US stock futures pulled back on Wednesday as the Trump administration’s trade war with China gained steam and investors digested corporate earnings reports.
The tech-heavy Nasdaq 100 futures (NQ=F) led declines, down 0.7%, while S&P 500 futures (ES=F) dropped 0.5% in the wake of disappointing earnings from Google parent Alphabet (GOOG, GOOGL) and chipmaker AMD (AMD). Dow Jones Industrial Average futures (YM=F) slipped 0.2%, after the major gauges closed with gains.
Trump imposed 10% tariffs on Chinese goods on Tuesday, and Chinese leader Xi Jinping quickly countered by announcing tariffs on 80 US products. Trump later indicated China’s retaliatory tariffs were ‘fine’ and he was in no rush to speak with Xi, suggesting an end to the trade war may not be near.
Alphabet (GOOG, GOOGL) is already finding itself in the crosshairs of the trade war. Ahead of the tech giant’s Q4 earnings report, China announced it was launching an antitrust probe into Google in what was widely understood as a retaliatory measure by Beijing against Trump’s tariffs.
Alphabet was dealt a second blow on Tuesday when its earnings results rattled investors. While the company beat on earnings and met expectations on revenue, a dip in cloud sales and jump in spending spooked Wall Street. Shares of the Google parent fell 7% after the bell.
AMD (AMD) earnings received a tough reception too. The chipmaker achieved a solid 4.6% gain after its Q4 revenue topped estimates, but once its CEO forecast declining data center sales, shares dived more than 8% in after-hours trading.
Burrito chain Chipotle (CMG) also met Wall Street’s expectations for earnings, but its conservative guidance led shares down more than 5% after market close.
Looking forward, Disney (DIS) is set to report earnings on Wednesday. The entertainment giant’s theme parks and Disney+ streaming platform are both expected to show headwinds.
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Toyota Motor raises full-year operating profit forecast
Toyota Motor (TM)raised its full-year operating profit forecast by 9%, signaling confidence in its ability to weather any potential US tariffs.
The world’s top-selling automaker updated its profit projection for the fiscal year ending March 2025 to 4.7 trillion yen ($30.7 billion), up from the previous forecast of 4.3 trillion yen.
In addition, Toyota announced plans to set up a wholly owned subsidiary in Shanghai to develop and produce electric vehicles and batteries for its Lexus brand. Production is expected to begin in 2027. The new unit will focus on creating a new Lexus EV with an initial annual production capacity of around 100,000 units.
Despite posting weaker-than-expected third quarter results and marking its second consecutive quarterly profit decline, Toyota’s confidence in its future performance remains strong.
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Gold sets new record high as trade war between US and China pushes need for stable assets
Gold (GC=F) has surged to a record high, climbing nearly 1% as the first shots of the US-China trade war increase demand for haven assets.
The price of bullion hit an all-time high, topping $2,854 an ounce on Wednesday. This spike followed President Donald Trump’s move to impose a 10% tariff on Chinese imports.
China’s retaliatory efforts have been less aggressive compared to earlier trade conflicts, when tariffs were nearly on par with the U.S. However, concerns remain about the potential impact on the world’s two largest economies. Markets are also closely watching to see if these renewed tariffs could trigger inflationary pressures, which might influence US monetary policy.
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Asian stocks drop as investors react to rising trade tensions
Asian stocks were mostly lower Wednesday as markets digested the impact of the trade tensions brewing between China and the US.
The CSI 300 Index (000300.SS) quickly erased its initial gains on the first trading day after the Lunar New Year holiday closure, falling by 0.6%.
Japan’s benchmark Nikkei 225 (^N225) slipped 0.2% in early trading. Australia’s ASX 200 (^AXJO) rose 0.5%, while Hong Kong’s Hang Seng (^HSI) dropped 0.6%. South Korea’s Kospi (^KS11) jumped 1.1%
What started as a relatively calm day quickly became volatile after news broke that the US Postal Service would temporarily halt inbound parcels from China and Hong Kong. This move came just one day after both the US and China imposed tariffs on each other’s exports. Although there are still hopes for a deal to ease tensions, investors are pulling back as uncertainty lingers.
The stock outlook remains unclear, largely dependent on further developments in tariff negotiations and China’s economic recovery. US President Donald Trump stated there is no urgency to speak with Chinese President Xi Jinping.
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