There are more jitters in the AI sector Wednesday after analysts at TD Cowen highlighted that their channel checks show Microsoft is canceling data center leases in the U.S. and Europe, following up on his earlier finding.

Across the AI sector, AI chip makers NVIDIA (NASDAQ:NVDA) and Broadcom Inc (NASDAQ:AVGO) are each down 5%, while AI server makers Dell Technologies Inc (NYSE:DELL) and Super Micro (NASDAQ:SMCI) are down 3% and 9%, respectively.

Specifically, analyst Michael Elias said that Microsoft (NASDAQ:MSFT) walked away from +2GW of capacity in both the U.S. and Europe in the last six months that was in the process of being leased and has both deferred and canceled existing data center leases in both the U.S. and Europe in the last month.  Elias first warned about Microsoft’s data center activity slowing in February.

The analyst views the pullback as being largely driven by the decision not to support incremental Open AI training workloads.

That being said, they still believe that the lease cancellations and capacity deferrals indicate an oversupply of data centers.

“As such, we believe the lease deferrals are intended to provide Microsoft with a medium-term runway of capacity in major markets to support cloud/inference workloads, with Microsoft canceling leases for capacity that exceeds its updated medium-term capacity needs,” the analyst commented.

On a positive note, Elias said that competitor Google (NASDAQ:GOOGL) is stepping in to backfill the capacity that Microsoft walked away from in international markets.  In the U.S., Meta (NASDAQ:META) is backfilling the capacity.

“The ramp in demand from Google is driven by what we increasingly believe is a global capacity shortfall as its internal demand ramped amid its late August pullback from the market (which we highlighted in September 2024) stemming from an internal initiative to increase the utilization of its existing data center fleet,” the analyst said. “ As for Meta, the demand ramp comes as it is meaningfully increasing its data center capacity in support of Llama.”

On OpenAI, the firm checks indicate that the company is increasingly securing data center capacity directly from third parties, exemplified by its deal with CoreWeave. Additionally, OpenAI has significant long-term capacity ambitions, planning multiple Stargate projects, each ranging from 800MW to 1.5GW, potentially exceeding 6GW in total. To meet these needs, OpenAI is hiring talent from other hyperscalers with expertise in design, construction, and capacity planning, suggesting a move toward self-building data centers in the medium to long term.

U.S. President Donald Trump said he will impose a 25% tariff on all foreign-made cars and light trucks on April 2, as he gears up to widen his tariff agenda on key industries and trading partners.

Shares of major U.S.-listed automakers slumped after Trump’s comments, while Wall Street also retreated.

“What we’re going to be doing is a 25% tariff on all cars that are not made in the United States... business is coming back to the United States so that they don’t have to pay tariffs... This will continue to spur growth like you haven’t seen before,” Trump said during an event at the White House on Wednesday.

Trump expects automakers worldwide to flock to the U.S. to build their cars. He also expects U.S. automakers to shift production back onto U.S. soil from countries such as Mexico and Canada.

Earlier this week, Hyundai (OTC:HYMTF) announced a $21 billion investment in the U.S., including $5.8 billion for a new steel plant in Louisiana, creating nearly 1,500 jobs. Hyundai plans to increase its U.S. production capacity by about 200,000 vehicles.

The administration said the tariffs are expected to generate $100 billion in new tariff revenue for the country. But they are expected to be borne by local importers- a scenario that could ramp up local car prices, disrupt supply chains and factor into stickier inflation.

Trump said he would ask Congress to pass a bill to make interest payments for cars made in the U.S. tax deductible.

Wall St, auto stocks slide on tariff jitters

Shares of General Motors Company (NYSE:GM), Ford Motor (NYSE:F), and Stellantis NV (NYSE:STLA) fell between 3% and 8% in aftermarket trade. Tesla Inc (NASDAQ:TSLA) steadied after falling over 5%.

