Global Markets slide Amid U.S.-China Tech War and Rate Cut Bets
Asian markets opened the day in sharp decline as investors reacted to escalating tensions between the U.S. and China. Washington is tightening restrictions on semiconductor exports, particularly targeting AI chips from Nvidia, according to a Bloomberg report. Markets slide, signalling a deepening technology war that now spans artificial intelligence, quantum computing, and aerospace.
Hong Kong’s Hang Seng Index initially plunged by 2.7%, led by an 8% drop in Alibaba shares following a 10% decline in its U.S.-listed counterpart. However, losses later eased as investors bought the dip, with Hong Kong-listed tech firms rebounding amid speculation of increased demand for low-cost AI models. The Hang Seng was last down 0.6%.
Wall Street Awaits Nvidia Earnings Amid AI Spending Concerns
In the U.S., investor sentiment remains cautious ahead of Nvidia’s earnings report on Wednesday. Analysts expect the AI chip giant to post a staggering 72% increase in quarterly revenue. However, concerns are rising over whether the current level of AI investment is sustainable.
Gold Surges to Record Highs as Economic Uncertainty Grows
Gold continues to benefit from global uncertainty, setting a new record overnight and approaching the $3,000 per ounce mark. The surge is partly driven by former U.S. President Donald Trump’s policy rhetoric, including calls for a swift end to the Ukraine war and a more aggressive stance on trade tariffs with Canada and Mexico.
Soft U.S. Data Fuels Rate Cut Expectations
Weak economic indicators in the U.S. are further shaping market sentiment. Disappointing retail sales, consumer confidence, and manufacturing surveys have reinforced concerns about inflationary pressures and slowing growth. As a result, traders are now fully pricing in a 50-basis-point interest rate cut from the Federal Reserve this year, up from the 40-bps expectation just last week.
Bond markets reacted accordingly, with U.S. Treasury yields hitting fresh lows during Asian trading. The 10-year Treasury yield dropped to a two-month low of 4.377%, while the two-year yield slipped to 4.156%, its lowest since early December.
Key Market Events to Watch
- U.S. Consumer Confidence Survey: The Conference Board’s latest reading will provide further insight into consumer sentiment, following a slump in the University of Michigan’s equivalent poll.
- Federal Reserve Speeches: Dallas Fed President Lorie Logan and Richmond Fed President Thomas Barkin are expected to reinforce a cautious approach to rate cuts.
- European Central Bank Commentary: ECB board member Isabel Schnabel will speak in London on the future of the central bank’s balance sheet.
With geopolitical tensions, AI investment concerns, and central bank policies shaping how markets slide, volatility remains high as investors navigate an increasingly uncertain global landscape.
With inputs from Reuters