Pace of selloffs is accelerating
The tariff tensions ignited by President Trump are exerting a toll on financial markets – all in advance of ‘Liberation Day’
Hedge funds are trimming their exposure to global tech stocks, with the latest selloff marking the fastest decline in six months, per a note from Goldman Sachs.
U.S. tech stocks made up about 75% of last week’s selloff, with the focus primarily on companies in the AI hardware sector. Stocks of major tech firms like Meta, Apple, Google, Tesla, and Microsoft were among the most sold on Goldman Sachs’ prime brokerage platform.
Goldman Sachs’ note aligns with Morgan Stanley’s observations last week which revealed that hedge funds were increasingly ramping up bets against tech stocks, with Nvidia, Advanced Micro Devices (AMD), and Tesla as their top three short positions.
The growing uncertainty in the global stock market has already seen the tech-heavy Nasdaq Composite fall over 8% this year. In addition to the uncertainty driving selloffs, growing concerns about the ratio of debt, hype and utility for generative AI is also driving investors to rebalance their portfolios.
Tariffs and Counter-Tariffs Continue to Drive Global Trade Tensions
The sell-off comes as investors brace for the economic impact of the tariffs set to be announced on 2nd April, which Trump has dubbed “Liberation Day.” The upcoming tariffs are part of a broader strategy by President Trump to address what he perceives as unfair trade practices against the United States.
Starting April 2, the U.S. plans to impose what the White House refers to as “reciprocal” taxes targeting countries with significant trade surpluses, including China, Canada, and the European Union. Despite a great deal of diplomatic work it looks like the UK givernment has not managed to negotiate a carve out and will therefore be subject to the same tariffs on US exports.
These measures will include a 25% tariff on automobile imports and yet-to-be-announced duties on pharmaceutical drugs, computer chips, copper, and lumber. Trump has argued that these tariffs will protect American industries and generate billions in tax revenue.
In response, affected countries have announced counter-tariffs. China has already imposed duties on U.S. agricultural goods and energy products, while the EU has threatened retaliatory measures targeting American exports such as whiskey and motorcycles.
Remarkably, Trump has managed to unite China, Japan and South Korea in a bid to coordinate a response to the tariffs, according to Chinese state media.
These actions have disrupted global supply chains and contributed to market volatility, with the latest report from Oxford Economics warning that prolonged trade disputes could harm global economic growth. The impact could soon be felt on laptop and tablet prices as a recent Consumer Tech study from Canalys estimates a 46% rise if the tariffs go on.