers in China said they discovered a new coronavirus in bats that enters cells using the same gateway as the virus that causes Covid-19.
Chinese Vice Premier He Lifeng expressed “serious concern” over President Donald Trump’s 10% tariff hike on Chinese goods in a call with Treasury Secretary Scott Bessent, China Central Television reported Friday. For his part, Bessent also signaled concerns on a host of issues with China, including “economic imbalances,” the US Treasury said.
The Trump administration told Mexican officials that they should put their own duties on Chinese imports as part of their efforts to avoid tariffs threatened by the US president, according to people familiar with the matter.
In corporate news, Berkshire Hathaway Inc. is looking to increase ownership in Japan’s five largest trading houses “over time,” Warren Buffett said in an annual letter to shareholders.
In commodities, oil held a decline as the prospect of increased supply from Iraq weighed on prices. Gold traded just shy of last week’s all-time high as unexpectedly weak economic data and rising expectations for inflation helped boost haven demand.
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