BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
Investing.com-- Most Asian stocks sank on Tuesday as technology shares extended a recent rout ahead of closely watched earnings from bellwether Nvidia, while losses in South Korea were limited by an interest rate cut.
Sentiment towards tech was further rattled by a Bloomberg report that the White House was seeking to toughen Biden-era controls on chip technology exports to China. This came after Trump over the weekend ordered more scrutiny towards Chinese investment in key U.S. sectors, threatening to further worsen ties with Beijing.
Losses in regional markets tracked those in Wall Street, as investors largely dumped technology shares in a mix of pre-Nvidia caution and profit-taking from a strong rally. U.S. stock index futures were flat in Asian trade.
Risk appetite was also rattled by repeated threats of trade tariffs from U.S. President Donald Trump, who warned that 25% duties against Canada and Mexico were likely to be imposed next week.
Hong Kong slides as tech weakens ahead of Nvidia
Hong Kong’s Hang Seng index was the worst performer in Asia, losing 2% as a stellar, tech-driven rally in the market now gave way to profit-taking.
Other tech-heavy bourses also retreated, with Japan’s Nikkei 225 losing 0.9%. TSMC (TW:2330)- a major Nvidia supplier- lost 1.4% in Taiwan trade, pressuring the Taiwan Weighted index.
Losses were largely concentrated around chipmaking and tech stocks, as investors turned averse towards the sector ahead of key quarterly earnings from NVIDIA Corporation (NASDAQ:NVDA).
The chipmaker is set to report earnings after the U.S. market close on Wednesday, and will be closely watched for more signals on artificial intelligence demand.
Nvidia reports amid growing questions over just how much AI demand will buoy the tech industry, especially after the release of China’s DeepSeek in late-January. While the release had battered global tech stocks, Hong Kong and Chinese markets had rallied on optimism over China’s AI capabilities.
But this rally also cooled in recent sessions. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes shed 0.9% and 0.5%, respectively, on Tuesday.
Bloomberg reported that Trump’s team was seeking to toughen Biden’s curbs on China’s chip industry- a move that could weigh on Chinese tech stocks and further sour relations between the world’s largest economies.
S.Korean stock losses limited as BOK cuts rates
South Korea’s KOSPI fell 0.4% on Tuesday, clocking relatively smaller losses than its Asian peers after the BOK cut interest rates by 25 basis points and presented a dovish outlook.
Tuesday’s cut is the BOK’s third such move in an ongoing easing cycle, with the central bank flagging the potential for more easing to support a slowing South Korean economy.
But South Korean tech stocks still weakened, with major chipmaker and Nvidia supplier SK Hynix Inc (KS:000660) down 2.2%.
Broader Asian markets largely retreated, amid few positive cues. Japan’s TOPIX shed 0.2%, with bigger losses limited by a rally in shares of major Japanese trading houses, after billionaire investor Warren Buffett said Berkshire Hathaway Inc (NYSE:BRKa) will increase its stakes in the companies.
Shares of Itochu Corp. (TYO:8001), Marubeni Corp. (TYO:8002), Mitsui & Co., Ltd. (TYO:8031), Sumitomo Corp. (TYO:8053), and Mitsubishi Corp. (TYO:8058) rose between 5% and 10%.
Australia’s ASX 200 fell 0.6%, extending losses from record highs hit earlier this month.
Singapore’s Straits Times index was flat after a softer-than-expected inflation reading, while futures for India’s Nifty 50 index pointed to a weak open amid steadily deepening losses in Indian markets.