Asian Shares Echo US Drop as Tariffs Hit Sentiment
Asian equities fell Friday after heavy selling on Wall Street as traders grappled with underwhelming Nvidia Corp. results, further details on US tariffs and mixed economic data.
Shares in Australia and Japan opened lower after the S&P 500 lost 1.6% Thursday, erasing its gains for the year. The Nasdaq 100 declined 2.8%, as tech stocks weighed on US benchmarks. Shares in Nvidia fell 8.5% in a sign its earnings results disappointed. An index of the so-called Magnificent Seven slipped 3%, the biggest decline since December. Treasuries were steady Friday after selling slightly at the long end of the curve Thursday while short-dated US government debt advanced.
Gains for the dollar followed comments from US President Donald Trump stating that 25% tariffs on Canada and Mexico would come into force from March 4, while Chinese imports would face a further 10% levy. Economists say tariffs may hurt US growth, worsen inflation and possibly spark recessions in Mexico and Canada. If there’s no last-minute reprieve, the moves will see taxes ramped up on well over $1 trillion of imports.
“Tariffs are back in the crosshairs, and a market that had reduced its sensitivity to recent tariff headlines has had to reconsider that reaction function,” Chris Weston, head of research at Pepperstone Group wrote in a note.
The US economy advanced at a healthy pace and inflation was more stubborn than initially estimated at the end of 2024, data showed on Thursday. Gross domestic product increased at an unrevised 2.3% annualized pace in the fourth quarter. The primary growth engine — consumer spending — advanced at a 4.2% pace.
“Investors want lower rates from the Fed, but they don’t want to get there by seeing a notable deterioration in the underlying economy,” said Bret Kenwell at eToro. “At the very least, if the economy is going to slow, investors will want to see inflation slow down too.”
News of the impending tariffs on Canada and Mexico, the two largest suppliers of crude to the US, sent oil prices higher. West Texas Intermediate rose 2.2% Thursday to above $70 a barrel. Gold was set for its first weekly loss of the year.
The yen weakened slightly against the greenback Friday as inflation in Tokyo slowed more than expected, although it is unlikely to deter the central bank from considering more hikes to its benchmark interest rate.
Bank of Japan Governor Kazuo Ueda reiterated the central bank’s stance to intervene in the debt market in exceptional cases of rapid increases in bond yields. Ueda was speaking at this week’s gathering of economic policymakers in Cape Town.
Stocks
S&P 500 futures rose 0.2% as of 9:05 a.m. Tokyo time
Hang Seng futures rose 0.2%. Japan’s Topix fell 1%. Australia’s S&P/ASX 200 fell 0.9%. Euro Stoxx 50 futures fell 1.2%.
Source: Bloomberg
