Asian stocks followed their U.S. counterparts lower as investor sentiment soured due to growing uncertainty over President Donald Trump’s trade tariffs and underwhelming news regarding the U.S. government’s cryptocurrency reserve. Bitcoin, in particular, struggled after the details of the U.S. reserve failed to excite the market.
Stock Market Retreat
Shares in major Asian markets, including Australia, Japan, and South Korea, all fell sharply, with benchmarks sliding more than 1%. An index of U.S.-listed Chinese companies, however, outperformed Wall Street, showing some resilience.
The downward pressure on equities was somewhat alleviated by positive earnings results from U.S. chipmaker Broadcom, which helped boost U.S. futures on Friday. However, the broad market remained under pressure, as the S&P 500 dropped 1.8% and the Nasdaq 100 fell 2.8% during Thursday’s main trading session.
Trump’s Tariffs and Market Uncertainty
Traders pointed to the lack of clarity surrounding Trump’s trade policy, especially regarding tariffs on Canada and Mexico. Despite Trump delaying the imposition of levies on these countries’ goods until April 2, stocks failed to rally in response. Trump downplayed the potential market impact, stating that the U.S. economy would remain strong in the long term.
The confusion over trade policy contributed to a general risk-off mood in the markets, with funds and fast-money accounts reducing equity exposure. Chris Weston, head of research at Pepperstone Group, remarked, “Confusion reigns around the Trump Administration policy agenda,” adding that there were no signs of panic but a retreat from risky assets.
A Divided Market Outlook
While U.S. stocks faced their largest weekly decline since September, a gauge of Asian equities was poised for its best week in the same period, highlighting diverging market conditions. European shares rose by 1%, marking their strongest week in three.
Bitcoin’s Struggles Amid U.S. Crypto Reserve
Bitcoin saw a sharp decline after the announcement of the U.S. government’s new cryptocurrency reserve, which will hold digital assets forfeited in criminal or civil proceedings. This move failed to ignite the expected enthusiasm in the cryptocurrency market, which had been hoping for more groundbreaking developments.
Broadcom’s Reassurance Amid AI Growth
On a more positive note, Broadcom’s upbeat revenue forecast provided reassurance that spending on artificial intelligence (AI) computing remains robust. The company’s shares surged 13% in after-market trading, and the rally extended to other tech companies, including Nvidia and Marvell Technology. Both firms, which had seen steep declines earlier in the day due to disappointing earnings outlooks, saw their stocks recover in after-hours trading.
Dollar and Treasuries Movement
In the currency markets, the U.S. dollar continued its losing streak, falling for the fifth consecutive session, its longest slump in nearly a year. On the other hand, the Mexican peso and Canadian dollar rose on news of the potential tariff delay. In bond markets, Treasuries were slightly higher, with yields in Australia and New Zealand falling early on Friday.
China’s Fiscal and Monetary Policy Response
China’s finance minister, Lan Fo’an, indicated that the country has ample fiscal policy tools to respond to potential domestic and external challenges. The People’s Bank of China (PBOC) also reiterated its pledge to implement a moderately loose monetary policy, including interest rate cuts and reductions in the reserve requirement ratio for lenders at an “appropriate time.”
Economic Data and Market Outlook
Traders were also looking ahead to upcoming economic data, including inflation figures for Thailand and Taiwan and foreign reserves data for China and Singapore. Friday’s U.S. nonfarm payrolls report is expected to provide insight into the labor market, a key factor for the Federal Reserve as it weighs future interest rate decisions.
Fed officials, including Governor Christopher Waller, indicated that while there may be room to cut interest rates later this year, they would not support a rate cut at the March meeting. Waller noted that if inflation trends back toward the Fed’s target, rate cuts could be considered, but only if the labor market remains strong.
Commodities: Oil Holds Steady, Bitcoin Above $90K
In the commodities market, oil managed a slight gain, with West Texas Intermediate futures closing just above $66 a barrel, breaking a four-day losing streak. Meanwhile, Bitcoin remained above the $90,000 mark despite broader market challenges.
As markets continue to navigate geopolitical uncertainty, mixed economic signals, and the evolving landscape of cryptocurrency regulation, investor sentiment remains fragile, leading to caution in risk assets across global markets.
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