Asian stock markets tumbled on Friday, following a sharp sell-off on Wall Street as doubts over artificial intelligence (AI) technology and renewed trade tensions rattled investor confidence. Japan, Hong Kong, and South Korea all saw steep declines, with technology stocks leading the downturn.
Adding to market woes, former US President Donald Trump reaffirmed plans to impose 25 per cent tariffs on imports from Canada and Mexico, while doubling tariffs on Chinese products to 20 per cent. The announcement exacerbated concerns over inflation and global economic stability, triggering a sell-off in major Asian indices.
Asian markets suffer heavy losses
The Nikkei 225 in Tokyo plunged 3.4 per cent to 36,939.89, dragged down by significant losses in technology shares. Advantest Corp., a leading chip test equipment manufacturer, saw its stock plummet 9.4 per cent, while Disco Corp. lost 11.1 per cent and Tokyo Electron declined 5.3 per cent.
Hong Kong’s Hang Seng Index slid 2.3 per cent to 23,175.49, reflecting mounting investor concerns about US-China trade relations. Meanwhile, China’s Shanghai Composite Index dipped 0.9 per cent to 3,358.28, as economic uncertainty weighed on sentiment.
South Korea’s Kospi followed suit, falling 3.2 per cent to 2,538.07, led by losses in the semiconductor and electronics sectors.
Australia’s S&P/ASX 200 dropped 1.1 per cent to 8,174.10, as the country’s commodity-heavy market reacted negatively to global economic headwinds.
Wall street’s AI worries and trade concerns deepen sell-off
Asian markets took their cues from a turbulent session on Wall Street, where stocks fell sharply on Thursday. The S&P 500 lost 1.6 per cent to 5,861.57, while the Dow Jones Industrial Average edged 0.4 per cent lower to 43,239.50. The Nasdaq Composite, which is heavily weighted toward technology stocks, tumbled 2.8 per cent to 18,544.42.
The broader US market has been struggling, with the S&P 500 posting declines in five of the past six trading sessions. Concerns over economic stability, potential inflationary pressures from tariffs, and increasing unemployment risks have fuelled investor anxiety.
Among the biggest losers was Nvidia, a key player in the AI sector, which sank 8.5 per cent despite posting better-than-expected earnings. The sell-off was triggered by China’s DeepSeek, which announced a large language model capable of competing with the world’s best AI technologies without relying on the most expensive chips. The news raised fears that demand for Nvidia’s high-end processors could weaken, denting one of the biggest growth drivers in the AI sector.
Trump’s tariff hikes stoke inflation fears
The latest market turmoil was compounded by Trump’s confirmation that new tariffs will take effect on 4th March, raising trade tensions at a time when investors were hoping for economic stability. The tariffs on imports from Canada and Mexico will be 25 per cent, while Chinese goods currently taxed at 10 per cent will see an additional 10 per cent hike.
The move is expected to further strain US-China relations and could drive up costs for American households, adding to inflationary pressures. While some analysts speculate that Trump’s tariff threats are a negotiation tactic, the uncertainty has already undermined consumer confidence—a key driver of US economic growth.
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US economy remains resilient but faces risks
Despite the volatility, US economic indicators suggest moderate stability. On Thursday, the government left its estimate for GDP growth in the final quarter of 2024 unchanged, although it did revise inflation estimates slightly higher.
A separate report showed that unemployment claims rose to a three-month high, suggesting a slight cooling in the job market. However, the figures remain well below levels typically associated with a recession.
Oil and currency markets reflect cautious sentiment
In commodities trading, oil prices slipped amid global market uncertainty. US benchmark crude oil declined by 32 cents to $70.03 per barrel, while Brent crude, the international standard, dropped 33 cents to $73.24 per barrel.
In currency markets, the US dollar weakened slightly, falling to 149.55 Japanese yen from 149.82 yen late Thursday. The euro also edged lower, dipping to $1.0390 from $1.0401.
Outlook: Uncertainty remains high
As investors digest the implications of Trump’s tariffs, AI sector doubts, and Wall Street’s decline, markets remain on edge. The coming weeks will be critical in determining whether economic resilience can counterbalance inflation concerns and trade disruptions.
For now, global markets remain highly volatile, with investors adopting a cautious stance amid escalating economic and geopolitical uncertainties.
