Breakfast | Trump's tariffs + computing power concerns crash US stocks! NVIDIA and Tesla lead the decline of over 5%

Market Overview

Trump's tariffs and concerns over computing power have reignited, with all three major U.S. stock indices recently closing down for the first time in four trading days, including the Dow Jones, which had risen over 230 points in early trading, and the Nasdaq, which had fallen over 2% at midday, while the S&P dropped over 1%.

The "Seven Sisters" of tech giants all closed down, including Apple, which had turned positive multiple times in early trading. NVIDIA fell over 5.7%, marking its second consecutive decline and hitting a low not seen since March 11; Tesla, which had risen for five consecutive days, fell nearly 5.6%, while Google's parent company, which had risen for three days, dropped about 3.3%. Amazon, Microsoft, and Apple, which had all risen for three days, fell 2.2%, 1.3%, and 1%, respectively, while Meta, which had risen for five days, fell nearly 2.5%.

Chip stocks overall fell for two consecutive days, with the Philadelphia Semiconductor Index closing down about 3.3%. Arm fell 7.5%, Marvell Technology dropped nearly 6.9%, Broadcom fell 4.8%, TSMC's U.S. shares dropped 4.1%, AMD fell 4%, and Intel dropped 3.2%.

AI concept stocks generally fell, with Super Micro Computer (SMCI) down nearly 8.9%, AppLovin down 5.4%, Palantir down 4.4%, and Oracle down 3.9%.

In the quantum computing sector, QMCO fell 7.5%, QUBT dropped 5.5%, and ARQQ fell 5.1%.

In the automotive sector, after reports that Trump would announce automotive tariffs as early as Wednesday, General Motors, which had risen over 1% in early trading, turned down and closed down 3.1%. Toyota's U.S. shares fell 1.9%, Honda's U.S. shares dropped 1.8%, while Ford, which had fallen nearly 2% at midday, turned positive at the close, rising 0.1%.

After the board approved using company cash to purchase Bitcoin and stablecoins, GameStop (GME) closed up nearly 11.7%.

Notable Analyst Leak: Microsoft Abandons New Data Center Projects in the U.S. and Europe

According to TD Cowen analysts, Microsoft has abandoned new data center projects in the U.S. and Europe, which were originally planned to consume 2 gigawatts of power. Analysts attribute this to an oversupply of computer clusters supporting artificial intelligence computations. A report from TD Cowen in February had already attracted significant attention, stating that Microsoft had canceled several leasing agreements with multiple private data center operators.

Microsoft's latest response stated, "While we may strategically adjust or slow the pace of infrastructure development in certain areas, we will continue to maintain strong growth across all regions."

Trump Announces 25% Tariff on Non-U.S. Made Cars, Automotive Stocks Decline After Hours

At the end of Wednesday's early trading, news broke that President Trump would announce automotive tariffs that day, which was later confirmed by the White House press secretary, leading to a 5% drop in General Motors' after-hours trading.

After the U.S. stock market closed on Wednesday, according to CCTV News, President Trump signed an executive order at the White House, announcing a 25% tariff on all imported cars. The related measures will take effect on April 2.

According to CCTV, Trump stated that the automotive tariffs would be permanent. He indicated that there would be no tariffs for cars manufactured in the U.S., meaning the new tariffs apply to all non-U.S. made cars.

CCTV mentioned that Trump stated Tesla's CEO Elon Musk had not made any suggestions regarding the automotive tariffs nor sought any benefits from them. Trump also stated that the U.S. would impose tariffs on lumber and pharmaceuticals

The first annual report of Mixue Ice City since its listing is out!

Mixue Ice City reported a 22.3% year-on-year increase in revenue for 2024, with net profit significantly rising by 39.8%. With its "high quality and affordable" model, the company's profitability has improved, and gross profit increased by 34.4% year-on-year to 8.06 billion yuan.

On the eve of "April 2", Goldman Sachs and Morgan Stanley's China strategy teams are bullish

Goldman Sachs stated that based on investor surveys, investors are calmly addressing tariff concerns. They believe that China's AI narrative is seen as a game changer and is expected to attract over $200 billion in capital inflows within the next decade.

Goldman Sachs pointed out that the emergence of DeepSeek has changed the narrative of Chinese tech stocks, and with the government's supportive attitude towards private enterprises, global capital is returning to China. This rise is more sustainable than previous ones. A-shares may slightly outperform H-shares in the next three months, and the necessary conditions for a comprehensive rotation from tech stocks to non-tech stocks are broad economic recovery, stability in the real estate market, and clear signs of reflation.

Morgan Stanley has once again raised its target price for the Chinese market, expecting an 8%-9% upside for the Hang Seng Index, the State-Owned Enterprises Index, MSCI China, and the CSI 300 Index by the end of the year. This adjustment is based on three main reasons: the first earnings surprise in three and a half years, upward revisions of profit forecasts, and the potential elimination of long-term discounts in valuations, bringing them closer to emerging market levels.

U.S. durable goods orders return to near historical highs in February

Despite market predictions of an impending recession, U.S. durable goods orders unexpectedly rose by 0.9% in February, with core durable goods orders reaching a nearly two-year high. The data indicates that the gap between actual economic data ("hard" data) and survey-based economic indicators ("soft" data) continues to widen.

Divergence between two Federal Reserve officials and Powell: The impact of tariffs on inflation may not be temporary, focus on inflation expectations

St. Louis Fed President James Bullard stated that he would be cautious about the belief that the impact of tariff increases on inflation is entirely temporary or that a complete transparency strategy is appropriate. He reiterated the importance of keeping inflation expectations stable. Bullard's team found that based on the announced tariff increases, if the effective U.S. tariff rate rises by 10%, the Fed's preferred inflation rate indicator could increase by as much as 1.2 percentage points.

Chicago Fed President Goolsbee indicated that once long-term inflation expectations in the market begin to rise, it would undoubtedly be a "major warning sign." The tariff policy implemented by Trump has introduced new variables, and the Fed's next rate cut may take longer than expected.

The next market focus of "Trump 2.0", is the timeline set for the end of May?

Republican leaders stated that they are close to reaching an agreement to extend Trump's 2017 tax cut policy and raise the debt ceiling, with Congress hoping to approve this economic plan by the end of May. The Republicans aim to calm the markets, which have been turbulent due to Trump's tariff policies, through legislative victories. However, despite the leadership's positive attitude, significant divisions remain within the Republican Party