TOKYO, Feb 28 (Reuters) - Equities across Asia experienced a significant slump on Friday, with the U.S. dollar remaining near multi-week highs against the currencies of the country's leading trading partners. This decline in market sentiment was largely attributed to growing concerns over an escalating global trade war, which is impacting investor confidence.
Technology shares faced additional pressure following a notable sell-off in Nvidia, a key player in the AI sector, along with other stocks within the so-called Magnificent Seven group of mega-cap companies on Wall Street. Investors reacted harshly to Nvidia's latest earnings report, leading to a reevaluation of the tech sector's stability.
In response to these market dynamics, safe-haven currencies such as the yen and Swiss franc strengthened. The Japanese yen received an extra boost from declining U.S. Treasury yields, indicating a flight to safety among investors. An overall firmer dollar also weighed heavily on commodities, including gold, although oil prices managed to retain most of the strong gains made on Thursday, driven by U.S. President Donald Trump's cancellation of Chevron's license in Venezuela.
Trump announced on Thursday that 25% duties on imports from Canada and Mexico would take effect on March 4, a shift from the previously suggested date of April 2. He also indicated that goods from China would incur an additional 10% duty and reiterated his intention to impose 25% tariffs on shipments from the European Union. These developments prompted a reassessment of market reactions, particularly as Chris Weston, head of research at Pepperstone, noted that the market had previously reduced its sensitivity to tariff-related headlines.
Weston highlighted the most significant impacts seen in foreign exchange (FX) channels, particularly affecting the Canadian dollar and the euro. Many analysts now project that Trump's trade policies could increase the likelihood of additional stimulus measures being discussed at next week's National People’s Congress in China.
In Europe, the Pan-European STOXX 50 stock futures indicated a decline of 0.8%, following a retreat in bourses across the region on Thursday. Meanwhile, U.S. S&P 500 futures remained flat after the cash index experienced a sharp 1.6% drop overnight. The U.S. dollar index, which measures the strength of the greenback against six major currencies, slightly decreased to 107.20 but had opened the session at its highest level since February 19 at 107.34.
The euro remained steady at $1.04 after dipping to $1.0389 earlier, marking its lowest value since February 13. The Swiss franc gained slightly to 0.8986 francs per dollar, recovering from a low of 0.9005 francs on Thursday. The yen also saw an increase of 0.3%, reaching 149.34 per dollar, as 10-year Treasury yields fell to 4.2310% during Asian trading hours, a level not seen since December 11.
While the threat of rising tariffs has contributed to the strengthening of the dollar, it has simultaneously raised concerns regarding potential negative impacts on the U.S. economy. Recent economic data from the U.S. has shown signs of weakness, prompting traders to price in expectations for at least two quarter-point Federal Reserve interest rate cuts this year, with the first potentially occurring as early as June and another by September.
Investors are closely monitoring the Fed's preferred inflation gauge, the PCE deflator, which is set to be released later today. Additionally, monthly non-farm payroll figures are scheduled to be published a week from now, adding further anticipation in the market.
In commodity markets, gold prices remained flat at $2,880 per ounce, hovering near Thursday's low of $2,867.63, the lowest in two weeks. Oil prices stayed close to Thursday's highs, with U.S. West Texas Intermediate crude futures slightly easing by 0.4% to $70.08, down from a peak of $70.54 in the previous session.
In the cryptocurrency market, bitcoin experienced a decline of 3.6%, falling to $81,260 after briefly reaching $81,807.29, its highest level since November 11. This fluctuation reflects the ongoing volatility within the digital currency market.
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Reporting by Kevin Buckland; Editing by Sam Holmes
