Asian stocks fell Thursday as investors digested US President Donald Trump’s most recent tariff proposals and Nvidia Corp.’s lackluster results. Hong Kong technology equities and Chinese equity measures declined as 10-year Treasury rates slightly increased. Following Trump’s announcement that his government will slap 25% tariffs on the European Union, European equities index futures fell as much as 0.9%. Additionally, the president stated that tariffs on Canada and Mexico that had been previously announced would take effect on April 2.
Trump occasionally made inconsistent remarks that caused uncertainty as the tariffs on US neighbors were about to go into force the following month. After-hours trading saw a decline in Nvidia shares as the chipmaker disappointed investors accustomed to blowout results with solid but not exceptional quarterly performance.
Charu Chanana, chief investment strategist at Saxo Markets, stated, “It’s just a relief that nothing went wrong, but not a sustainable push higher that the market needed from Nvidia.” “The rotation trade to China may give Europe more runway, and US stocks will likely continue to lack a short-term driver as Nvidia lacks the spark it typically brings.”
She said Nvidia’s performance was “insufficient to address and calm” the worries about tariffs, geopolitics, and the changing AI trade environment. According to a new study, Trump’s recent tariffs on Chinese imports may negatively impact the US economy more than official trade data implies.
“Investors are being kept off-balance by the administration’s somewhat contradictory statements regarding the timing and scope of tariffs,” stated Marvin Loh of State Street. “Whether the president will once more postpone and weaken his plans or if this is the beginning of the aggressive rhetoric is still up for debate.” Subscribe to the Markets Daily newsletter to find out what’s happening with stocks, bonds, currencies, and commodities.
The dollar’s value increased for a second day. Treasury bonds fell. Following their Wednesday rally, the US 10-year yield fell to its lowest since mid-December. US government bond investors are beginning to wager that the Fed will soon have to shift its focus from being concerned about sticky inflation to sluggish economic growth.
At around 3.65%, traders this week started pricing in two quarter-point reductions by the Fed this year and the majority of a third one next year. Morgan Stanley strategists predict that the 10-year might surpass 4% if market prices fall to 3.25%. The bank anticipates that the January personal consumption expenditures (PCE) price indexes, which are announced on Friday, will demonstrate a slowdown in the rate of price increase that may prove to be pivotal.
After Wednesday’s session ended with no movement, the yen traded around 149 to the dollar in Asia. On Wednesday, Japan’s top currency official said he had no problem with the market’s increasing expectations of interest rate rises from the Bank of Japan, which contributed to the yen’s four-month high this week.
According to business reports, a possible change in leadership had a good impact on Nissan Motor Company’s shares and bonds. After a resurgence in Japan offset flat sales elsewhere, Toyota Motor Corp.’s year is off to a modest but encouraging start.
After China’s stimulus measures increased trading and listing volume, Hong Kong’s stock exchange earned its best quarterly profit over four years.
Nvidia’s Warning:
As it pushes to release a new chip architecture dubbed Blackwell, Nvidia also cautioned that gross profit margins might be thinner than expected. Additionally, there’s a chance that US tariffs will negatively impact outcomes.
The AI sector is currently in a precarious position with a mixed outlook. This year, Nvidia’s stock has fallen due to worries that data center operators may cut down on their expenditures. DeepSeek, a Chinese business, has also raised concerns about the possibility that chatbots may be created cheaply, negating the need for Nvidia’s sophisticated AI hardware.
Edward Chan, a senior investment analyst at Mirae Asset Global Investments, stated that before the introduction of DeepSeek, it was anticipated that China’s AI would lag somewhat behind that of the United States. The main takeaway is that Chinese software and internet firms now have access to a highly competitive model that allows them to begin developing their tech stack and a wide range of apps. That is a significant shift for the whole Chinese IT sector.
Separately, the best commodities merchants in the world are racing to send copper from as far away as Asia to the US because Trump’s threat of import duties on the metal presents a tremendous profit opportunity.
Overnight, Bitcoin dropped below $84,000 and then rose to $85,000. Gold declined as oil remained close to its lowest closing of the year.
Key events this week:
- Consumer Confidence in the Eurozone, Thursday
- US GDP, first unemployment claims, durable goods, Thursday
- Fed representatives Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, and Michelle Bowman are speaking. Thursday
- Japan’s retail sales, industrial production, and Tokyo CPI Friday
- US PCE expenditure, income, and inflation, Friday
- Austan Goolsbee of the Fed talks on Friday
Stocks
- As of 2:57 p.m., S&P 500 futures were up 0.3%. Japan’s Topix increased by 0.6% during Tokyo time.
- The Hang Seng in Hong Kong dropped 0.1%.
- The Shanghai Composite dropped by 0.3%.
- Futures for the Euro Stoxx 50 dropped 0.5%.
Currencies
- By 0.2%, the Bloomberg Dollar Spot Index increased.
- The euro dropped to $1.0464, down 0.2%.
- The value of the Japanese yen dropped 0.2% to 149.34 USD.
- The offshore yuan dropped 0.1% to USD 7.2745.
Cryptocurrencies
- Bitcoin reached $85,800.6, up 1.6%.
- Ether hardly moved, trading at $2,341.23.
Bonds
- Ten-year Treasuries’ yield increased by two basis points to 4.28%.
- The 10-year yield in Australia dropped two basis points to 4.34%.
Commodities
- At $68.75 a barrel, West Texas Intermediate crude increased by 0.2%.
- The price of spot gold dropped 0.9% to $2,891.06 per ounce.
