Asian stocks declined on Tuesday. A slide in Chinese tech shares after a strong rally dragged them down. Investors also weighed the potential impact of smaller-than-expected U.S. tariffs. The dollar remained near three-week highs following positive U.S. economic data.
Investors have been focusing on the reciprocal tariffs promised by U.S. President Donald Trump. They are concerned about its impact on the global economy as trade war fears grip markets.
Trump said on Monday, “automobile tariffs are coming soon.” He also indicated that not all threatened levies would be imposed on April 2 and that some countries may receive breaks, suggesting room for negotiations.
This led to an overnight “exuberant risk-on reaction.” The S&P 500 closed at its highest in over two weeks. A tech stock rally boosted Nasdaq up over 2% on Monday.
Asian stock bourses initially joined the rally on Tuesday morning. By mid-afternoon, the relief rally looked set to fizzle out. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.35% lower ahead of the European open.
European futures fell 0.24%, while S&P 500 and Nasdaq futures inched lower.
Charu Chanana, chief investment strategist at Saxo, said, “While markets can react to every tariff headline, businesses cannot. Businesses need clarity – and the lack of it could weigh on earnings soon.” She stated that the high degree of uncertainty would make business planning extremely difficult.
Kyle Rodda, senior financial markets analyst at Capital.com, said there was a need to see the full details of the tariffs. He also said to see whether they represented the full extent of the Trump administration’s “bid to shake up the global trading system.”
Wall Street’s main indexes ended sharply higher on Monday.
“I don’t think we are out of the woods completely yet.”
Hong Kong’s Hang Seng index dropped 1.8%, as tech stocks led a broad selloff. Xiaomi’s upsized $5.5 billion share sale triggered concerns about stretched valuations across the market.
Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong, said, “Xiaomi’s placement is only an ‘excuse’ for the market decline in general, after this round of a 6,000-point rally.” He was referring to the strong rally in Hang Seng this year.
The Hang Seng is up 17% this year. It remains the best-performing major stock market in the world, boosted by AI bets after startup DeepSeek’s sparkling debut.
The dollar reached a three-week high against the yen at 150.95. It had jumped 0.9% in the previous session. The dollar hovered at its strongest since March 6 at $1.0781 per euro after stronger-than-expected U.S. economic data.
Data showed S&P Global’s flash U.S. Composite PMI Output Index increased to 53.5 this month from 51.6 in February. A reading above 50 indicates expansion in the private sector.
The PMI suggested the economy was regaining speed after a soft patch in the first quarter. However, hard data, including retail sales and the employment report, have hinted at cracks in the foundation of the economy.
The strong dollar also impacted emerging markets. The Indonesian rupiah sank to its lowest level since June 1998 during the Asian financial crisis. Mounting concerns existed over the country’s fiscal health.
Investor attention will focus on the size of the reciprocal tariffs to be announced next week. They also will watch which countries the Trump administration will target.
Oil prices were little changed on Tuesday after rising 1% in the previous session. Investors weighed the impact of Trump’s announcement of tariffs on countries buying oil and gas from Venezuela.
Brent crude futures were up 2 cents at $73.02. U.S. West Texas Intermediate crude futures remained flat at $69.11.
Gold was steady at $3,015.87 per ounce. A Federal Reserve official had signaled a cautious stance on interest rate cuts this year.
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