TOKYO (Reuters) – Asian markets took a downturn on Friday, with stocks across the region plummeting as investors grew increasingly concerned about the looming threat of a global trade war. Simultaneously, the U.S. dollar hovered near multi-week highs against key global currencies, reflecting market unease over the escalating tensions.
Technology stocks faced an additional blow following disappointing earnings reports from Nvidia and other major tech players, collectively known as the “Magnificent Seven.” The chipmaker’s weaker-than-expected performance further dampened investor sentiment, especially in the wake of a sharp sell-off.
As a result of the uncertain market environment, the yen and Swiss franc gained strength, with the yen also benefiting from falling U.S. Treasury yields. The rising dollar also pressured commodity markets, pushing gold lower, although oil prices managed to retain most of their previous day’s gains, supported by President Trump’s decision to revoke Chevron’s license to operate in Venezuela.
Trump’s announcement on Thursday that he would impose a 25% tariff on imports from Canada and Mexico, effective March 4, stirred additional concerns. He also confirmed that goods from China would face a 10% duty, while pledging 25% tariffs on European Union imports as well. The market’s initial calm response to tariff news now seems to be giving way to renewed anxiety.
Chris Weston, head of research at Pepperstone, observed that the market, which had grown less sensitive to tariff developments, is now reassessing its stance. The U.S. dollar has shown the clearest reaction to these developments, with the Canadian dollar and euro both seeing notable declines.
In early trading, Japan’s Nikkei index fell 2.4%, pressured by a stronger yen, while South Korea’s Kospi dropped 1.8% and Australia’s ASX 200 shed 0.9%. Chinese markets fared somewhat better, with Hong Kong’s Hang Seng index slipping 1% and mainland Chinese stocks down by 0.3%.
Looking ahead, many analysts predict that Trump’s trade policies could increase the likelihood of additional economic stimulus measures in China, especially ahead of the National People’s Congress meeting next week.
European markets were also in negative territory, with Pan-European STOXX 50 futures pointing down 0.8%, following a retreat in major European bourses on Thursday. U.S. S&P 500 futures remained flat after the index fell 1.6% overnight.
Global stock markets are on track for their worst week since mid-December, with world equities down by more than 2%.
The U.S. dollar index, which tracks the greenback against six major currencies, dipped to 107.20 but started the day at its highest level since February 19 at 107.34. The euro traded around $1.04 after briefly falling to $1.0389, its lowest since mid-February. Meanwhile, the Swiss franc rose to 0.8986 francs per dollar, recovering from Thursday’s lows.
The Japanese yen gained 0.3%, reaching 149.34 per dollar, buoyed by a drop in U.S. Treasury yields to 4.2310%—their lowest level since December 11.
While the growing threat of tariffs is driving dollar strength, concerns about its broader economic impact are beginning to surface. Recent U.S. economic data has been weak, leading traders to anticipate at least two interest rate cuts from the Federal Reserve later this year, with the first likely to come in June.
Investors are closely awaiting the release of the Federal Reserve’s preferred inflation measure, the PCE deflator, later in the day. Additionally, monthly non-farm payrolls data will be released next week.
Gold held steady at $2,880 per ounce, remaining near Thursday’s two-week low of $2,867.63. Oil prices remained near recent highs, with U.S. West Texas Intermediate crude futures dropping slightly by 0.4% to $70.08, down from a high of $70.54 the previous day.
Meanwhile, the cryptocurrency market experienced a setback, with Bitcoin slipping 3.6% to $81,260 after touching $81,807.29, its highest level since November 11.
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