Foreign automakers like Toyota Motor (NYSE:TM), Honda Motor (NYSE:HMC), and Ferrari NV (NYSE:RACE) fell anywhere from 1% to 3%.

Losses in automobile stocks came amid a broader rout on Wall Street, as investors fretted over the impact of Trump’s tariff agenda. The U.S. President is set to announce sweeping reciprocal tariffs against at least 15 countries on April 2, a date he has repeatedly touted as "liberation day."

Trump is also expected to impose tariffs on select commodity imports, and has threatened to impose tariffs on other key sectors such as semiconductors and pharmaceuticals.

But investors and policymakers- especially at the Federal Reserve- are growing increasingly concerned over the economic impact of Trump’s tariffs, especially in that they will crimp consumption and underpin inflation.

Ambar Warrick contributed to this report

JAKARTA (Reuters) - The Indonesian central bank said it is ready to intervene to stabilise the rupiah, which on Wednesday stayed close to its lowest levels since 1998 even as officials said market sentiment was positive and economic fundamentals were resilient.

There was positive sentiment in domestic stocks, bonds and the foreign exchange market, said Fitra Jusdiman, Bank Indonesia’s director of monetary and securities asset management.

He would not comment on whether the central bank had intervened on Wednesday, but said BI always monitored the market and was ready to step in to support the rupiah.

On Tuesday, the rupiah weakened past 16,600 per dollar to hit its lowest levels since the Asian financial crisis in 1998.

The rupiah was trading at 16,585 per dollar as of 0738 GMT on Wednesday, LSEG data showed.

The economy remains fundamentally resilient, Solikin M. Juhro, BI’s head of macroprudential policy, told reporters, citing economic growth of around 5%, low inflation and manageable foreign loans.

"Fundamentally, we remain well," he said, adding Indonesia is "totally different" and more resilient now than it was in 1998 during the Asian Financial Crisis.

Chief economic minister Airlangga Hartarto separately told reporters the country’s economic fundamentals remain strong despite the rupiah’s drop.

By Leika Kihara

TOKYO (Reuters) -The Bank of Japan must raise interest rates if persistent increases in food costs lead to broad-based inflation, Governor Kazuo Ueda said on Wednesday, signalling the bank’s resolve to continue weaning the economy off monetary support.

Ueda said Japan’s recent "very high" inflation was driven mostly by temporary factors such as rising import costs and food prices, which are likely to dissipate and thus not a reason to tighten monetary policy.

But there is a chance that sustained rises in food costs could push up prices for other goods and services, he said.

"If such moves lead to broad-based inflation across the economy, we must respond by raising interest rates," Ueda told parliament.

Ueda also said the BOJ will take "stronger steps" to whittle down monetary support if inflation overshoots its projections, signalling the chance of hiking rates sooner or more aggressively than initially expected.

Japan’s core consumer inflation hit 3.0% in February and has exceeded the central bank’s target for nearly three years, with recent rises driven largely by steady gains in food prices.

The BOJ has stressed the need to focus on underlying inflation, or the long-term price trend that strips away the effect of temporary factors, in deciding the timing and pace of further rate hikes.

Ueda said underlying inflation, which the BOJ determines by looking at various indicators, is heading towards but remains "just a bit" short of 2%.

"We expect underlying inflation to gradually converge toward 2% even when temporary rises in food prices disappear," as a tightening job market and improvements in the economy lead to sustained rises in wages and inflation, Ueda said.

"We are always vigilant to the possibility that underlying inflation could accelerate at a pace faster than we expect," Ueda said.

The impact of rising food prices on underlying inflation will likely be a key point of debate when the BOJ’s board issues fresh quarterly economic projections at its next policy meeting on April 30-May 1.

OVERSEAS UNCERTAINTIES

Another complication is U.S. President Donald Trump’s tariff policies, as higher levies on automobiles could deal a huge blow to Japan’s export-reliant economy, analysts say.

