A global stock market selloff moderated during Asian trading hours as futures on U.S. equity indexes, Treasury yields, and cryptocurrencies rebounded from sharp early-day declines. Despite the recovery, investor sentiment remained cautious after Wall Street tempered its bullish outlook, with growing concerns that tariffs, government spending cuts, and shifting geopolitical dynamics could undermine growth in the U.S., the world’s largest economy.
S&P 500 futures gained as much as 0.3%, recovering from an early loss of over 1%, while contracts for the Nasdaq 100 and European stocks also advanced. Asian markets had slumped to a five-week low earlier in the day, with the Nasdaq 100 suffering its worst performance since 2022. However, Hong Kong and Chinese equities trimmed their losses by the afternoon, and yields on 2-year U.S. Treasury notes recovered after hitting their lowest point since October. The U.S. dollar slipped, reflecting the broader risk-off sentiment.
Two months into President Donald Trump’s administration, market sentiment has turned more negative as investors grow increasingly concerned about the long-term impact of tariffs, fiscal austerity, and shifting alliances on U.S. economic prospects. While the mood remains downbeat globally, some investors view the pullback as an opportunity to buy, particularly in Hong Kong and China, where expectations of economic stimulus measures from the government are high.
Kok Hoong Wong, head of institutional equities sales at Maybank Securities, noted, “The handful of people I managed to speak to this morning, most are still looking for opportunities to buy if markets correct… HK/China could be an interesting candidate for this.”
Despite global caution, mainland Chinese investors have been heavily buying Hong Kong stocks, with a surge in tech-driven stocks following a breakthrough AI model from DeepSeek, a Chinese startup. This has fueled optimism around China’s tech sector, which has seen strong performance this year.
Marvin Chen, strategist at Bloomberg Intelligence, suggested that China could be more resilient than other markets due to policy divergence, particularly during the ongoing National People’s Congress. Meanwhile, Australian stocks reached a seven-month low, and Japan’s Nikkei-225 index fell to its lowest point since September.
As global market volatility continues, many investors have sought protection by shorting futures and options, which can intensify market declines. Rajeev De Mello, global macro portfolio manager at Gama Asset Management, cautioned, “I remain cautious as investor sentiment has turned increasingly risk-averse,” despite Monday’s rebound.
Citigroup downgraded U.S. stocks to neutral from overweight, while upgrading China to overweight, reflecting a shift in the market as U.S. exceptionalism appears to be on pause. Similarly, HSBC raised its rating on European equities (excluding the UK) to overweight, citing expectations for euro-zone fiscal stimulus to drive growth in the region.
U.S. stocks experienced a rough day on Monday, with the S&P 500 falling 2.7% and the Nasdaq 100 losing 3.8%. Tesla shares plummeted 15%, while Nvidia’s performance contributed to a broader decline in semiconductor stocks. In the bond market, around 10 high-grade companies delayed their U.S. bond sales.
Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, described the selloff as a liquidation of crowded positions, combined with a “buyers’ strike.” He added, “Why buy now when Trump is not concerned with the stock market and Powell said he’s not in a rush?”
Strategist Garfield Reynolds from Markets Live noted that the global equity selloff, which originated in the U.S., has been exacerbated by the perception that central banks may not act quickly to alleviate market turbulence. “Investors have to take into account the potential that monetary settings will remain at levels that in many economies are still seen as being at least somewhat restrictive for a while yet,” Reynolds said.
In currency markets, most Group-of-10 currencies gained against the U.S. dollar, with the Swiss franc and Japanese yen outperforming as traditional safe havens. The euro also continued to attract buyers due to stronger growth prospects in the euro zone.
In commodities, oil prices fell for a second consecutive day as concerns about tariffs and economic slowdown weighed on market sentiment. Gold saw a slight increase, while cryptocurrencies continued to slide as fears of a broader selloff in U.S. equities overshadowed Trump’s recent efforts to support the crypto industry.
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