A Global Trade Warning Sends Nasdaq 100 Down By 2%

Technology stocks declined sharply as Nvidia Corp. once again became the focal point in the intensifying trade conflict driven by the Trump administration. The Nasdaq 100 index dropped by 1.6%, reflecting a broader selloff in tech shares after the White House introduced new restrictions on Nvidia’s chip exports to China. The latest move highlights ongoing tensions between the world’s two largest economies and adds fresh uncertainty to global tech markets.

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Nvidia’s shares fell by 5.5% following news that the U.S. government now requires the company to obtain a license to export its H20 chip to China. This policy shift comes amid fears that the chip could be repurposed for use in Chinese supercomputers, a concern voiced by U.S. regulators.

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Nvidia also disclosed that it expects to take a $5.5 billion hit in the current quarter due to writedowns related to chip inventory and contractual obligations.

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The impact of the policy rippled across the semiconductor industry. Shares of ASML Holding NV, a major supplier of chipmaking equipment, dropped 5.4% in U.S. trading after it reported lower-than-anticipated orders—further signaling weakness in the semiconductor space. The outlook for the sector dimmed as industry players assessed the possibility of prolonged restrictions and reduced demand.

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The broader stock market also reacted negatively. The S&P 500 slipped by 0.8% while the yield on 10-year U.S. Treasuries held steady at around 4.34%. Despite the market volatility, investors are still pricing in at least three interest rate cuts for 2025, especially after March retail sales in the U.S. rose 1.4%, matching expectations and marking the largest monthly gain in two years.

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In addition to the trade dispute, global economic concerns added to the negative sentiment. The World Trade Organization (WTO) revised its forecast for global merchandise trade, now expecting a 0.2% decline in 2025.

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That figure is nearly three percentage points lower than where it would have been if the U.S.-led trade war had not occurred, underlining the lasting impact of trade tensions on the global economy.

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“While we believe that negotiations will eventually lead to progress, the current back-and-forth between the U.S. and China appears poised to persist in the near term,” said Solita Marcelli of UBS Global Wealth Management. Her comments reflect a common view among investors and analysts that the geopolitical standoff may continue to weigh on markets for the foreseeable future.

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Amid the uncertainty, the U.S. dollar lost some strength, while gold prices surged to a record high as investors sought safe-haven assets. The Swiss franc also gained, reinforcing a cautious global outlook.

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Investors are closely watching for a scheduled speech by Federal Reserve Chair Jerome Powell. Many are hoping for signs that the central bank may take action to support financial markets, especially the bond market, which has seen volatility amid economic and policy shifts. Ian Lyngen of BMO Capital Markets suggested that Powell is likely to maintain the Fed’s current stance of caution and patience.

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“Given the wide range of potential outcomes from the evolving tariffs environment and its effects on the U.S. economy, Powell is expected to avoid giving detailed forward guidance on interest rate policy,” Lyngen wrote in a note to clients.

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The abrupt change in export policy affecting Nvidia underscores the unpredictable nature of U.S. trade measures. The company disclosed that the Biden administration informed them on Monday that exports of its H20 chip to China would require a license indefinitely.

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The policy, according to Nvidia’s filing, is intended to prevent the chips from being used in Chinese supercomputers, a move aligned with broader U.S. efforts to limit China's technological progress.

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“This development is unsettling for two key reasons,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “First, it reveals the erratic character of Trump-era tariffs, especially as earlier exemptions for Nvidia have now been revoked. Second, it shows that tensions between the U.S. and China remain intense and possibly even combative, despite a relatively calm public facade.”

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Taken together, the market’s reaction to Nvidia’s situation reflects both immediate financial concerns and broader geopolitical anxieties. As trade restrictions continue to evolve, investors remain wary of the lasting implications for the tech sector and global economic stability.

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With regulatory pressure mounting and relations between Washington and Beijing still fraught, the path forward for companies like Nvidia—and the markets they influence—remains uncertain.

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