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Global stocks fell on Friday, extending a sharp US market sell-off after Donald Trumpโs latest threat to impose steep tariffs on imports from major trading partners added to investorsโ concerns about the health of the US economy.
Japanโs exporter-heavy Nikkei 225 index lost 3 per cent and South Koreaโs Kospi fell 2.7 per cent during morning trading. Hong Kongโs Hang Seng index fell 1.9 per cent. Chinaโs benchmark CSI 300 index edged down 0.5 per cent.
The losses in Asia came after the blue-chip S&P 500 lost 1.6 per cent on Thursday, taking its decline since last Wednesday to 4.2 per cent and erasing the marketโs year-to-date gains.
The tech-heavy Nasdaq Composite closed down 2.8 per cent, with Nvidia shedding 8.4 per cent even after the chipmaker overnight reported an almost 80 per cent jump in revenue.
Investorsโ lukewarm response to Nvidiaโs earnings left the market vulnerable to bad macroeconomic news, according to investors. The US presidentโs latest barrage of announcements on Chinese, Mexican and Canadian imports, announced on Thursday, came after data released in recent days indicated a sharp drop in US consumer and business sentiment.
โNvidia didnโt save the world,โ said Mike Zigmont, co-head of trading at Visdom Investment Group. โThe results were great but not so mind-blowingly great that everyone wants to buy more stocks.โ
โBears are winning the battle right now,โ he added.
After Trumpโs election in November, US stocks had climbed on hopes the new administration would enact pro-business economic policies, pushing the S&P 500 to its latest record high as recently as last Wednesday.
But the index has slipped in recent days, as worries about the health of the US economy sparked by a flurry of gloomy economic data have begun to weigh on sentiment.
Retail investors, who have so often stepped in to buy stocks whenever the market dips, are suddenly gripped by โuneaseโ, according to VandaTrack, a data company that monitors retail trading flows.
US government debt sold off as equities tumbled, with the 10-year Treasury yield, which moves inversely to prices, up 0.03 percentage points at 4.28 per cent.
Treasuries, considered a safe haven during periods of market volatility, rallied in recent weeks as a growing list of data point to a worsening outlook for the worldโs biggest economy.
On Friday, Asian investors bought US debt, with yields on two-year and 10-year treasuries falling 0.029 percentage points and 0.034 percentage points respectively.
A measure of the dollarโs strength against a basket of six other major currencies rose 0.8 per cent.
Fears of an impending economic slowdown look overblown to some market participants, however.
After a strong end to 2024, weak consumer sentiment data released over the past week has given โover-extended markets the opportunity to correctโ, said Steven Blitz, chief US economist at TS Lombard.
โThe Trump recession? Not so fast,โ he added.
