Tech Tumbles: Market Jitters Amid U.S.-China Tensions

China and Hong Kong markets faced setbacks due to a tech stock sell-off and rising U.S. tariff risks, with key indices experiencing declines. Escalating geopolitical concerns, particularly related to U.S. semiconductor curbs, contributed to market volatility as optimism on AI developments clashed with profit-taking pressures.

China and Hong Kong's financial markets experienced turbulence on Tuesday, primarily caused by a sell-off in technology stocks and heightened U.S. tariff risks. Major indices, including the Hang Seng Tech Index and benchmark Hang Seng Index, saw declines, influenced by heavy losses in tech giants such as Alibaba and Baidu.

The drop comes amid growing geopolitical concerns, triggered by the Trump administration's potential tightening of semiconductor restrictions on China. This move aligns with the 'America First Investment Policy,' aiming to impose stricter controls on Chinese economic interactions. Such geopolitical tensions overshadowed positive market trends driven by robust earnings and an optimistic outlook on artificial intelligence.

Market analysts indicate that the reduction in discounts for Hong Kong-listed Chinese stocks relative to onshore counterparts might dampen mainland investors' enthusiasm for southbound investments. The recent downtrend acts as a stark reminder of impending risks, with sentiments indicating market correction after an extensive rally.

(With inputs from agencies.)