While prospects of higher wages will likely underpin consumption, the BOJ must also scrutinise how growing overseas uncertainties could affect consumer confidence, Ueda said.

The yield on the benchmark 10-year Japanese government bond (JGB) briefly hit 1.585% on Wednesday, the highest level since October 2008, due in part to market expectations of further rate hikes by the BOJ.

In judging whether underlying inflation is on course to hit 2%, the BOJ is focusing particularly on whether wages will keep rising at the current pace of around 3%, Ueda said.

"What’s important is for wage gains to be sustained and broaden," Ueda said, stressing the need to scrutinise whether bumper pay hikes offered by big firms will spread to smaller firms.

"It’s also important for wage gains to be properly reflected in services prices" and heighten long-term inflation expectations, he said.

A leading indicator of Japan’s service-sector inflation hit 3.0% in February, data showed on Wednesday, keeping alive expectations of further BOJ rate hikes.

The BOJ raised its short-term policy rate to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target backed by solid wage gains.

Ueda has said the central bank will keep raising interest rates if prospects of higher wages lead to broader price hikes, not just for goods but also for services.

A Reuters poll this month showed many analysts expect the BOJ’s next rate hike to come in the third quarter, most likely in July.

Most Asian stocks rose on Wednesday, extending recent gains amid cooling concerns over the impact of U.S. President Donald Trump’s planned trade tariffs, while regional tech stocks tracked gains in their U.S. peers.

Australian shares were the best performers for the day after softer-than-expected inflation data furthered bets on more interest rate cuts by the Reserve Bank of Australia.

Hong Kong stocks recovered from Tuesday’s losses, while Japanese shares trimmed early gains after Bank of Japan Governor Kazuo Ueda warned that the central bank will raise rates further. 

Asian markets took some positive cues from Wall Street, which closed marginally higher on Tuesday on strength in major tech stocks. But uncertainty over Trump’s tariffs and weak consumer confidence data limited broader gains.

U.S. stock index futures rose marginally in Asian trade after Trump said in a Newsmax interview that he will probably be more lenient than reciprocal with his April 2 tariffs, but that he also did not want too many exceptions from his tariffs. 

Earlier reports suggesting that Trump’s upcoming tariffs will be less severe than expected helped buoy Asian markets this week, although investors still remained uncertain over just what their scope and impact will be. 

Australia stocks surge as CPI inflation cools 

Australia’s ASX 200 rose 0.7% after consumer price index inflation data read slightly below expectations for February, while underlying inflation also eased.

The inflation data came just a week after softer labor data, with both prints driving up some bets that the RBA will have enough headroom to cut interest rates further.

The central bank meets next week after cutting rates for the first time in nearly five years in Feb. 

The RBA had signaled a largely data-driven approach to further easing, with sticky inflation and a tight labor market being its two biggest considerations. Analysts at Capital Economics said the central bank will likely leave rates unchanged when it meets next week, but the softer inflation primes it to cut rates at least two more times this year. 

Hong Kong recovers, Japan trims gains on Ueda comments 

Broader Asian markets were largely upbeat, with Hong Kong’s Hang Seng index rising 0.6%, recovering a measure of recent losses as the index was slapped with profit-taking at three-year highs. Tech stocks also rose tracking their U.S. peers. 

Focus remained squarely on more cues on China’s artificial intelligence capabilities, as well as Beijing’s plans for more stimulus. The mainland Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell slightly amid fears of more U.S. trade measures against Beijing. 

Japan’s Nikkei 225 and TOPIX indexes rose 0.3% and 0.2%, respectively, trading well below intraday highs. The two trimmed early gains after the BOJ’s Ueda warned that the central bank will keep raising interest rates if the economy remains on track. 

Japanese corporate services price index data- a gauge of producer inflation- read mildly cooler than expected for Feb, but remained sticky at 3%, data showed on Wednesday.

