(Bloomberg) — The selloff in Asian equities is set to resume on Thursday as risk appetite is scuppered amid heightened uncertainty over President Donald Trump’s trade policy.
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Equity futures in Australia, Japan and Hong Kong all pointed to early losses. US stock futures also fell in early Asian trading after the benchmark indexes S&P 500 and Nasdaq 100 both slumped the most in two weeks on Wednesday. A gauge of US-listed Chinese shares rose. The dollar extended its overnight gain in early trading.
Trump signed an order to slap a 25% tariff on all cars not made in the US that’s effective from April 2. However, reciprocal duties that are set to be announced next week will be “very lenient,” Trump said. China may also get a tariff reduction to secure a deal on the sale of ByteDance Ltd.’s social video platform TikTok to an American company, Trump added.
The quickly shifting stance on US trade sanctions on the nation’s allies and foes alike adds to already heightened market uncertainty as investors race to assess the impact on global trade and economic growth. In Asia, that threatens to resume a selloff in broader markets while Chinese tech names may benefit from the rotation away from US megacap stocks.
“We see a heavy picture for the respective equity market opens” with Japanese stocks likely underperforming given their correlation to the Nasdaq, said Chris Weston, head of research at Pepperstone Group in Melbourne. “We will watch to see if the weakness in US tech/AI plays proves to lift HK and China tech, and we see signs of switching back on an international basis.”
US equities slipped Wednesday as the S&P 500 fell more than 1%, led by the group of megacaps known as “Magnificent Seven” — whose quarterly selloff is shaping up to be the worst since 2022. Nvidia Corp. and Tesla Inc. dropped at least 5.5%. The Nasdaq 100 slipped around 2%. A gauge of big banks snapped a streak of eight straight days of gains.
Worries over the economic effects of the global trade war are sapping liquidity in US stocks, creating a headache for institutional investors that may also boost volatility in broader markets. Liquidity in S&P 500 stock-index futures, as measured in the most-active contract, stands at a two-year low, data compiled by Deutsche Bank AG show.
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