SINGAPORE- Asian stocks stumbled on Tuesday, dragged by a slide in Chinese tech shares after a strong rally, while investors weighed the prospect of narrower-than-feared US tariffs and the dollar hovered near three-week highs after upbeat economic data.
Investors have been focused on the impending reciprocal tariffs promised by US President Donald Trump and its impact on the global economy as trade war fears grip markets.
Trump said on Monday automobile tariffs are coming soon even as he indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks, suggesting some room for negotiations.
That led to an exuberant risk-on reaction overnight. The S&P 500 closed at its highest in over two weeks, while a rally in tech stocks led Nasdaq up over 2 percent on Monday.
Asian stock bourses initially joined in on Tuesday morning but by mid-afternoon the relief rally looked set to fizzle out. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.35 percent lower ahead of European open.
European futures were down 0.24 percent while S&P 500 and Nasdaq futures inched lower.
Charu Chanana, chief investment strategist at Saxo, said the high degree of uncertainty would make business planning extremely difficult.
“While markets can react to every tariff headline, businesses cannot. Businesses need clarity – and the lack of it could weigh on earnings soon,” Chanana said.
Kyle Rodda, senior financial markets analyst at Capital.com, said there was still a need to see the full detail of what the tariffs would entail, and whether they represented the full extent of the Trump administration’s “bid to shake up the global trading system.”
“I don’t think we are out of the woods completely yet.”
Hong Kong’s Hang Seng index fell 1.8 percent , as tech stocks led a broad selloff, with Xiaomi’s $5.5 billion upsized share sale triggering concerns about stretched valuations across the market.
