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(Bloomberg) -- A global equities selloff extended into Asia, while the dollar strengthened and Treasury yields edged lower after President Donald Trump’s tariff announcements prompted investors to trim risky bets.
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A benchmark of Asian shares fell to the lowest in more than two weeks after the S&P 500 slid 1.6% Thursday and erased its gains for the year. The Nasdaq 100 declined 2.8% while Nvidia Corp. shares slumped 8.5% after its latest earnings weighed on the ‘Magnificent Seven’ group. The rout in Bitcoin worsened, sending it down 25% from the all-time high it set less than six weeks ago.
The greenback advanced after Trump said the 25% tariffs on Canada and Mexico would come into force from March 4, while Chinese imports would face a further 10% levy. Economists say tariffs may hurt US growth, worsen inflation and possibly spark recessions in Mexico and Canada. If there’s no last-minute reprieve, the plan will see taxes ramped up on well over $1 trillion of imports.
The announcements “have prompted market participants to reassess their expectations of tariff risks,” said Jun Rong Yeap, market strategist at IG Asia Pte. “Whether this is still a negotiation tactic or a definite move remains up for debate, but markets are unwilling to take chances.”
Treasuries advanced Friday in Asian trading, extending gains for short-dated US government debt from the prior session. US 10-year yields dropped to around 4.23%, a level not seen since December.
Trump unveiling additional tariffs on Chinese imports raises the risk Beijing will ramp up its retaliation and a spiraling of tensions between the world’s two largest economies.
The additional 10% tariff on China “is frustrating because it keeps uncertainty alive and reinforces the risk that this becomes a pattern,” said Billy Leung, an investment strategist at Global X ETFs. “Markets were already fatigued and tired by tariff talk, and now investors are being forced to reassess.”
While tariffs introduce near-term risks, they don’t significantly alter the current narrative around Chinese markets, which have been supported by enthusiasm over artificial intelligence, said Charu Chanana, chief investment strategist at Saxo Markets. Focus will now be on the National People’s Congress meeting next week, which will play a crucial role in sustaining the current momentum in China, she said.