Key Points:
- Nasdaq dropped 2.08% to close at 20,509.75, reflecting trade war concerns and trader risk aversion.
- Tech stocks faced heavy selling pressure, with the index hitting an intraday low of 20,292.75 before a slight recovery.
Nasdaq Suffers Steep Decline as Trade War Fears Mount
The Nasdaq Composite tumbled 2.6% on Monday, logging its steepest decline in 2025 as traders dumped tech stocks amid growing trade war concerns.
President Donald Trump confirmed a 25% tariff on Canada and Mexico, alongside a 20% hike on Chinese imports, sending shockwaves through financial markets. Traders fear the escalating trade war could slow global growth and disrupt supply chains, particularly in the tech sector, which relies heavily on international manufacturing and semiconductor imports.
Asian markets mirrored the weakness, with Japan’s Nikkei 225 sliding 2.2% and Taiwan’s TAIEX falling 1.3%, reflecting concerns over global demand for semiconductors and electronics.
Tech Stocks Lead the Sell-Off, Chipmakers Under Pressure
The renewed tariff escalation hit semiconductor stocks hardest, with major chipmakers extending losses from last week. Nvidia, AMD, and Broadcom saw sharp declines in light of the news around Blackwell chips being smuggled into China, despite stringent US export restrictions.
Apple and Microsoft each lost over 2%, while Tesla fell 4.1%, extending its 2025 downturn amid rising regulatory scrutiny and supply chain risks.
The sell-off comes ahead of Nvidia’s highly anticipated earnings report on Thursday, which could determine whether AI-driven stocks can maintain momentum despite trade headwinds.
The risk-off sentiment pushed U.S. Treasury yields lower, with the 10-year yield dropping to 4.115%, its lowest since October. Traders sought safety amid concerns that higher tariffs could drive inflation and slow economic expansion.
Technical Analysis
The NASDAQ 100 index has dropped 2.08%, with the price opening at 20,945.55 and closing at 20,509.75. The index tested a high of 20,567.60 before facing selling pressure and dipping to a low of 20,446.00. The moving averages (5, 10, 30) indicate a downward trend, with price action struggling to hold above short-term resistance. The MACD histogram is recovering from negative territory, suggesting that bearish momentum may be weakening.
Picture: NASDAQ 100 stabilises after sharp drop, resistance at 21,086, as seen on the VT Markets app
Currently, support is found at 20,292.75, with a break below this level potentially leading to further declines. On the upside, resistance is seen near 21,086, where the last major rejection occurred. If the index can regain strength above 20,600, a move toward 20,800-21,000 is possible. Traders should monitor market sentiment, tech sector earnings, and Federal Reserve policy signals, as these will play a key role in shaping the index’s next move.
With the Nasdaq facing its biggest decline in months, traders will closely monitor upcoming economic data, particularly U.S. payrolls and inflation reports, for clues on the Federal Reserve’s rate path and broader market outlook.
