Asian stock markets saw significant declines on Tuesday, led by a steep drop in tech shares in anticipation of Nvidia’s (NASDAQ: NVDA) earnings report. Factors such as heightened concerns over stricter U.S. export controls on chip technology to China and renewed trade tensions between Washington and Beijing have contributed to bearish market sentiment.

Key Market Moves

• Hong Kong’s Hang Seng Index: -2%, primarily due to profit-taking in tech stocks.
• Japan’s Nikkei 225: -0.9%, driven lower by the poor performance of chipmakers.
• Taiwan Weighted Index: Declined due to TSMC (TW:2330) slipping 1.4%.
• South Korea’s KOSPI: Losses were limited as the Bank of Korea cut interest rates.

Key Market Drivers

1. Pre-Nvidia Caution: Investors brace for insights on AI demand and semiconductor trends as Nvidia releases earnings.
2. Tighter U.S. Export Controls: Reports point to the White House’s consideration of stringent chip technology export restrictions to China.
3. U.S.-China Trade Tensions: Former President Trump’s calls for scrutinizing Chinese investments raise concerns about escalating trade conflicts.
4. Profit-Taking in Tech Stocks: Following a strong AI-driven rally, profits were booked, particularly in chipmakers and AI-related firms.

Market Outlook

Tech stocks remain sensitive to Nvidia’s earnings, which could indicate whether AI demand is maintaining its momentum or cooling off. The performance of this sector could significantly affect broader market sentiment in the upcoming sessions.