By Stella Qiu and Harry Robertson
SYDNEY/LONDON (Reuters) -Asian and European shares fell on Wednesday along with U.S. stock futures as AI darling Nvidia took a hit from U.S. restrictions on chip sales to China as the global trade war intensified, while gold climbed to a record and the dollar slid.
Treasury yields ticked slightly higher ahead of a speech from Federal Reserve Chair Jerome Powell later in the day. Traders are wondering if he will echo the dovish tone set by his colleague Fed Governor Christopher Waller.
Washington issued new export licensing requirements for Nvidia’s H20 and AMD’s MI308 artificial intelligence chip sales to China. Nvidia said the move would cost it $5.5 billion, and its shares slumped 6% in after-hours trading.
“This disclosure is a clear sign that Nvidia now has massive restrictions and hurdles in selling to China,” said Daniel Ives, analyst at Wedbush Securities.
“The Street will take this news with clear nervousness, worried these are the first shots fired in the tech battle between the U.S. and China, and Beijing/Xi are not just going to take this news and walk away.”
Separately, President Donald Trump ordered a probe into potential new tariffs on all U.S. critical minerals imports, on top of reviews into pharmaceutical and chip imports. Beijing is continuing to play hardball, having reportedly ordered airlines to suspend deliveries of Boeing aircraft.
European stocks fell, with the STOXX 600 index down 0.8%. U.S. S&P 500 futures were also 0.8% lower while Nasdaq futures dropped 1.5%.
The selloff in Asian stocks gathered pace in the afternoon. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, snapping a four-day winning streak.
Chinese blue chips rose 0.3%, as investors also digested some solid GDP data that predated the tariff increases in April, but the Hong Kong Hang Seng index fell 1.9%.
“The broader focus still remains on tariffs,” said Aneeka Gupta, economist and strategist at WisdomTree.
“In China, we’ve had the restrictions raise concerns that access to global tech hardware would be further choked off,” Gupta said. “That’s also resulting in a bit of a risk-off sentiment in the market.”
The White House said Trump is open to making a trade deal with China but Beijing should make the first move.
GOLD SHINES
All of the uncertainties left gold in an unstoppable position, with bullion hitting another record high of $3,318 per ounce, last up 2.2%.
Australian bank ANZ on Wednesday updated their forecast for gold to hit $3,600 an ounce by the year’s end, arguing that safe-haven demand for the asset would accelerate.
The U.S. dollar index, which tracks the currency against six peers, slid 0.5% to around its lowest since April 2022 in a sign investors remained cautious about U.S. assets.
The Japanese yen and Swiss franc, seen as safe assets during market turbulence, rallied around 0.4% and 0.7% respectively.
The yen is trading around its highest level since September while the franc is at its highest in 10 years.
Bank of Japan Governor Kazuo Ueda told the Sankei newspaper that the central bank may need to take policy action if U.S. tariffs hurt the Japanese economy, signalling the potential to pause the bank’s rate-hiking cycle.
Investors moved into European government bonds as stocks fell but steered clear of Treasuries.
The benchmark 10-year Treasury yield was up 1 basis point at 4.335%, after yields surged last week on concerns about the stability of the U.S. economy.
Germany’s 10-year bond yield was 4 bps lower at 2.505%, near its lowest since early March. Yields move inversely to prices.
(Reporting by Stella Qiu in Sydney and Harry Robertson in London; Editing by Bernadette Baum and Joe Bavie)
