The Dollar Climbs on Trump's Tariff Threats, Asian Shares Retreat Amid AI Valuation Concerns
Equity Markets
Asian shares fell on Tuesday as concerns over elevated valuations in the artificial intelligence (AI) sector continued to weigh on sentiment. The MSCI Asia Pacific Index slipped 0.6%, with Japan's technology giants posting significant losses. US stocks had tumbled on Monday after a cheap AI model released by Chinese startup DeepSeek sparked fears of lofty valuations.
The Bloomberg Dollar Spot Index rose 0.4% after US President Donald Trump reiterated his intention to impose "much larger" tariffs. This adds to signals that he is preparing to levy widespread duties to boost US manufacturing.
Currencies
The US dollar strengthened against all major G-10 currencies. The risk-sensitive Australian and New Zealand dollars both fell at least 0.5%, while the Thai baht tumbled 0.7%. China's offshore yuan also weakened.
Commodities
Copper prices declined after Trump announced plans to impose import tariffs on the metal, along with aluminum and steel. This raises fears of escalating trade disputes.
Fixed Income
US Treasuries edged lower in Asia, with the 10-year yield climbing two basis points to 4.55% after falling nine basis points on Monday.
Key Events to Watch
* US consumer confidence and durable goods data on Tuesday
* Federal Reserve rate decision and press conference on Wednesday
* Tesla, Microsoft, Meta, and ASML earnings on Wednesday
* Eurozone ECB rate decision and economic data on Thursday
* US GDP and employment data on Thursday
* Apple and Deutsche Bank earnings on Thursday
* ECB rate decision and press conference on Thursday
* US personal income, spending, and inflation data on Friday
Headline Movers
* China Vanke: Shares rose over 14% in Hong Kong after the government pledged support for the developer.
* Nvidia: The stock fell 17% in New York, erasing $589 billion in market value, following the release of DeepSeek's AI model.
* Advantest: The Japanese technology stock plunged 11% on concerns over AI valuations.