(Bloomberg) — Asian stocks are poised for hefty losses throughout the region, dragged by a poor session on Wall Street and the Trump administration’s latest moves to curb US trade with China.
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Shares in Australia opened lower, while futures are pointing to Hong Kong and Tokyo benchmarks falling around 2% at the open. Shanghai shares are also set to decline. A slide in most megacaps hit the final stretch of US trading as the S&P 500 dropped 0.5%, the Nasdaq 100 lost more than 1%, and the Dow Jones Industrial Average wavered.
Just days before Nvidia Corp.’s results, hedge funds’ net exposure to “Magnificent Seven” stocks hit the lowest since April 2023. The chipmaker lost 3.1%. Microsoft Corp. fell as an analyst said the software giant dropped some AI data-center leases. Apple Inc. rose.
The mood in Asia has also soured after President Donald Trump rolled out a memorandum telling a key government committee to curb Chinese spending on tech, energy and other strategic American sectors. The administration also called on Mexican officials to place their own levies on Chinese imports.
“This could be a key week for a stock market that’s mostly been trading sideways for more than two months,” said Chris Larkin at E*Trade from Morgan Stanley.
Alibaba Group Holding Ltd.’s American depositary receipts closed down 10%, the biggest decline since Oct. 2022. The Nasdaq Golden Dragon China Index fell 5.2% with Bilibili Inc. and Kingsoft Cloud Holdings also among stocks that dropped 10% or more.
US investors have started to boost bets that volatility will come back as Nvidia’s earnings on Wednesday could be the first in a whirlwind of events. The US benchmark has gone more than 30 sessions without posting consecutive declines of more than 1%.
The yield on 10-year Treasuries slid three basis points to 4.4%. Bonds remained higher after a $69 billion sale of two-year notes drew record demand. Canada’s dollar and Mexico’s peso fell as Trump said he expects tariffs planned on both countries to go ahead next month.
“The market is churning sideways, driven by investor confusion, a natural consolidation period following recent gains, and seasonal weakness in February,” said Mark Hackett at Nationwide. “However, the strong macro backdrop, robust earnings, and healthy fund flows argue for a breakout to the upside once momentum returns.”
Meantime, the Federal Reserve’s preferred inflation gauge is expected to cool to the slowest since June, but glacial progress on taming prices will keep officials cautious. The data is due Friday.
“If we see blowout earnings from Nvidia and softer-than-expected inflation data, that could add upward momentum to stocks,” said Clark Bellin at Bellwether Wealth.
Back in Asia, traders are also studying the consequences of the US proposal to impose fees on the use of commercial ships made in China to counter the nation’s dominance in the production of the vessels. Chinese shipping stocks fell on Monday, while the benchmark CSI 300 Index slipped 0.2%.
Taken with other recent steps, it amounts to the most sweeping, forceful actions targeting Beijing of Trump’s fledgling second term and could complicate a deal to reduce China’s trade surplus with the US that the president has indicated he wants to forge.
In other markets, oil edged higher in a largely aimless session amid a slew of geopolitical uncertainties, including Russia-Ukraine peace talks and a possible increase in Iraqi crude production. Gold touched a fresh record, as exchange-traded funds backed by the precious metal draw renewed interest from investors.
Corporate Highlights:
Apple Inc., as it seeks relief from US President Donald Trump’s tariffs on goods imported from China, said that it will hire 20,000 new workers and produce AI servers in the US.
Microsoft Corp. has canceled some leases for US data center capacity, according to TD Cowen, raising broader concerns over whether it’s securing more AI computing capacity than it needs in the long term.
Berkshire Hathaway Inc.’s operating earnings surged 71% in the fourth quarter, as higher interest rates lifted the conglomerate’s investment income and its insurance business improved.
Starbucks Corp. is eliminating 1,100 corporate jobs in a move aimed at increasing efficiency and quickly enacting changes to revitalize the company.
Domino’s Pizza Inc.’s US sales rose less than expected in the fourth quarter, highlighting the mounting challenge to appeal to cash-strapped Americans.
Boeing Co. has hired an adviser to market a defense subsidiary that manufactures small, long-range military drones as the planemaker looks to unload businesses that aren’t central to its core commercial and defense operations, according to people familiar with the talks.
Apollo Global Management Inc. agreed to buy Bridge Investment Group Holdings Inc. for about $1.5 billion in an all-stock deal as the asset manager expands in real estate.
Strategy, the self-styled Bitcoin treasury company that until recently was known as MicroStrategy, said it acquired $1.99 billion more of the cryptocurrency with the proceeds from last week’s convertible bond sale.
Key events this week:
US consumer confidence, Tuesday
Fed’s Lorie Logan, Tom Barkin, Michael Barr speak, Tuesday
Apple shareholder meeting, Tuesday
US new home sales, Wednesday
Nvidia earnings, Wednesday
Fed’s Raphael Bostic speaks, Wednesday
Eurozone consumer confidence, Thursday
US GDP, durable goods, initial jobless claims, Thursday
Fed’s Jeff Schmid, Beth Hammack, Patrick Harker, Michael Barr, Michelle Bowman speak, Thursday
Japan Tokyo CPI, industrial production, retail sales, Friday
US PCE inflation, income and spending, Friday
Fed’s Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 8:11 a.m. Tokyo time
Nikkei 225 futures fell 1.9%
Hang Seng futures fell 2.2%
Australia’s S&P/ASX 200 fell 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0464
The Japanese yen was little changed at 149.86 per dollar
The offshore yuan was little changed at 7.2537 per dollar
Cryptocurrencies
Bitcoin fell 1.4% to $92,648.82
Ether fell 3.6% to $2,540.48
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
