Most Asian stocks fell on Tuesday, with sentiment towards Chinese markets worsening after Canada joined the U.S. and Europe in imposing steep import tariffs on the country’s electric vehicle sector.
Broader markets were also held back by speculation over U.S. interest rates, while caution kicked in before a closely-watched earnings report from NVIDIA Corporation (NASDAQ:NVDA) this week.
Regional markets took middling cues from a mixed overnight close on Wall Street. While the Dow Jones Industrial Average ended at a record high, this came at the expense of losses in the S&P 500 and the NASDAQ Composite, as expectations of U.S. interest rates saw traders pivot out of heavyweight technology stocks.
This trend spilled over into Asian trade. U.S. stock index futures also fell on Tuesday.
A spike in oil prices- on heightened tensions in the Middle East and disruptions in Libya- also spooked markets.
Chinese stocks dip as Canada imposes EV tariffs
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.6% and 0.2%, respectively, while Hong Kong’s Hang Seng index shed 0.5%.
EV stocks such as BYD Co (HK:1211), NIO Inc (HK:9866) and Li Auto Inc (HK:2015) traded in a flat-to-low range, after Canada said it will impose a 100% import duty on Chinese EVs, including those imported by Tesla.
Tesla Inc (NASDAQ:TSLA) fell 3.2% in overnight trade.
Losses in Chinese EV stocks were relatively limited, given that Canada represents a smaller export market for the sector than Europe.
But Canada’s move still drove ire from Beijing, souring sentiment towards China with the prospect of a renewed trade war with the west. Traders were concerned that Beijing could roll out retaliatory tariffs.
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Canada also imposed a 25% duty on Chinese steel imports.
Asian stocks muted amid rate cut speculation
Losses in major U.S. technology stocks spilled over into their Asian peers, as investors pivoted out of the sector in anticipation of lower interest rates.
South Korea’s KOSPI lost 0.4%, with chipmaking stocks also seeing some weakness before closely watched earnings from Nvidia on Wednesday, which are expected to show whether the artificial intelligence trade is still in vogue.
Japanese stocks steadied from recent losses, but remained under pressure from strength in the yen. The Nikkei 225 index rose 0.4%, while the TOPIX added 0.2%.
The yen lost some ground after Japan’s corporate services price index- a gauge of producer inflation- read slightly weaker than expected.
Concerns over China weighed on Australia’s ASX 200, which fell slightly. But further losses in the ASX were limited by a nearly 2% jump in BHP Group Ltd (ASX:BHP), after the world’s biggest miner clocked a stronger-than-expected profit.
Futures for India’s Nifty 50 index pointed to a mildly weaker open, with local stocks set to see some profit-taking after the Nifty broke above the closely-watched 25,000 level.
