Asian stock markets dropped sharply on Tuesday, primarily due to losses in the technology sector as investors cautiously awaited Nvidia’s (NASDAQ:NVDA) earnings report. Rising geopolitical tensions, especially between the U.S. and China, further dampened market sentiment.

Tech Sector Leads Decline, Nvidia Earnings in View

Market Movements:

• Hong Kong’s Hang Seng index fell 2%, leading regional declines.
• Japan’s Nikkei 225 decreased by 0.9%, dragging down chip-related stocks.
• Taiwan Semiconductor Manufacturing Co. (TW:2330), key to Nvidia’s supply chain, slid 1.4% in trading.
• China’s Shanghai Composite declined by 0.5%, reflecting investor anxiety over renewed chip industry restrictions.

Underlying Factors for the Tech Sell-Off

1. Pre-Nvidia Earnings Caution: Investors are wary ahead of Nvidia’s earnings report.
2. Intensified U.S.-China Trade Tensions: Reports suggest tighter export controls affecting chip supplies.
3. Profit-Taking: Following a tech rally, some investors are locking in gains.

South Korea: Rate Cut Mitigates Market Losses

South Korea’s KOSPI index fell only 0.4% after the Bank of Korea (BOK) cut interest rates. Nonetheless, tech stocks still faced pressures:

• SK Hynix Inc. (KS:000660), a major Nvidia supplier, dropped 2.2%.

Geopolitical Concerns Heighten Market Unease

U.S.-China relations face renewed strain due to potential policy changes from the former administration which could tighten investment rules for Chinese tech companies operating in the U.S.

Conclusion: Tech Sector Under Pressure, Future Considerations

• Investors are becoming cautious regarding tech stocks ahead of Nvidia’s earnings report and rising geopolitical tensions.
• The South Korean rate cut provides some support but overall sentiment remains weak across Asian markets.

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