Date Issued – 21th March 2025
Preview
Asian stocks slumped Friday as tariff concerns and weak corporate earnings weighed on sentiment, while oil climbed for a third day after US sanctions targeted a Chinese refinery over Iranian crude purchases. China announced plans to expand its strategic metal reserves, driving volatility in copper and cobalt prices, as the US responded with a push to boost critical mineral output under the Defense Production Act. Meanwhile, Micron surged on AI-driven earnings, with data center revenue tripling, positioning the semiconductor company for further gains amid robust demand. Investors face a complex landscape of geopolitical risks, trade tensions, and evolving opportunities in commodities, energy, and technology sectors.
Asian Stocks Falter Amid Tariff Fears and Earnings Woes
Asian equities slid on Friday, with Hong Kong technology stocks leading losses, as tariff concerns and mixed corporate earnings cast a shadow on global markets. The Hang Seng Tech Index shed over 3%, while broader Chinese indices marked their sharpest two-day decline of the year. Indonesian and Taiwanese stocks also fell, though Japan eked out gains. Market sentiment soured further as US President Trump confirmed sweeping tariffs set to take effect on April 2, amplifying fears of a global economic slowdown.
FedEx shares tumbled on a profit warning tied to higher costs and softening demand, while Nike flagged geopolitical tensions as a headwind. Central banks, including the Fed and Bank of England, offered little clarity, citing tariffs as a key uncertainty. Meanwhile, oil prices rose on US sanctions targeting a Chinese refinery, and gold edged lower after flirting with record highs.
Investment Insight
Investors face a precarious environment as policy uncertainty and geopolitical risks weigh on sentiment. With tariffs poised to disrupt supply chains and corporate earnings under pressure, maintaining a defensive stance is prudent. Focus on companies with strong balance sheets and robust pricing power to weather potential turbulence. In Asia, upcoming earnings from Chinese tech giants like Tencent and Meituan may offer insight into sector resilience, but caution is warranted as global uncertainty looms.
Oil Rises as US Sanctions Target Chinese Refinery
Oil prices climbed for a third consecutive day, with Brent crude holding above $72 per barrel, marking its biggest weekly gain since January. West Texas Intermediate traded just below $69. The rally followed US sanctions on a Chinese refinery and its CEO for allegedly purchasing Iranian oil, signaling a tougher stance on curbing Tehran’s crude exports. While the immediate physical impact on supply chains is minimal, analysts note the sanctions elevate regional risk premiums.
Optimism over US oil consumption has supported prices, though concerns over a global trade war and potential OPEC+ supply increases in April continue to cap gains. Additional production cuts by OPEC+ members like Kazakhstan, Iraq, and Russia aim to balance the market as the group plans a phased output recovery through 2025.
Investment Insight
The US sanctions on Chinese refineries highlight geopolitical risks that could amplify oil price volatility. Investors should monitor developments in US-China trade dynamics and OPEC+ production plans for potential disruptions to supply-demand balances. With Brent nearing key resistance levels, energy-focused portfolios may benefit from exposure to integrated oil majors with strong cash flows, while hedging against downside risks tied to trade tensions and macroeconomic headwinds.
China Plans Strategic Metals Stockpile to Bolster Supply Resilience
China is ramping up its strategic reserves of key industrial metals, including cobalt, copper, nickel, and lithium, in a bid to safeguard critical mineral supplies amid rising energy-transition demand and geopolitical tensions. The National Food and Strategic Reserves Administration has initiated price inquiries and bids to augment its metal inventories, which are often used to stabilize markets and ensure supply during disruptions.
Copper prices, already near record highs on the London Metal Exchange and New York’s Comex, have surged further due to US tariff investigations and increased demand. Meanwhile, cobalt saw sharp price gains this month following an export halt by the Democratic Republic of Congo, the world’s largest supplier. Nickel prices edged lower in London, reflecting broader market volatility.
Investment Insight
China’s focus on stockpiling critical metals underscores the intensifying strategic importance of commodities tied to the energy transition. Investors should consider opportunities in mining companies and metal producers with exposure to cobalt, copper, and lithium, as demand for these materials is likely to remain robust. However, heightened geopolitical risks and potential supply disruptions could lead to significant price swings, making diversification and hedging strategies essential for mitigating volatility in commodity-linked investments.
Micron Surges on AI-Driven Earnings Beat, Eyes Technical Breakout
Micron Technology shares rose 1% to $104 in after-hours trading Thursday after the company delivered strong earnings boosted by surging demand for AI-related products. Data center revenue tripled year-over-year, driven by high-bandwidth memory chips used in AI software. The stock, up 22% year-to-date, is nearing a potential breakout from a symmetrical triangle pattern.
Investors are watching key resistance levels at $107, $130, and $200, while $85 serves as a crucial support level during pullbacks. Despite modest demand for chips in smartphones and PCs, the AI-driven outlook has reignited investor interest.
Investment Insight
Micron’s earnings highlight its growing role in the AI supply chain, positioning the company as a key beneficiary of the sector’s explosive growth. Investors should monitor the stock’s technical breakout potential, with a move above $107 signaling further upside. Long-term opportunities remain compelling, particularly for those focused on AI-related semiconductor plays, though caution is warranted as broader chip demand outside AI remains uneven.
Trump Invokes Wartime Powers to Expand US Critical Mineral Output
President Donald Trump signed an executive order Thursday invoking the Defense Production Act to boost domestic production of critical minerals, including rare earth elements, lithium, and potentially coal. The initiative aims to reduce US reliance on China, which currently dominates global processing of key materials used in batteries, defense systems, and other technologies vital to energy and national security.
The order facilitates financing, faster permitting, and prioritization of mining projects on federal lands, with the Defense Department and private sector coordinating efforts. Shares of US critical mineral producers like MP Materials rose 4.6% in after-hours trading, while Australian and Chinese miners saw declines. Trump also announced plans for a rare earths agreement with Ukraine, further signaling a strategic shift to secure supply chains amid growing geopolitical tensions.
Investment Insight
The US government’s push to localize critical mineral production highlights a strategic opportunity for investors to focus on domestic producers of rare earths, lithium, and other key materials. Companies like MP Materials and other North American miners stand to benefit from increased government support and financing.
However, global trade disruptions and China’s potential retaliatory export controls on materials like germanium and gallium could drive price volatility, underscoring the need for diversification in resource-focused portfolios.
Conclusion
Markets are navigating a dynamic landscape shaped by geopolitical tensions, trade policies, and sector-specific developments. From Asian equities under pressure to oil gaining on sanctions and Micron’s AI-driven momentum, investors face both risks and opportunities. China’s push to bolster critical metal reserves and the US’s invocation of wartime powers to expand domestic mineral output highlight the strategic importance of commodities in the global economy.
As volatility persists, a focus on resilient sectors like AI, energy, and critical materials, alongside diversification strategies, will remain key for navigating near-term uncertainty and positioning portfolios for long-term growth.
Upcoming Dates to Watch
March 21st, 2025: Japan CPI
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $350 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.