Among other Asian markets, South Korea’s KOSPI rose 0.6% on strength in local chipmaking stocks, which tracked gains in their U.S. peers. 

Singapore’s Straits Times index rose 0.3% after notching a record high on Monday. Futures for India’s Nifty 50 index pointed to a slightly positive open, as a recent rebound in the index cooled. 

By Karen Freifeld and David Shepardson

WASHINGTON (Reuters) -The U.S. added six subsidiaries of Inspur Group, China’s leading cloud computing and big data service provider, and dozens of other Chinese entities to its export restriction list on Tuesday.

The Inspur units were listed for contributing to the development of supercomputers for the Chinese military, the Commerce department said in a posting. Five of the subsidiaries are based in China and one in Taiwan. Inspur Group itself was placed on the list in 2023.

The Inspur units are among about 80 companies and institutes added to the export control list Tuesday. Over 50 are based in China. Others are in Taiwan, Iran, Pakistan, South Africa and the United Arab Emirates.

The listings are intended to restrict China’s ability to develop high-performance computing capabilities, quantum technologies and advanced AI, and impede China’s development of its hypersonic weapons program.

"We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives," said Commerce Secretary Howard Lutnick.

The Chinese embassy in Washington said on Tuesday it "firmly oppose these acts taken by the US and demand that it immediately stop using military-related issues as pretexts to politicize, instrumentalize and weaponize trade and tech issues."

The U.S. also seeks to disrupt Iran’s procurement of drones and related defense items and prevent development of its ballistic missile program and unsafeguarded nuclear activities.

The government adds companies to the Commerce department’s Entity List for national security or foreign policy concerns. Companies cannot sell goods to those listed without applying for and obtaining licenses, which are likely to be denied.

Commerce official Jeffrey Kessler said the administration aims to prevent "U.S. technologies and goods from being misused for high performance computing, hypersonic missiles, military aircraft training, and UAVs (drones) that threaten our national security."

The Inspur Group did not immediately respond to a request for comment.

When Inspur Group was placed on the list in 2023, executives from AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) were questioned about their dealings with the company. At the time, chip industry insiders and their advisers said firms were trying to assess whether they had to halt supplying Inspur’s subsidiaries.Reuters could not immediately determine whether the U.S. companies continued to do business with the subsidiaries.

Nvidia declined to comment, and AMD did not immediately respond to a request for comment.

Chinese firms Nettrix Information Industry Co, Suma Technology Co, and Suma-USI Electronics, are among the other companies added to the list. The U.S. said they were added for helping develop Chinese exascale supercomputers, which can process vast amounts of data at very high speeds and conduct large-scale simulations.

The companies also have provided manufacturing capabilities to Sugon, also known as Dawning Information Industry Co, a computer server manufacturer added to the Entity List in 2019 for building supercomputers used by the military, the Commerce department said.

The companies could not immediately be reached for comment.

Other companies were added to the list for acquiring U.S.-origin items to advance China’s quantum technology capabilities, and for selling products to companies who supply other listed parties, including Huawei, the tech conglomerate viewed as at the center of China’s AI ambitions.

U.S. stock index futures moved little on Tuesday evening with investors remaining on edge in anticipation of more cues on President Donald Trump’s trade tariffs, while focus also turned to a string of upcoming economic readings. 

Futures steadied after a mildly positive session on Wall Street, as gains in most of the magnificent seven offset weakness in sectors outside of tech. Economically sensitive stocks fell after consumer confidence data read weaker than expected for March, signaling sustained weakness in private spending. 

S&P 500 Futures rose 0.1% to 5,831.25 points, while Nasdaq 100 Futures rose 0.1% to 20,517.50 points by 19:26 ET (23:26 GMT). Dow Jones Futures steadied at 42,917.0 points. 

Trump tariff uncertainty builds as April 2 deadline approaches 

Trump’s tariffs remained a major point of focus ahead of an April 2 announcement on more tariff measures. Reports suggesting that Trump will impose less strict tariffs than initially feared were a big point of support for Wall Street this week.

