China's State Administration for Market Regulation announced an anti-trust probe into Google, shortly after 10% US trade tariffs came into effect on Tuesday.
In addition, China's finance ministry said it would impose 15% tariffs on American coal and liquified natural gas, as well as a 10% levy on crude oil.
Julian Evans-Pritchard, head of China economics at Capital Economics, said: "For the most part, these moves are warnings that China intends to harm US interests if need be but still give China the option to back down.
"The tariffs could be postponed or cancelled before they come into effect on 10th February. The probe against Google could conclude without any penalties.
"The risk is that China's retaliation proves too modest to exert any real pressure on the US to reverse tariffs but sufficiently defiant to trigger a further escalation of trade tensions with the US."
Despite China's probe, shares in Google-parent Alphabet (GOOG, GOOGL) were up more than 1% in pre-market trading on Tuesday morning. Alphabet is due to release its fourth quarter results after the bell on Tuesday.
Shares in electric vehicle manufacturer Tesla (TSLA) closed Monday's session more than 5% in the red, as auto stocks more broadly fell, after US president Donald Trump followed through with threats to impose tariffs on Canada, Mexico and China.
While Tesla (TSLA) does not make any cars in Canada or Mexico, the fall in its share price is probably because it uses parts from those regions for its cars.
However, shares were trading back up more than 1% in the green in pre-market trading on Tuesday morning.
This comes as data from the California New Car Dealers Association showed that while zero emission vehicle registrations for Tesla (TSLA) continued to decline in the Golden State, its Cybertruck model was climbing up the top selling models list of battery-electric and plug-in hybrid vehicles.
Shares in Tesla (TSLA) are still up 104% over the last year, even as fourth quarter earnings last week disappointed against estimates, as investors remained optimistic about the company. Tesla (TSLA) CEO Elon Musk, a close adviser to Trump, said on an earnings call that paid, unsupervised full self-driving was coming to Austin, Texas in June.
Shares in data analytics software firm Palantir (PLTR) soared in extended hours trading and were up nearly 23% at the pre-market open on Tuesday morning, on the back of its latest results.
Palantir (PLTR) posted fourth quarter revenue of $827.5m (£665.7m), well above estimates of $775.9m, while adjusted earnings of $0.14 per share beat expectations of $0.11.
The AI software developer also offered a strong outlook for the coming year. For the first quarter, Palantir (PLTR) guided to revenue of between $858m and $862m and for the year, the company said it expected turnover to come in between $3.741bn and $3.757bn.
Matt Britzman, senior equity analyst at Hargreaves Lansdown (HL.L), said: "Palantir is the Michael Jordan of AI stocks right now, not only capturing investors imagination but delivering game-winning shots when it counts.
"The company’s massive retail investor fanbase is playing three moves ahead, but with its sky-high valuation, this ride could get bumpy. AI’s growing relevance keeps Palantir in the spotlight, but investors should buckle up for volatility."
Shares in Super Micro Computer (SMCI) were up 9% in pre-market trading on Tuesday, after the server maker confirmed that it would release a second fiscal quarter business update on Tuesday 11 February.
The company's shares have been on a bumpy ride over the past year, after an August report by now-defunct short seller Hindenburg Research claimed, among other things, "accounting manipulation" at the company.
The company then delayed the release of its annual report. However, Super Micro (SMCI) said in December that said it would delay the release of its annual report.
In its preliminary first quarter results, released in October, Super Micro (SMCI) said it expected net sales to come in between $5.5bn and $6.1bn in the second quarter.
Super Micro (SMCI) also guided to net income per diluted share of $0.48 to $0.58 for the second quarter.
In the UK, shares in mobile group Vodafone (VOD.L) sunk nearly 7% on Tuesday morning, after it flagged a slowdown in its German business.
Vodafone's (VOD.L) group total revenue grew by 5% in the third quarter to €9.8bn. However, the company said service revenue in Germany fell 6.4%, primarily due to the impact of the country's TV law change.
Despite these figures, Vodafone (VOD.L) reiterated its guidance for the 2025 fiscal year, saying it was on track to deliver adjusted earnings before interest, taxes, depreciation, amortisation and after lease expenses of €11bn (£9.1bn).
Vodafone (VOD.L) separately announced that it was starting a share repurchase programme of up to maximum consideration of €480m.
The company said its merger with Three, which was given the greenlight by the Competition and Markets Authority in December, was expected to be formally completed in the next few months.
Russ Mould, investment director at AJ Bell (AJB.L), said: "Vodafone’s (VOD.L) long decline shows no sign of letting up.
"While there are some reasons for encouragement in the UK market ahead of the now-approved merger with Three, and robust performance in other geographies too, the market has tuned these out and is focused on the growing problems in its German operation."
"Vodafone (VOD.L) is struggling to remain relevant and asset sales and mergers will only take it so far. The company will hope to win investors over with share buybacks this year but, again, it needs to demonstrate it can achieve sustainable growth. Until then, everything else it does looks like tinkering at the edges."
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Other companies in the news on Tuesday 4 February:
