Hang Seng Index Tumbles on Tariff News and an Nvidia-Fueled Tech Rout – Weekly Recap

US Markets: Nasdaq Tumbles as Nvidia Stumbles – Fed, Tariffs in Focus

US equity markets endured a choppy week ending February 28, with President Trump, key US data, and Nvidia at the center of investor concerns.

The Nasdaq Composite Index slid 3.47%, while the S&P 500 fell 0.98%. In contrast, the Dow gained 0.95%. Nvidia (NVDA) tumbled 7.07% in the week as a weaker-than-expected gross margin outlook overshadowed a better-than-consensus revenue projection.

US Economic Indicators Fuel Fed Rate Cut Bets

US economic data raised concerns about the US economy while boosting hopes for multiple 2025 Fed rate cuts. Key stats from the week included:

• CB Consumer Confidence Index dropped from 105.3 in January to 98.3 in February, signaling a potential pullback in spending and dampening the inflation outlook.
• Initial Jobless Claims rose to 242k (week ending February 22), up from 220k (week ending February 15). A weaker labor market could affect wage growth, consumer confidence, and spending.
• US GDP growth slowed from 3.1% in Q3 2024 to 2.3% in Q4 2024.
• Core PCE Price Index rises 2.6% year-on-year in January, down from 2.9% in December. Softer inflation bolstered expectations for multiple Fed rate cuts.

Rising bets on multiple Fed rate cuts drove the Dow into positive territory for the week, limiting the Nasdaq and S&P 500’s losses. Multiple rate cuts would lower borrowing costs, potentially boosting corporate earnings.

US Tariffs Impact Risk Assets

Markets faced heightened volatility as fresh tariff announcements fueled uncertainty. Key developments included:

• 25% tariffs on imports from Canada and Mexico, effective March 4.
• 10% tariffs on Chinese goods, effective March 4.
• 25% tariffs on EU goods.
• Sweeping tariffs on auto, pharmaceuticals, and semiconductor chip imports.

Trump’s pledge to hit China, Canada, and Mexico with tariffs highlighted a willingness to move beyond rhetoric, impacting risk sentiment. Higher tariffs may push US import prices higher, driving inflationary pressures and potentially delaying Fed rate cuts.

Beyond tariffs, President Trump also targeted China’s tech sector as the global race for AI dominance heated up. The national security memorandum targets Chinese investments in strategic US sectors. The directive aims to protect American innovation while limiting foreign adversaries’ access to US capital and expertise.

Hong Kong and Mainland China Markets Tumble Amid Tariff Jitters

The Hang Seng Index snapped a three-week winning streak, falling 2.22% as tariff developments overshadowed Beijing’s stimulus maneuvers. Beijing announced plans to recapitalize banks to drive credit demand and domestic consumption while bolstering the real estate sector. The capital injection, expected to be completed by June, would be the first since the 2008 global financial crisis.

The Hang Seng Mainland Properties Index ended the week up 6.17% on the recapitalization news. Meanwhile, Li Auto (2015) soared 7.4% after unveiling its first all-electric SUV.

Despite the stimulus news, tech stocks faced intense selling pressure as US tariffs loomed. The Hang Seng Technologies Index slid 4.97%, with tech giants Alibaba (9988) and Baidu (9888) logging weekly losses of 7.94% and 6.7%, respectively.

Mainland China equity markets also ended the week in negative territory, pressured by the prospect of US tariffs. The CSI 300 and Shanghai Composite Index dropped by 2.22% and 1.72% in the week ending February 28. However, hopes for fresh stimulus measures helped provide some support as investors awaited the upcoming third session of the 14th NPC.

For more analysis on the Hang Seng Index and global market trends, click here.

Commodities: Gold Slides, Iron Ore Plunges, Crude Oil Dips

Commodity markets faced broad selling pressure as Trump’s tariff announcements rattled investors:

• Gold ended its eight-week winning streak despite striking a new record high of $2,956, falling 2.67% to close at $2,858.
• Iron ore prices tumbled 5.41% as fears of weaker global demand hit sentiment.
• Crude oil slipped 0.48%, closing at $70.221 amid concerns that tariffs could slow economic growth.

ASX 200 Slides as Mining Stocks Sink

The ASX 200 declined by 1.49% in the week, adding to the previous week’s 3.03% plunge. US tariff developments and market reaction to Nvidia’s forward guidance weighed on sentiment. The S&P/ASX All Technology Index plummeted 8% in the week.

Key stock movements included:

• Northern Star Resources Ltd. (NST) fell 5.45%, pressured by gold price trends.
• BHP Group Ltd. (BHP) and Rio Tinto ltd. (RIO) dropped 5.38% and 8.19%, respectively, weighed by iron ore spot price losses.
• Meanwhile, ANZ (ANZ) and Commonwealth Bank of Australia (CBA) closed the week up 3.47% and 3.3%, respectively. Falling 10-year US Treasury yields fueled demand for higher-yielding Aussie bank stocks.

Nikkei Index Drops Amid Nvidia Selloff, Yen Strength

The Nikkei Index extended its weekly losses, falling 3.55%. An Nvidia-fueled global tech sector rout and US tariffs pressured Japanese markets.

• Tokyo Electron (8035) and Softbank Group (9984) dropped 6.26% and 11.90%, respectively.
• Sony Group Corp. (6758) fell 1.94%, while Nissan Motor Co. (7201) tumbled 6.26% as tariffs threatened Japanese exporters’ competitiveness.

The Japanese Yen weakened, with the USD/JPY pair rising 0.93% to end the week at 150.609. A weaker Japanese Yen typically boosts overseas earnings and corporate valuations.

Market Outlook: Key Events to Watch

The first week of March will be a pivotal week for Asian markets. Economic data, geopolitics, and tariffs will be focal points. Key events include:

• US tariffs: 10% tariffs on Chinese goods take effect on March 4. Further escalation in the US-China trade war could weigh on Asian markets.
• Third session of the 14th NPC: Fresh tariff measures targeting domestic consumption could provide Hong Kong and Mainland China stocks much-needed support.
• Bank of Japan Policy Stance: A hawkish BoJ policy outlook could drive Yen strength, impacting Japanese stocks.
• China Economic Data: Private sector PMIs and trade data will offer insights into the demand outlook.
• USD/JPY Trends: Rising Japanese Government Bond (JGB) yields could trigger a Yen carry trade unwind, impacting risk assets. However, BoJ threats to intervene in the bond markets could ease Yen demand.

Traders should closely monitor macroeconomic shifts and policy changes to navigate volatile market conditions.