Global stock markets took a sharp dive on Wednesday following new U.S. restrictions on chip sales to China and growing tariff uncertainties, sending technology shares tumbling and driving investors towards safe-haven assets like gold, which surged to an all-time high.
The Biden administration announced updated export licensing rules affecting sales of Nvidia’s H20 and AMD’s MI308 artificial intelligence chips to China. Nvidia projected a $5.5 billion revenue hit due to the restrictions, and its shares fell nearly 7%.
The MSCI index tracking global stocks (.MIWD00000PUS) dropped roughly 1.5%. In the U.S., the Dow Jones Industrial Average (.DJI) lost 1.7%, the S&P 500 (.SPX) declined by 2.2%, and the tech-focused Nasdaq Composite (.IXIC) plunged 3.1%.
“Capital markets remain caught between news about new tariffs and, on the other hand, about tariff negotiations or suspensions,” said Paul Christopher, strategist at the Wells Fargo Investment Institute.
Federal Reserve Chair Jerome Powell addressed the economic outlook on Wednesday, stating that the Fed is holding off on policy changes until more data is available. He noted that recent market volatility reflects investor reactions to the administration’s aggressive tariff policies.
“Powell is doing what the rest of us are doing – waiting and watching,” commented Jamie Cox, managing partner at Harris Financial Group. “The Federal Reserve won’t act unless and until either the labor market turns or there is a systemic risk, such as a breakdown in the payment system.”
March data showed a spike in U.S. retail sales, driven by consumers accelerating purchases of motor vehicles ahead of possible new tariffs. However, broader economic uncertainty is dampening discretionary spending.
On Tuesday, President Trump ordered an investigation into potential new tariffs on critical mineral imports, adding to ongoing reviews of pharmaceutical and semiconductor imports. In response, China has reportedly instructed its airlines to suspend new deliveries of Boeing aircraft.
European markets were also affected, with the STOXX 600 index (.STOXX) falling 0.2% as tech stocks weakened. In Asia, the MSCI index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped 0.8%, ending a four-day rally. Although Chinese blue-chip stocks (.CSI300) rose 0.3% on solid GDP data, Hong Kong’s Hang Seng index dropped 1.9%.
“The broader focus still remains on tariffs,” said Aneeka Gupta, economist and strategist at WisdomTree. “In China, we’ve had the restrictions raise concerns that access to global tech hardware would be further choked off. That’s also resulting in a bit of a risk-off sentiment in the market.”
While the White House signaled openness to a trade deal, it emphasized that Beijing must initiate the next steps. Meanwhile, the World Trade Organization downgraded its 2025 forecast for global merchandise trade from growth to contraction, warning of a potential slump akin to the depths of the pandemic.
As uncertainty gripped markets, gold prices soared to a record $3,339 per ounce, up 3.5% on the day. Analysts at ANZ upgraded their gold forecast to $3,600 per ounce by the end of the year, citing growing demand for safe-haven assets.
U.S. Treasury yields also declined amid concerns over slowing growth. The 10-year Treasury yield dropped 4 basis points to 4.283%. Traders are now pricing in potential Fed rate cuts starting in June, with expectations that the policy rate could fall by a full percentage point before year-end.
The U.S. dollar index slipped 0.7%, reaching levels not seen since April 2022, while traditional safe-haven currencies like the Japanese yen and Swiss franc rallied by 0.8% and 1.2% respectively. The yen is now near its highest level since September, and the franc is at a 10-year high.
Bank of Japan Governor Kazuo Ueda told the Sankei newspaper that policy adjustments could be necessary if U.S. tariffs significantly impact Japan’s economy, hinting at a possible pause in the central bank’s rate hikes.
Oil prices climbed to a two-week high, fueled by concerns over supply following new U.S. sanctions targeting Chinese buyers of Iranian oil. In cryptocurrency markets, bitcoin edged up 0.5% to $84,389, though it remains down nearly 10% for the year.
