Asian equities wavered in early Tuesday, February 24, trading as regional investors reacted to a sharp overnight selloff on Wall Street. Sentiment remained fragile amid renewed uncertainty surrounding U.S. President Donald Trump’s tariff policy and escalating geopolitical tensions.
MSCI’s broad Asia-Pacific index excluding Japan reversed earlier gains, slipping 0.2% after a six-session rally, with South Korean stocks leading the decline. The cautious mood followed heavy losses in U.S. markets driven by concerns over artificial intelligence (AI) valuations and shifting trade policy.
Japan’s Nikkei Rises as Liquidity Returns
Japan and China both returned from public holidays, boosting regional trading volumes. The Nikkei 225 climbed 0.7% as investors repositioned portfolios, while S&P 500 e-mini futures edged up 0.1%, signaling tentative stabilization in U.S. markets.
The U.S. dollar strengthened 0.1% against the yen to 154.77, while the offshore Chinese yuan held steady at 6.889 per dollar.
Wall Street Pressured by AI Valuation Concerns
Overnight, the S&P 500 dropped 1%, wiping out gains from the previous week. The tech-heavy Nasdaq Composite slid 1.1% as investors reassessed the long-term impact of artificial intelligence on software companies and broader industries.
Market volatility ticked higher, with the CBOE Volatility Index (VIX) rising nearly two points to 21.01, reflecting increased investor anxiety.
Analysts at Bernstein warned that crowded positioning in both U.S. and Asian equities could amplify downside risks as investors chase returns in a concentrated group of high-performing stocks. Concerns over the sustainability of the AI-driven rally have added pressure to already stretched valuations.
Trade Policy Uncertainty Adds to Market Jitters
Fresh uncertainty emerged after the U.S. Supreme Court struck down emergency tariffs introduced by the Trump administration. In response, Trump signaled that higher duties could be imposed under Section 122 of the Trade Act of 1974, deepening confusion over the direction of U.S. trade policy.
The unpredictable tariff outlook has weighed on global equities, as investors attempt to assess potential impacts on supply chains, corporate earnings, and economic growth.
Fed Outlook and Treasury Yields
In interest rate markets, traders see a strong likelihood that the Federal Reserve will keep rates unchanged at its upcoming March 18 meeting. According to CME’s FedWatch data, futures imply a 95.5% probability that policymakers will hold steady.
The yield on the 10-year U.S. Treasury note rose slightly to 4.029% as markets evaluated the broader fiscal implications of the Supreme Court ruling.
Commodities and Crypto Reflect Risk-Off Sentiment
Oil prices edged lower, with WTI crude slipping 0.1% to $66.23 per barrel amid persistent tensions between the U.S. and Iran. Meanwhile, safe-haven demand lifted gold 0.3% to $5,244.96, while silver eased 0.1%.
In cryptocurrency markets, Bitcoin gained 0.4% to $64,832.48, while Ether dipped marginally to $1,861.22, reflecting mixed investor appetite for risk assets.