But the 47th President still kept up his threats of more tariffs, claiming that duties on automobile imports were still coming, and that he will impose lumber and semiconductor tariffs later.

Trump is expected to announce reciprocal tariffs on about 15 major U.S. trading partners next week, with the potential scope and impact of the tariffs remaining unclear. 

Wall St marks third straight day of gains 

Wall Street indexes advanced on Tuesday, buoyed chiefly by gains in heavyweight technology stocks. Tesla Inc (NASDAQ:TSLA) rose more than 3% even after data showed its European sales slumped for a second straight month. 

Gold prices rose slightly in Asian trade on Tuesday, remaining pinned below recent record highs amid easing concerns over the severity of U.S. President Donald Trump’s planned trade tariffs.

But haven demand still remained relatively high amid uncertainty over just what tariffs will be imposed on Trump’s April 2 deadline. Investors were also cautious before a string of key economic readings this week.

Gold and other precious metals retreated from recent peaks this week, as risk appetite improved on reports that Trump’s tariffs will be less severe than feared. But weakness in the dollar limited bigger losses in metal markets, keeping them close to recent highs.

Spot gold rose 0.1% to $3,015.51 an ounce, while gold futures expiring in May rose 0.1% to $3,048.05/oz by 00:59 ET (04:59 GMT). 

Gold falls from record highs as Trump tariff concerns ease

Spot gold prices- which reflect near-term demand for physical gold- fell sharply from a record high of $3,057.51/oz hit last week.

Softer gold prices were driven chiefly by improving risk appetite, with Wall Street also rebounding sharply from recent lows this week.

Traders were seen increasing bets that Trump’s April 2 tariffs will not include key sectors such as semiconductors, automobiles, and pharmaceuticals. Trump’s reciprocal tariffs are also expected to be against a select group of about 15 countries, limiting their overall impact.

But the impact and scope of Trump’s policies still remained uncertain, keeping markets  biased towards havens. Gold still traded above the coveted $3,000/oz level, which it breached earlier in March. 

This notion saw the yellow metal clock some gains on Tuesday. Other precious metals also advanced, with silver futures rising 0.7% to $33.673 an ounce, while platinum futures steadying at $967.10 an ounce. 

Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.4% to $9,989.60 an ounce, while May copper futures jumped 0.9% to $5.1280 a pound. 

Copper prices were boosted by growing fears of a supply crunch, amid potential U.S. import tariffs and Chinese refinery closures.

PCE, GDP data awaited for more cues 

Focus this week was squarely on key U.S. economic data for more cues on the economy and interest rates. 

PCE price index data- which is the Federal Reserve’s preferred inflation gauge- will be the biggest point of focus this week. The print is due on Friday, with core PCE inflation expected to remain well above the Fed’s 2% annual target. 

Before that, a revised reading on fourth-quarter gross domestic product is due on Thursday. The print comes amid growing concerns over a potential U.S. recession- fears of which were exacerbated by uncertainty over Trump’s policies. 

By Tom Westbrook

SINGAPORE (Reuters) - The dollar hit a three-week high on the yen early on Tuesday and was firm across the board after some strong U.S. services data and cautious optimism on the tariff front.

President Donald Trump said not all of his threatened levies would be imposed on April 2 and some countries may get breaks, which helped the dollar and the mood on Wall Street overnight by soothing some fears about a slowdown in U.S growth.

The dollar jumped 0.9%, pulling above 150 yen, then rose a little further in the Asia morning to a three-week high of 150.92 yen.

A strong services component in S&P Global’s flash U.S. PMI figures pushed up U.S. yields and coincided with weakness in Japan, where services and manufacturing were both in contraction.

The dollar also hit its strongest since March 6 at $1.0781 per euro, as a powerful rally in the common currency loses steam.

