Wall Street rattled by Trump tariffs, ASX set to fall

KLA, a supplier to the electronics industry initially rose after reporting profit and revenue that topped analysts’ expectations, but then closed down 0.6 per cent. The company, which credited its results on expanding artificial-intelligence and high-performance computing investments, fell 6.3 per cent on Monday. That’s when tech stocks around the world tumbled, after a Chinese upstart, DeepSeek, said it developed a large language model capable of competing with the world’s best, without having to use top-flight chips.

The disruption raised questions about whether all the investment expected for AI chips, data centres and electricity is really needed.

Shares of Nvidia, considered the poster child for the AI frenzy, fell 3.7 per cent. They dropped 15.8 per cent for the week. Its CEO, Jensen Huang, meet with Trump on Friday in Washington.

Worries that tariffs could end up driving inflation higher helped push long-term bond yields higher, including the 10-year Treasury, which rose to 4.54 per cent from 4.52 per cent late on Thursday.

“It’s not the safe haven that it normally is because these tariffs might result in higher inflation and the need for the Fed to remain on pause for longer or to reverse course and raise rates,” Stovall said.

Shorter-term US government bond yields mostly fell.

Yields have been generally climbing since September as the US economy has remained much more solid than economists expected. More recently, worries about tariffs and other possible Trump administration policies that could add upward pressure on inflation and the US government’s debt have also sent yields higher.

The Federal Reserve left its benchmark interest rate unchanged as it closed out its most recent meeting on Wednesday. The central bank is signalling a more cautious approach as it waits to see how policies under Trump will impact inflation and the broader economy. Higher tariffs and tax cuts could push inflation higher, while deregulation could possibly reduce it.

“Markets are on edge watching President Trump’s plans to raise tariffs and tighten immigration policies, since both are pressuring the Fed to keep interest rates elevated,” said Bill Adams, chief economist for Comerica Bank.

Loading

On Wall Street, Walgreens Boots Alliance dropped 10.3 per cent after suspending its dividend and breaking a streak of quarterly payouts to its shareholders that stretches back more than 90 years.

Exxon Mobil ticked down 2.5 per cent even though the energy giant posted a stronger fourth quarter profit than Wall Street had forecast. Exxon credited increased production in the US Permian basin and in Guyana for the strong results, but its revenue came in lower than expected.

All told, the S&P 500 fell 30.64 points to 6040.53. The Dow dropped 337.47 points to 44,544.66. The Nasdaq lost 54.31 points to close at 19,627.44.

In stock markets abroad, indexes ended mixed in Europe after also finishing mixed in Asia.

Japan’s Nikkei 225 index added 0.1 per cent after a report showed that the country’s core inflation rate topped the central bank’s 2 per cent target, paving the way for further rises to interest rates.

The Kospi in South Korea fell 0.8 per cent after trading resumed there following holidays. Markets remained closed in Hong Kong and Shanghai for the Lunar New Year.

AP

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.