Stock markets faced challenges on Tuesday after US President Donald Trump reignited trade war concerns by proposing new restrictions on Chinese investments, particularly in technology. While London equities saw modest gains, markets in Paris and Frankfurt fluctuated, with strong performances in defense and banking sectors. This followed a weak trading session in Asia and New York.
According to Matt Britzman, senior equity analyst at Hargreaves Lansdown, global markets are reacting to concerns over “looming US tariff policies and their potential impact on global growth and inflation.”
Trump announced on Monday that he plans to implement tariffs on Canada and Mexico once the current 30-day suspension ends next week. Although these levies were initially introduced in January, they had been delayed to allow for negotiations. Meanwhile, tariffs on Chinese goods were put in place without any delay.
The latest development followed a memo Trump signed over the weekend, calling for restrictions on Chinese investments in vital industries such as technology, infrastructure, healthcare, and energy. These moves have intensified tensions between the US and China, raising fears of a renewed trade war amid increasing uncertainty about the global economic outlook.
“Trump’s first term was marked by trade wars, and his second term may be defined by a tech war with the world confronting China,” remarked Russ Mould, investment director at AJ Bell.
The Hang Seng Index in Hong Kong dropped over one percent, with tech giants Alibaba and JD.com losing more than three percent, while Tencent declined by nearly three percent. Markets in Shanghai and Tokyo also ended the day in the red.
This downturn came after a negative session in New York, where major tech companies are facing challenges, particularly following China’s DeepSeek unveiling a disruptive chatbot that shook the AI industry. This development has led traders to reconsider their investments in tech stocks.
The market slump also precedes earnings reports from Nvidia, a leading AI company, which investors are watching closely for guidance on the future outlook after DeepSeek’s emergence.
In Seoul, the stock market retreated after the South Korean central bank reduced its economic growth forecast and lowered interest rates, citing concerns over US tariffs and the fallout from President Yoon Suk Yeol’s brief declaration of martial law in December.
Bitcoin dropped below $90,000 for the first time in over a month as hopes for Trump’s potential deregulation of the cryptocurrency market diminished. The crypto sector was further rocked by the recent $1.5 billion hack of Dubai-based exchange Bybit, the largest cryptocurrency theft in history, as well as a memecoin scandal in Argentina.
In corporate news, shares of British consumer goods giant Unilever fell about two percent after CEO Hein Schumacher resigned less than two years into his role.
Key Figures at 1100 GMT
- London – FTSE 100: Up 0.3% at 8,686.25 points
- Paris – CAC 40: Down 0.1% at 8,081.10
- Frankfurt – DAX: Down 0.1% at 22,396.74
- Tokyo – Nikkei 225: Down 1.4% at 38,237.79 (close)
- Hong Kong – Hang Seng Index: Down 1.3% at 23,034.02 (close)
- Shanghai – Composite: Down 0.8% at 3,346.04 (close)
- New York – Dow: Up 0.1% at 43,461.21 (close)
Currencies & Commodities
- Euro/dollar: Up at $1.0473 from $1.0468 on Monday
- Pound/dollar: Up at $1.2625 from $1.2623
- Dollar/yen: Up at 149.79 from 149.76 yen
- Euro/pound: Up at 82.97 pence from 82.91 pence
- West Texas Intermediate (WTI): Flat at $70.71 per barrel
- Brent Crude: Up 0.3% at $74.24 per barrel
AFP
