Chip stocks slide on China Risk 27/03/2025

HOT stories for today

 

US market wrap:
 

• U.S. equities pulled back on Wednesday, with technology shares weighing heavily on the broader market as tariff tensions resurfaced. The S&P 500 dropped 1.12%, the Dow Jones Industrial Average dipped 0.31%, and the Nasdaq Composite, driven by tech, fell 2.04%—dragged down by a nearly 6% slide in Nvidia (NVDA). Other major tech names also struggled, with Meta Platforms (META) and Amazon (AMZN) each declining over 2%, Alphabet (GOOGL) losing more than 3%, and Tesla (TSLA) tumbling more than 5%.
• The pullback comes ahead of a fresh wave of tariffs expected to be unveiled next week. President Trump noted on Tuesday that the upcoming duties may be “more lenient than reciprocal,” suggesting a softer approach. This aligns with earlier reports indicating the measures could be narrower in scope, with industry-specific tariffs likely postponed.
• Adding to tech sector pressure, analysts at TD Cowen issued renewed cautions around Microsoft's (MSFT) aggressive AI spending and broader concerns about the sustainability of rapid growth in the sector. According to the S&P 500 heatmap, only 5 of 11 sectors closed in positive territory. Consumer staples led the way with a 1.55% gain, while technology lagged the most, down 2.23%.

Chip stocks slide on China Risk
 

• Shares of Nvidia and other major semiconductor companies fell sharply Wednesday as investors grew increasingly concerned about the impact of U.S. export restrictions on chip sales to China. Nvidia dropped nearly 6%, while AMD and Broadcom also declined, as fresh worries emerged over the long-term demand outlook from one of the industry's most critical markets.
• Analysts warned that ongoing U.S.-China tensions and potential tightening of export rules could pose serious headwinds, particularly for firms heavily exposed to China's AI and data center sectors. Despite strong recent performance and solid fundamentals, investors are turning more cautious as geopolitical uncertainty clouds the growth prospects of the chip sector.

 
Stocks on the move: 
      

• Tesla (TSLA) — Shares of the electric vehicle giant retreated 5.6%, ending a five-day winning streak. Despite the pullback, the stock is still up more than 16% over the past week
• Cintas (CTAS) — The uniform and business services provider rallied 5.8% after reporting fiscal Q3 earnings and revenue that topped Wall Street forecasts
• Playtika (PLTK) — The mobile gaming company soared 20.5% following a rare double upgrade from Bank of America, which raised its rating from underperform to buy, citing strong margins in a mature yet expanding industry
• Perimeter Solutions (PRM) — Shares of the fire safety materials producer climbed roughly 10% after UBS upgraded the stock to buy from neutral, pointing to potential gains as wildfire activity intensifies in more densely populated regions
   

Today’s action

• Asia-Pacific markets were mixed on Thursday, mirroring Wall Street’s decline as investors digested U.S. President Donald Trump’s announcement of a 25% tariff on imported vehicles. Japan’s Nikkei 225 slid 1.01% in late trading, while Hong Kong’s Hang Seng Index climbed 0.87%, and China’s CSI 300 rose 0.4%.
• U.S. stock futures edged higher early Thursday. Futures tied to the Dow Jones Industrial Average (DJIA) gained 75 points, or 0.18%, while S&P 500 futures rose 0.15%. Nasdaq 100 futures remained flat. Auto stocks took a hit after Trump’s remarks, with General Motors (GM) falling 7% in after-hours trading and Ford (F) down 5%, as investors feared the new tariffs could weigh on margins and global demand. On the data front, markets are eyeing Thursday’s weekly jobless claims and Friday’s PCE inflation report—seen as the Federal Reserve’s key inflation barometer.

Watchlist: TSLA, NVDA, META, ORCL, LULU, COIN, AVGO

Bitcoin

• Bitcoin hovered near $87,000 late Wednesday after briefly dipping to $85,869 earlier in the session, with traders navigating another round of sharp intraday swings. The global crypto market saw over $79 billion in trading volume, with bitcoin making up roughly $26.8 billion. The digital asset’s sideways movement echoes prior consolidation phases following sharp peaks, as supply-demand tension builds and the $90,000 level remains a psychological ceiling. Technical signals suggest hesitation, but a clean break above that threshold could trigger fresh momentum toward the elusive $100K mark.
• Adding to the volatility, President Trump’s newly announced 25% tariffs on foreign auto imports rattled broader markets, pushing all major U.S. stock indexes into the red. Meanwhile, GameStop’s (GME) $1.3 billion fundraising push to boost its bitcoin reserves added an unexpected twist to the day’s market narrative.
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176
   

Forex

• EUR/USD edged higher on Thursday, snapping a six-day losing streak as the U.S. dollar pulled back from recent multi-month highs. The pair bounced from a three-week low near 1.0730, climbing to the 1.0780 zone during the Asian session. The move was driven by renewed dollar softness, although lingering concerns over a global trade war and weaker market sentiment may limit further upside.
• Meanwhile, the Japanese Yen (JPY) gained traction amid heightened trade tensions and rising expectations that the Bank of Japan will continue tightening policy. Solid wage growth and safe-haven demand kept USD/JPY under pressure, holding just above the 150.00 mark. A modest retreat in the U.S. dollar further weighed on the pair, reinforcing the yen’s near-term strength.
  Watchlist: EUR/USD: 1.0700-1.0950, USD/JPY: 148-151
   

Basic Materials

• Gold (XAU/USD) regained upward momentum Thursday, supported by safe-haven demand amid rising trade tensions and a softer U.S. dollar. The metal hovered just below $3,030 after briefly hitting a weekly high earlier in the session. While firmer U.S. bond yields and a rebound in equity futures capped gains, Fed rate cut expectations continued to offer underlying support. Traders now turn to upcoming U.S. economic data, with Friday’s PCE inflation print in focus.
• Meanwhile, WTI crude rose toward $69.60, touching a near four-week high in early Asian trading. The rally followed a sharper-than-expected 3.34 million barrel drop in U.S. crude inventories, according to the EIA, and fresh concerns over global supply after President Trump warned of a 25% tariff on nations purchasing Venezuelan oil.
  Watchlist: GOLD 2600-3050, US Oil: 65.00-79.00

Key Economic Events Today:

EST time

08:30 am: USD Final GDP
08:30 am: USD Unemployment Claims
08:30 am: USD Goods Trade Balance
08:30 am: USD Wholesale Inventories
10:00 am: USD Pending Home Sales
10:30 am: USD Natural Gas storage

Earnings

BMO (Before the US Market opens)
SNX           TS Synnex Corp.
AAPG         Ascentage
AMC (After the US Market closes): LULU. WBA, BRZE

The TEFS Analyst team wishes you a successful day!