Morning Wrap (25.02.2025)

Asian markets broadly declined on Tuesday with tech shares leading losses ahead of Nvidia's earnings report on Wednesday. Japan's Nikkei was the worst performer, dropping 1,23%, while Hang Seng fell 1% as tech stocks retreated and Chinese mainland indices lost 0.5-0.9%. South Korea's KOSPI showed more resilience, falling only 0.49% after the BOK's rate cut.

Technology sentiment deteriorated further following reports that the Trump administration is seeking to tighten Biden-era controls on chip technology exports to China, particularly targeting Nvidia chips and maintenance of semiconductor equipment. This comes after Trump ordered increased scrutiny of Chinese investments in key U.S. sectors, further straining U.S.-China relations.

South Korea's central bank cut interest rates by 25 basis points to 2.75%, marking its third reduction in an ongoing easing cycle. The BOK significantly lowered its 2025 GDP growth forecast to 1.5% from 1.9% previously, citing concerns over weakening consumer sentiment and potential export challenges from U.S. tariff policies.

Oil prices rose in Asian trading with Brent reaching $74.59 and WTI at $71.06, gaining 0.6-0.7% after the U.S. Treasury Department announced new sanctions targeting Iran's oil industry. The measures affect over 30 entities across the UAE, Hong Kong, and China as part of Trump's "maximum pressure" campaign aimed at halting Iranian petroleum exports.

Trade tensions escalated as Trump reaffirmed plans to impose 25% tariffs on imports from Mexico and Canada starting March 4, adding to global trade uncertainty. Australian Treasurer Jim Chalmers is meeting with U.S. Treasury Secretary Scott Bessent in Washington seeking an exemption for Australian steel and aluminum from similar tariffs.

Gold approached record levels, drawing near $3,000 an ounce as investors sought safe havens amid escalating trade tensions and expectations of Federal Reserve rate cuts. Treasury yields touched fresh lows with the benchmark yield hitting a two-month low of 4.377% while two-year yields fell to 4.156%.

Japanese trading house shares surged 5-10% after Warren Buffett announced plans to increase Berkshire Hathaway's stakes in these companies. Berkshire shares hit a record high on Monday, with the conglomerate's market value rising to $1.08 trillion following its highest-ever quarterly profit report.

Tesla's European and UK new car registrations plummeted 45.2% year-on-year in January, with market share dropping to 1% from 1.8% as the EV maker faced increased competition. Chinese manufacturer SAIC Motor saw sales jump nearly 37%, far outpacing Tesla with a 2.3% market share in the region.

China's property sector outlook remains bleak despite government support measures, according to a Reuters poll. Analysts expect home prices to decline 2.5% this year, faster than previously forecast, with growth resuming only in 2026. Property sales are projected to shrink 5.7% this year while investment is expected to fall 7.0%.

Russia-Ukraine peace prospects remain uncertain despite recent U.S.-Russia talks in Saudi Arabia. President Putin stated that European participation would be needed eventually but emphasized building trust with Washington first, suggesting any resolution may not come as quickly as Trump has indicated. Putin also expressed openness to discussing deep military spending cuts with the U.S.