Stocks drop as Nvidia suffers US restrictions

by John Viljoen and Julien Ponthus

Tech stocks led a slump in global equities after the Trump administration imposed new restrictions on Nvidia Corp.’s chip exports to China amid deepening trade tensions.

Europe’s Stoxx 600 index dropped as ASML Holding NV sank more than 7% on lower-than-expected orders, citing weakness in the chip sector. Nasdaq 100 futures fell more than 2.3%, with Nvidia down 7% in premarket trading. 

The dollar fell to a fresh six-month low as intensifying trade war concerns drove demand for havens. Gold hit a record and the Swiss franc rallied.

A brief consolidation in stocks following last week’s turmoil is unraveling as traders confront a fresh slew of tariff headlines, including US President Donald Trump launching a probe into the need for levies on critical minerals. Investors are struggling to take long-term positions due to the unpredictability of policy announcements from Washington and tit-for-tat measures between the world’s two largest economies.

“There’s clearly no de-escalation between China and the US — it’s about who will blink first and at the moment no one is blinking,” said Vincent Juvyns, chief investment strategist at ING. “It’s quite logical for tech to be in the spotlight due to the supply chain implications and the strategic nature of the sector.”

The Bloomberg Dollar Spot Index dropped as much as 0.6%. The pound pared gains after weaker-than-expected UK inflation data, with traders adding to bets on Bank of England interest-rate cuts. Sterling is still on course to rise for a seventh day, the longest winning streak since July.

Treasury yields ticked lower across the curve as investors looked forward to Federal Reserve Chair Jerome Powell’s comments on the economy later Wednesday. UK bonds rallied on the inflation report. 

In Asian trading, a gauge of Chinese technology shares in Hong Kong fell as much as 4.9% after Nvidia’s announcement raised concerns about how the latest curbs may expand the trade war beyond import taxes. The fallout could weigh on chip-sector earnings and set back China’s ambitions to compete on the global artificial intelligence stage. 

“The under-performance for Hong Kong stocks is driven by concerns about the US-China trade war extending to non-tariff measures such as increasing restrictions to US technology and possibly financial markets,” said Gary Tan, a portfolio manager at Allspring Global Investments.

Nvidia said the US government will begin requiring a license to export the company’s H20 chips to China, an escalation of restrictions that the company has publicly opposed. It’ll report about $5.5 billion in charges during the fiscal first quarter from “inventory, purchase commitments and related reserves” tied to the products.

“This move is unnerving for two reasons,” said Vishnu Varathan, Singapore-based head of economics and strategy at Mizuho Bank, referring to the Nvidia curbs. “First, it conveys the mercurial nature of Trump tariffs in so far that it has revoked earlier concessions extended to Nvidia. Second, this also suggests that the US-China undercurrents are rather abusive, even as there appears to be some calm on the surface.”

 In addition to Powell’s speech, US retail sales numbers will offer a gauge of consumer sentiment in March before the imposition of tariffs, 

In commodities, oil fell for a second day as expectations increased for a glut because of the escalating US-China trade war. Bullion surged 2.2% to exceed $3,300 an ounce for the first time, surpassing the previous all-time peak set on Monday.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 1.4% as of 9:18 a.m. London time
• S&P 500 futures fell 1.5%
• Nasdaq 100 futures fell 2.3%
• Futures on the Dow Jones Industrial Average fell 0.9%
• The MSCI Asia Pacific Index fell 0.9%
• The MSCI Emerging Markets Index fell 1.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.5%
• The euro rose 0.8% to $1.1374
• The Japanese yen rose 0.7% to 142.16 per dollar
• The offshore yuan was little changed at 7.3284 per dollar
• The British pound rose 0.3% to $1.3277

Cryptocurrencies

• Bitcoin fell 1% to $83,167.4
• Ether fell 2.2% to $1,559.72

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.29%
• Germany’s 10-year yield declined five basis points to 2.48%
• Britain’s 10-year yield declined seven basis points to 4.58%

Commodities

• Brent crude fell 0.5% to $64.34 a barrel
• Spot gold rose 2.6% to $3,315.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

Copyright Bloomberg News