In a much-anticipated return, the Hong Kong stock market resumed trading after the Lunar New Year holiday on February 3rdThis resumption of activity comes on the heels of a bullish week in the U.Smarkets, where Chinese assets have seen a significant uptickNotably, the Nasdaq Golden Dragon Index soared by over four percent on January 30, while Alibaba's stock posted a weekly gain exceeding ten percentThis surge suggests that investors are optimistic about the potential for positive performance in the Hong Kong stock market as well, particularly during the Year of the Snake.

However, investors are also bracing for broader implications of global economic developmentsThe enforcement of a new tariff executive order by U.SPresident has raised concerns about potential shocks to the U.Sequity marketsEconomists from Goldman Sachs, including Jenny Grimberg, have warned that the market may not be fully pricing in the risk of retaliatory or widespread tariffs, which could lead to a considerable market correction once these tariffs take effect.

This week is pivotal for U.S

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economic data, with the focus primarily on the employment marketThe upcoming Non-Farm Payrolls report on Friday, which is highly anticipated by analysts, will serve as a critical gauge of the labor market's healthShould the report indicate continued strength in job creation, it could further dampen expectations for interest rate cuts by the Federal Reserve.

The reopening of the Hong Kong market on February 3 was particularly noteworthy for Chinese investors returning from the Lunar New Year celebrationsWhile trading was suspended for the southbound and northbound channels on that day, the A-share market, along with the Hong Kong-Shanghai and Hong Kong-Shenzhen Stock Connect programs, will resume on February 5.

During the Chinese stock market's holiday pause, the U.Smarkets experienced a remarkable rise in Chinese assetsThe Nasdaq Golden Dragon Index reached a point of 7052.85, boasting a staggering eleven percent increase from its January low, despite a minor drop on January 31. Alibaba's stock particularly shone, climbing over ten percent last week and closing at $98.84 per share, marking a 23.5 percent rise compared to January's low.

In the realm of innovation, Alibaba's subsidiary, Tongyi Qianwen, made headlines last Thursday by announcing the pricing for its Qwen2.5-Max model, powered by Alibaba Cloud

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The model is priced at $1.6 per million tokens for inputs and $6.4 for outputsThis flagship model, unveiled on the first day of the Lunar New Year, has outperformed models from major competitors like OpenAI and Meta in various benchmark tests.

Additionally, futures for the FTSE China A50 index surged significantly, rising as much as 2.5 percent on January 31. The record inflow into the KraneShares CSI China Internet ETF last Wednesday, which saw a one-day inflow of $105 million, highlights investors’ growing confidence in the Chinese tech sector.

Analysts suggest that the recent rise in Chinese assets reflects a global recognition of China's prowess in AI technologyThe arrival of DeepSeek's advanced technology could potentially attract greater foreign capital towards Chinese assets.

Zhejiang Securities emphasizes that the high cost-performance ratio of DeepSeek's technology not only challenges the monopolistic hold of American AI models but also bolsters domestic confidence in self-sufficiency in tech, marking a positive shift from a long-standing dependency on imported technologies

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They recommend focusing on sectors like Technology, Media and Telecommunications (TMT), military industry, and high-end manufacturing.

The global economic landscape is facing potential turbulence as President Biden's tariff executive order has come into force this week, which may have ramifications for U.Sstock marketsAs reported by state media on February 1, President Biden signed an executive order imposing a ten percent tariff on goods imported from China, with higher tariffs of 25 percent on products from Canada and Mexico and an energy tariff of ten percent on Canadian importsThese tariffs are set to take effect in upcoming days, with warnings from the White House about potential retaliations leading to increased duties.

Both Canada and Mexico have vowed to respond with counter-measures, while China has also indicated it will take corresponding actionsGoldman Sachs has voiced concerns that the U.S

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markets are underestimating the risks involved, and any implementation of such tariffs could lead to significant market adjustments.

Truist Advisory Services highlights a notable drop in hedge fund net long positions in tech stocks, reaching a low not seen in two yearsThe last two trading days of the U.Smarket featured sharp declines, indicating how the tariffs are shaking investor confidence in risk assets.

Automakers like General Motors, Ford, and Stellantis are likely to feel the brunt of these tariffs, given their substantial business dealings in Mexico and CanadaAdditionally, electric vehicle manufacturers such as Tesla, Rivian, and Lucid Group may also face significant impactsIndustrial manufacturers including Deere, Caterpillar, and Boeing, as well as U.Ssemiconductor firms like Nvidia, Applied Materials, and Broadcom, are similarly expected to confront challenges.

The upcoming week will be critical for economic data releases, chiefly spotlighting the January Non-Farm Payrolls report due on Friday

Analysts suggest that January added approximately 256,000 jobs, well above expectations, with an unemployment rate that has dipped to 4.1 percent.

As job growth persists, it may lead to a dampening of the market's anticipation regarding Fed interest rate cutsConsensus from economists predicts that the employment report will show an addition of around 170,000 jobs, aligning with the Fed's view that while the labor market is cooling, it remains robust enough to support the economy.

Currently, market expectations hinge on two potential interest rate cuts from the Federal Reserve in the year ahead, with the first likely not occurring until the second half of the yearAdditionally, several Fed officials, including Bowman and Adriana Kugler, are scheduled to deliver speeches in the coming days that might provide further insights into Fed policy direction.

Earlier economic indicators, including the Jolts job openings data and ADP employment data, will also lend clues regarding future monetary policy

Furthermore, both the U.Sand Eurozone are set to release updated PMI data that will offer insights into the current economic conditions.

On the international front, the Bank of England is anticipated to announce a rate decision this Thursday, with expectations leaning towards a 25 basis point reduction to a rate of 4.50%. This decision, along with updated inflation and growth forecasts, will be viewed as a key indicator for potential future cuts over the remainder of the yearThe Mexican central bank is also set to release its rate decision, and the implications of U.Stariffs will be a significant consideration for their policymakers.

In the wake of last week's volatility in the U.Stech sector, the earnings reports from Amazon and Google this week will be crucial, as both are major players in cloud computing and AI, potential discussion items during their earnings callsOther notable earnings set for release include those of AI stock Palantir, semiconductor giants Qualcomm and AMD, alongside major players in the pharmaceutical arena like Eli Lilly and Novo Nordisk