Asian stock markets faced early turbulence on Tuesday, following a significant selloff on Wall Street that unsettled investors. The market sentiment was adversely impacted by the prevailing uncertainties regarding U.S. President Donald Trump’s tariff policies and escalating geopolitical tensions.
MSCI’s broadest index of Asia-Pacific shares outside Japan reversed from gains to losses after a six-day rally, declining by 0.2%, primarily driven by downturns in South Korea. Meanwhile, the Nikkei 225 rose by 0.7% as Japanese markets resumed trading post-holiday, and S&P 500 e-mini futures saw a slight increase of 0.1%.
Analysts from Bernstein noted in a research report that stock market momentum is “under pressure” due to rising concerns about the AI trade and increasing geopolitical and trade uncertainties.
On Monday, President Trump cautioned countries against retracting from recently negotiated trade deals with the U.S. after the Supreme Court invalidated his emergency tariffs, threatening to impose much higher duties under alternative trade laws. The new tariffs, based on Section 122 of the Trade Act of 1974, have added to the confusion in markets as they grapple with U.S. protectionist measures.
Overnight, the S&P 500 fell by 1.0%, wiping out gains from the previous week, as apprehensions over AI’s impact on software and other industries contributed to a 1.1% drop in the Nasdaq Composite. Additionally, a bearish report from Citrini Research on potential risks to the global economy further dampened investor sentiment.
The CBOE Volatility Index, commonly referred to as the VIX, increased by 1.9 percentage points to 21.01.
With Japan and China returning from holidays on Tuesday, liquidity in regional markets was enhanced. The U.S. dollar gained 0.1% against the yen, trading at 154.77 yen, while the Chinese yuan remained steady at 6.889 yuan in offshore trade.
According to the CME Group’s FedWatch tool, Fed funds futures indicate a 95.5% probability that the U.S. central bank will maintain its current stance during its upcoming two-day meeting on March 18, showing little change from the previous day’s expectations.
The yield on the U.S. 10-year Treasury bond increased by 0.6 basis points to 4.029%, as investors considered the implications of the Supreme Court’s ruling on U.S. tax receipts.
In commodities, WTI crude saw a marginal decline of 0.1% to $66.23, amid ongoing tensions between the U.S. and Iran. On Monday, a senior State Department official announced the withdrawal of non-essential government personnel and their eligible family members from the U.S. embassy in Lebanon, citing growing concerns about the potential for military conflict.
This prevailing unease led to a 0.3% increase in the safe-haven gold, reaching $5,244.96, while silver edged down by 0.1% to $88.12.
In the cryptocurrency market, Bitcoin rose by 0.4% to $64,832.48, whereas Ether experienced a slight decline of 0.1% to $1,861.22.
