Asian Markets Tumble as Trade Tensions and Chip Curbs Cloud Economic Outlook

Asian markets dropped Wednesday as Nvidia shares plunged following U.S. restrictions on AI chip exports to China, fueling fears of an expanding U.S.-China tech war. The news wiped out $160 billion from Nvidia’s market cap, triggering a 1.4% fall in Nasdaq futures and a 0.8% drop in S&P 500 futures.

The U.S. imposed new export licensing rules on Nvidia’s H20 chips, a move expected to cost the chipmaker $5.5 billion. Analysts warn the export curbs mark the beginning of a larger tech battle, prompting investor caution. The broader MSCI Asia-Pacific index slipped 0.9%, while Japan’s Nikkei dipped 0.5%, and Hong Kong’s Hang Seng dropped 1.6%. In contrast, Chinese chipmakers like Hua Hong Semiconductor and SMIC gained on expectations of domestic growth.

Despite China’s Q1 GDP growth beating forecasts at 5.4%, trade tensions cloud the outlook. President Trump’s order to investigate new tariffs on critical mineral imports and China’s retaliation—including a halt on Boeing aircraft deliveries—intensified concerns over global supply chains.

Gold soared 1.2% to a record $3,266.65 per ounce, driven by rising geopolitical risk. ANZ raised its year-end gold price forecast to $3,600, citing increased demand for safe-haven assets. U.S. Treasury yields stabilized, with the 10-year at 4.325% and the 30-year at 4.777%, both below last week’s highs.

In currency markets, the dollar weakened. The euro rose to $1.1316, and the yen gained to 142.84 per dollar. Bank of Japan Governor Ueda signaled potential policy action if tariffs weigh on Japan’s economy.

Oil prices edged higher, with Brent at $64.79 and U.S. crude at $61.42. Markets now await Federal Reserve Chair Jerome Powell’s speech for further guidance amid escalating trade tensions.