2 days Ago
LONDON: European and Asian stock markets mostly retreated on Wednesday (Apr 16) after the United States government imposed restrictions on exports of a key Nvidia chip to China, the latest trade war salvo between the world's biggest economies. Nvidia late on Tuesday notified regulators that it expects a US$5.5 billion hit this quarter owing to a new US licensing requirement on the chip it can legally sell in the Asian country.
The company at the heart of helping to power artificial intelligence said it must obtain licenses to export its H20 chips to China because of concerns they may be used in supercomputers there. President Donald Trump's decision over Nvidia is "signalling a tech-led decline for US equities" when Wall Street opens, noted Joshua Mahony, analyst at trading group Scope Markets. After a relatively peaceful couple of days on markets following last week's tariff-fuelled ructions, investors were once again on the defensive, sending safe haven gold above US$3,300 an ounce for the first time.
Nvidia shares tumbled around six per cent in after-market trade, and its Asian suppliers were also hit. Trump has also kicked off an investigation that could see tariffs imposed on critical minerals such as rare earths, which are used in a wide range of products including smartphones, wind turbines and electric vehicle motors. "Nvidia dropped the mic, revealing fresh export curbs on AI gear headed to China," said Stephen Innes at SPI Asset Management.
"Then came the other shoe: Trump ordering a new probe into tariffs on critical minerals. Boom - just like that, we're back in whiplash mode. "Welcome to the new normal: one step forward, two tariff probes back," added Innes.
In Europe, London's benchmark FTSE 100 stocks index was down about 0.5 per cent around midday, even as official data showed UK inflation slowed more than expected in March. Paris and Frankfurt shed a similar amount.
The dollar slid once more against main rivals, helping gold to reach yet another fresh record high, this time at US$3,317.75. Oil prices rose nearly one per cent after recent sharp falls on fears that the tariffs will dampen global economic growth.
However, cheaper oil could help put on lid on inflation, analysts said. Trump's most recent moves mark the latest salvo in an increasingly nasty row that has seen Washington and Beijing hit each other with eye-watering tariffs . China did little to soothe worries Wednesday by saying US levies were putting pressure on its economy, even if official data showed it expanded more than expected in the first quarter.
Beijing told Washington to "stop threatening and blackmailing" . A decision by Hong Kong's postal service to stop shipping US-bound goods in response to "bullying" levies added to the unease..
