- NVIDIA shares dropped 8% after the company disclosed a $5.5 billion charge related to Trump’s ban on H20 chip sales to China.
- Cryptocurrency markets turned bearish following Nvidia’s announcement, with Bitcoin falling to $83,600 from a two-week high of $86,440.
- Market participants now await U.S. retail sales data and Fed Chair Powell’s speech for signals on how the trade war might impact monetary policy.
Market sentiment deteriorated Wednesday evening as Nvidia shares plummeted 8% to $89.10 in after-hours trading following the company’s disclosure of a substantial $5.5 billion charge linked to the Trump administration’s restrictions on its H20 chip exports to China. The negative sentiment quickly spread to cryptocurrency markets, with Bitcoin retreating to $83,600 from its two-week high of $86,440 reached earlier in the day.
The market reaction came after Nvidia revealed in a regulatory filing that it expects to write down $5.5 billion in the fiscal first quarter due to the new export restrictions targeting its H20 chips to China. Other cryptocurrencies also followed Bitcoin’s downward trajectory, with XRP dropping over 2% to $2.08 and Cardano‘s ADA sliding 4% to $0.61. The CoinDesk 20 Index, which tracks broader crypto market performance, weakened by more than 2%.
Interestingly, AI-associated cryptocurrencies performed even worse as NVDA stock tanked. The negative price action came just one day after unusual activity was observed in NVDA put options, which some analysts had interpreted as signaling a potential market decline. Nasdaq futures also fell over 1%, providing bearish signals for risk assets in general.
All Eyes on Economic Data and Powell
Investors are now focused on upcoming catalysts that could provide direction to markets rattled by trade tensions. The U.S. retail sales report for March, scheduled for release Wednesday morning Eastern time, is expected to show a 1.2% increase in consumer spending, up from February’s 0.2% climb, according to economists polled by Dow Jones.
A strong retail sales report might help ease recession fears triggered by President Trump’s escalating trade war with China and other trading partners. However, some market observers worry that even positive data could be dismissed as backward-looking since it doesn’t account for the major trade tensions that emerged this month.
Fed Policy in Focus Amid Trade Tensions
Perhaps more significant for market direction will be Federal Reserve Chairman Jerome Powell‘s scheduled speech Wednesday at the Economic Club of Chicago, where he will discuss his outlook for the U.S. economy.
“All eyes are on Powell. Markets are holding their breath for Powell on Wednesday. Between the trade war and rising recession chatter, traders are watching for any hint the Fed might be forced to cut sooner than expected,” stated Secure Digital Markets in Tuesday’s research note.
Forward-looking market indicators like inflation breakevens have already declined amid trade tensions, highlighting the potential disinflationary impact of Trump’s tariffs. This development could provide the Fed with justification to cut interest rates. Earlier this week, Federal Reserve Governor Christopher Waller indicated that the central bank might be compelled to rapidly implement a series of “bad news” rate cuts if the president reinstates the broad tariffs announced on April 2.
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