Asian equities slip, with China being hurt by Canadian tariffs on EVs

With attitude toward Chinese markets weakening following Canada's decision to join the United States and Europe in slapping hefty import duties on the nation's electric car sector, the majority of Asian equities slumped on Tuesday.

Additionally, concern about U.S. interest rates restrained the broad markets, and caution was warranted ahead of this week's highly anticipated NVIDIA earnings release.

Wall Street's uneven overnight closing provided mediocre clues for regional markets. Although the Dow Jones Industrial Average closed at a new high, the S&P 500 and the NASDAQ Composite suffered losses as investors withdrew from heavyweight technology firms due to worries about U.S. interest rates.

A surge in oil costs due to increased Middle East tensions and disturbances in Libya further startled the markets.

Following Canada's announcement that it will apply a 100% import charge on Chinese EVs, including those imported by Tesla, EV stocks including BYD, NIO, and Li Auto traded in a flat-to-low range.

Tesla's overnight trading dropped 3.2%.

Given that Europe is the sector's larger export market than Canada, losses in Chinese EV equities were very minimal.

However, Beijing remained infuriated by Canada's action, and with the possibility of a new trade war with the West, the mood towards China soured. The possibility of Beijing imposing retaliatory tariffs worried traders.

As investors withdrew from the technology sector in expectation of lower interest rates, losses in significant U.S. technology equities impacted their Asian counterparts.

The KOSPI in South Korea fell 0.4%, while chip stocks experienced some dip ahead of Nvidia's highly anticipated results on Wednesday, which are anticipated to reveal if the artificial intelligence trade is still popular.4

Despite recovering from their recent losses, Japanese equities were nonetheless under pressure due to the yen's strength. While the TOPIX gained 0.2%, the Nikkei 225 index increased by 0.4%.

Following a somewhat weaker-than-expected reading of Japan's corporate services price index, a measure of producer inflation, the yen lost some momentum.

(Sources: investing.com, reuters.com)