Global Stock Markets Face Decline Amid US Export Controls on AI Chips
Global Market Overview
On Wednesday, global stock markets experienced a downturn, primarily influenced by stricter US regulations on the export of advanced computer chips essential for artificial intelligence. The S&P 500 futures dropped by 0.8%, while the Dow Jones Industrial Average futures fell by 0.3%.
Nvidia, a leading chip manufacturer, saw its shares decline by 5.9% in premarket trading following the announcement of these new export controls. Similarly, AMD, another competitor in the chip market, experienced a 6.7% drop in its stock price.
Concerns regarding a trade war resurfaced after the Trump administration initiated an investigation into the import of critical minerals, including rare earth elements vital for various technologies such as smartphones and electric vehicles.
In early trading across Europe, the UK's FTSE 100 index decreased by 0.3% to 8,224.51, following news that inflation in the UK had decreased for the second consecutive month, largely due to falling gas prices.
Germany's DAX index fell by 0.7% to 21,139.72, while France's CAC 40 dropped 0.5% to 7,299.72.
Asian markets also faced declines, particularly in China, where the economy reported a robust 5.4% annual growth rate for the first quarter, driven by strong industrial production and retail sales. However, quarterly growth slowed to 1.2% from 1.6% in the previous quarter.
Hong Kong's Hang Seng index fell by 1.9% to 21,056.98, while the Shanghai Composite index managed to recover slightly, gaining 0.3% to reach 3,276.00.
Economists have been revising their growth forecasts downward after President Trump's tariffs on most imports from China were raised to 145%, while China retaliated with a 125% tariff on US imports.
Analysts from ANZ Research noted that economic activity is already showing signs of weakening this quarter, attributing this to the unpredictability surrounding the tariffs rather than the tariffs themselves. They emphasized that Trump's announcements have negatively impacted business sentiment.
In Tokyo, the Nikkei 225 index decreased by 1% to 33,920.40, influenced by significant losses in major tech firms, including Advantest, which dropped 6.6%, and Disco Corp., which fell by 8%.
South Korea's Kospi index declined by 1.2% to 2,447.43, while Australia's S&P/ASX 200 edged down slightly by less than 0.1% to 7,758.90.
In contrast, India's Sensex rose by 0.4%, and Bangkok's SET increased by 0.9%.
On the previous day, US stocks showed little movement, with the S&P 500 slipping by 0.2% and the Dow down by 0.4%. The Nasdaq composite also saw a minor decline of less than 0.1%.
Investor uncertainty surrounding Trump's tariffs continues to keep market participants on edge.
The US bond market appeared to stabilize after experiencing sharp fluctuations last week, which had raised doubts about the reliability of US government bonds as a safe investment. The yield on the 10-year Treasury remained steady at 4.33%, down from 4.38% on Monday and 4.48% at the end of the previous week.
The US dollar also stabilized after a significant drop last week, raising concerns that Trump's trade policies might be undermining its status as a safe-haven asset.
Palantir Technologies saw a 6.2% increase in its stock for the second consecutive day after NATO announced plans to utilize the company's AI capabilities in its operations.
In commodity markets, US benchmark crude oil prices rebounded from earlier losses, gaining 45 cents to reach USD 61.78 per barrel, while Brent crude rose by 49 cents to USD 65.16 per barrel.
Trump's tariffs have heightened expectations of an economic slowdown, which could dampen demand for oil and other resources.
The US dollar traded at 142.71 Japanese Yen, down from 143.