Following the escalation of US-China trade tensions, global markets are once again under pressure, with investors fleeing to shelters and tech stocks being assaulted.
Gold spiked over 2% on Wednesday, setting a new record at the top of $3,300 per ounce. The dollar weakened even further, with Nasdaq’s futures pointing to the tough day ahead on Wall Street.
On Tuesday, the White House announced tariffs of up to 245% on Chinese imports in response to China’s retaliation measures, banning the export of key strategic materials, including rare earth elements, gallium and germanium, using the production of high-speed computer chips. The move follows an executive order that launches an investigation into national security risks related to dependence on important foreign minerals.
The market responded quickly. The Dollar Index (DXY) fell below 100, reducing investors’ confidence in US currency. Meanwhile, the euro has grown stronger to $1.13, with the yen reaching 142 per dollar.
Stocks were tough. Nasdaq futures fell by more than 2%, with tech stocks being particularly huge hits. NVIDIA (NVDA) stock fell 7% before the market as it revealed that AI chips’ new US export controls to China would cost $5.5 billion in loss revenue. The announcement raised concerns about a wider revenue hit across the semiconductor industry, which is heavily dependent on Chinese demand.
Bitcoin (BTC) has dropped slightly to $83,000 after the news, reflecting a stronger correlation with US tech stocks rather than acting as a safe asset like gold.
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