It was last trading at $1.0796, while sterling hit a two-week low of $1.2883 before steadying at $1.2918 in Asia trade. The U.S. dollar index notched a fourth straight session of gains to settle at 104.3.

But with Trump vowing that automobile tariffs are coming soon and the market implications of the levies complicated by concerns about U.S. growth, the next move is not obvious.

Data from the Commodity Futures Trading Commission on Friday showed that speculators turned net bearish on the U.S. currency last week for the first time since October, though the position is close to neutral.

"It seems like nobody knows what to do with the USD," said Brent Donnelly, President at analytics firm Spectra Markets.

"The EUR/USD trade has petered out, as have the massive move in rate differentials and relative equity performance," he said.

"The view that tariffs are unambiguously bullish USD has been challenged by the price action in 2025, and so even when we get the information on what tariffs look like next week, it will be hard to know what we are supposed to do."

The Australian dollar seemed to catch support from optimism about Trump’s tariff flexibility, and was steady at $0.6282. Australia’s government will unveil a pre-election budget at 0830 GMT, aimed at cost of living relief.

Bitcoin rode about 3% higher with the mood to trade around $87,400 in Asia. The New Zealand dollar slipped to its lowest in a week at $0.5725.

Most Asian stocks rose on Tuesday, extending recent gains amid growing bets that U.S. President Donald Trump’s tariff agenda will be less severe than expected.

But Chinese markets were outliers, especially shares in Hong Kong, as profit-taking in heavyweight technology stocks from a stellar year-to-date rally battered the Hang Seng. 

Broader Asian markets took a positive lead-in from Wall Street, which clocked strong gains during Monday’s session as reports suggested that Trump’s April 2 tariffs will be less severe than initially feared.

But Wall Street futures fell slightly in Asian trade, as investors still remained cautious over the impact of Trump’s tariffs, given that several Asian countries will be targeted by his reciprocal tariffs. 

Japan’s Nikkei advances, TOPIX hits 9-mth high

Japan’s Nikkei 225 index was among the best performers in Asia on Tuesday, rising 0.7% on support from heavyweight export-oriented stocks, which tracked some weakness in the yen.

But domestically-exposed Japanese stocks also advanced, with the TOPIX index briefly hitting its highest level since July 2024. 

Still, sentiment towards Japan soured this week after softer-than-expected purchasing managers index data. But bumper wage hikes and increased private consumption are expected to underpin activity in 2025, although they are also expected to elicit more interest rate hikes by the Bank of Japan.

The minutes of BOJ’s January meeting- where the central bank raised rates by 25 basis points- showed policymakers discussing further hikes. 

Other Asian markets advanced, with Australia’s ASX 200 adding 0.4%, while Singapore’s Straits Times surged 0.9% to a record high. 

South Korea’s KOSPI lagged, falling 0.3% despite strong gains in Hyundai Motor (KS:005380) (OTC:HYMTF) after it announced plans to invest $21 billion in the U.S.

Futures for India’s Nifty 50 index pointed to a mildly positive open, as the index rebounded further from nine-month lows hit at the beginning of March. The Nifty hit a 1-½ month high on Monday. 

Chinese stocks fall, Hong Kong slides 2% on tech losses 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.2% and 0.1%, respectively, while the Hang Seng was the worst performer in Asia with a 2% drop. 

Major Chinese tech stocks were battered by profit-taking after optimism over more stimulus and China’s artificial intelligence prospects drove a stellar rally so far in 2025. 

Xiaomi (OTC:XIACF) Corp (HK:1810) sank 5% and was among the biggest weights on the Hang Seng after it raised $5.5 billion in an upsized Hong Kong share sale. The stock recently hit a record high on optimism over its prospects in the crowded electric vehicle market. 

Alibaba (NYSE:BABA) (HK:9988) fell 2.7% after Chair Joseph Tsai warned of a growing bubble in the AI data center space, amid concentrated but overlapping efforts in the U.S. and China to build more infrastructure.