The Dow Jones fell over 400 points Tuesday as worries over US inflation and a mixed bag of big bank earnings dragged the blue-chip index lower. The Nasdaq, meanwhile, got a boost from a 4% rise in Nvidia after the AI chip company said it hopes to “soon” resume deliveries of its H20 GPU sales to China.
June inflation data released Tuesday represented an increase from May levels, despite the headline numbers matching expectations. The consumer price index increased 0.3% on the month, putting the annual inflation rate at 2.7%, matching a consensus poll from Dow Jones. So-called core CPI, which excludes food and energy prices, grew 0.2% month over month, slightly less than expected. Year over year, it expanded by 2.9%, matching estimates.
The print spurred fears about the impact of President Trump’s tariffs. Trump on Saturday said the US will impose a 30% tariff on goods from the European Union (EU) and Mexico starting Aug 1.
“The latest US inflation report practically confirmed that President Trump’s tariffs acted to push up consumer prices in June,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.
“While there was a mild miss in the core number, both the main and underlying inflation measures are now printing at their highest levels in four months. The big fear for Fed officials is that stormier waters lie ahead, as not only is there a time lag between the tariffs and an increase to prices, but additional tariff hikes on 1st August would almost certainly herald further inflationary pressures ahead,” Ryan added.
Skyler Weinand, chief investment officer of Regan Capital, said it was a relief to see Tuesday’s CPI report coming in-line with expectations, but that “it’s highly likely that a tariff-driven inflation reckoning is coming.”
On the earnings front, reports from several financial heavyweights failed to impress investors.
Wells Fargo beat earnings, but a reduction in net interest income guidance sent shares lower by more than 5%. Shares of JPMorgan Chase edged lower even though the bank posted better-than-expected second-quarter results driven by strong trading and investment banking revenue. Asset manager BlackRock slipped nearly 6% on a quarterly revenue miss.
Citigroup bucked the negative trend in financials, rising more than 3% after the bank topped second-quarter estimates.
Wall Street is hoping that the second-quarter earnings season will boost a stock market that is already near all-time highs. Expectations are low ahead of the reports, however. The S&P 500 is projected to post a blended earnings growth rate of 4.3% on a year-on-year basis, according to FactSet data. That would mark the lowest growth rate for the index going back to the fourth quarter of 2023.
Nvidia said on Monday evening that it will resume selling its H20 processor in China “soon”, amid improving trade relations between Washington and Beijing, and as CEO Jensen Huang met with officials from both sides.
Nvidia also announced a new graphic processing unit for China which it claimed was ideal for AI smart factories and logistics.
Huang told customers that Nvidia is “filing applications to sell Nvidia H20 GPU again … the US government has assured Nvidia that licenses will be granted,” the world’s most valuable listed company said in a statement.
The H20 is a processor Nvidia designed specifically to sell in China, and was made in line with earlier, Biden-era restrictions. The chip is wildly popular among Chinese AI developers, and is used by majors such as DeepSeek, Tencent, Baidu and Alibaba.
William Blair analyst Sebastien Naji estimates that the deal will add roughly $0.30 to Nvidia’s EPS for fiscal 2026. “… we see an opportunity for $0.30 in additional EPS in fiscal 2026 assuming China revenue of roughly $20 billion for the full year,” Naji said. This would be up modestly from the $17.1 billion in China sales for fiscal 2025. Teh analyst also said the China development could provide a tailwinds to gross margins in the second half.
Several brokerage firms raised their price target on Nvidia following the China news.
Oppenheimer analyst Rick Schafer raised the price target on Nvidia to $200 from $175. Additionally, Melius Research analyst Benjamin Reitzes raised the target price on Nvidia to $235. At the same time, DZ Bank increased its target price on the stock to $195, BofA raised its price target to $220, and Mizuho raised its price target to $195.
China’s economy grew in the face of Trump’s tariffs
The New York Times, July 16, 2025
China’s economy grew at a steady pace this spring, according to official figures, despite President Trump’s steep tariffs. Part of China’s resilience rests in investments in factories and big projects like high-speed rail lines and a continual flood of global exports. The economy also got a boost as buyers, anticipating tariffs, ramped up their orders in the first three months of the year.
If China’s current pace of growth continues, its economy will expand at an annual rate of about 4.1 percent — only slightly slower than the growth in the first three months of this year.
China’s G.D.P. report was released as the U.S. took stock of the latest inflation figures, which showed that Trump’s tariffs were starting to push up prices. Prices of products most exposed to tariffs, like household furnishings, jumped significantly in June.
U-turn on chips: Three months after shutting down Nvidia’s A.I. chip sales to China, the Trump administration has reversed course and will allow Chinese tech companies to restart purchases of Nvidia’s chips.
E.V.: Beijing said that it would restrict any transfer out of China of eight key technologies for manufacturing electric vehicle batteries. That could make it harder for Chinese electric carmakers to set up factories overseas, as the E.U. has pushed them to do.
Australia: On a visit to China, Prime Minister Anthony Albanese met with Xi Jinping, trying to deepen ties while being under pressure from the U.S.
Trump’s shift on Ukraine is good for Europe — for now
The New York Times, July 16, 2025
When Trump agreed to sell sophisticated U.S. weapons to Europe so that they could be supplied to Ukraine, European leaders saw it as an important shift. Still, these leaders are cautious, even if Trump is suddenly sharply criticizing President Vladimir Putin.
Europeans are smiling through gritted teeth, infuriated by Trump’s threat to raise tariffs to 30 percent on all goods that arrive in the U.S. from the E.U. Trump’s new attitude “might be good news, but good news for how long, and under what conditions?” one expert asked, adding: “It does nothing to solve the problems of the trans-Atlantic relationship.”
Asian markets mixed as China’s economy meets forecasts
AFP, July 15, 2025
HONG KONG: Markets were mixed today as positive Chinese economic data was offset by weak consumer spending, while optimism that governments will hammer out deals to avoid the worst of Donald Trump’s tariff threats provided support.
Beijing said gross domestic product expanded 5.2% in April-June thanks to a surge in exports as businesses front-loaded shipments ahead of the US president’s stiff levies, and after the superpowers agreed to work on a long-term pact.
While the reading was slightly slower than the first quarter, it was in line with forecasts in an AFP survey and comes after figures yesterday showed exports soared more than expected in June, including a strong recovery in goods sent to the US.
Meanwhile, industrial output came in above expectations.
However, today’s reports showed efforts to boost consumer activity continue to fall flat, with retail sales expanding 4.8% last month, well below estimates in a Bloomberg study and highlighting the work leaders face in kickstarting the economy.
China’s recovery has been hamstrung by a bruising trade war with the US, driven by Trump’s sweeping tariffs, though the two de-escalated their spat with a framework for a deal at talks in London last month.
However, observers warn of lingering uncertainty.
“The national economy withstood pressure and made steady improvement despite challenges,” National Bureau of Statistics (NBS) deputy director Sheng Laiyun told a news conference.
“Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development, and high-quality development made new strides,” he said.
The US president upped the ante yesterday, warning Russia’s trading partners – which include China – that he will impose tariffs reaching 100% if Moscow fails to end its war on Ukraine within 50 days.
After a strong start to the day, Hong Kong pared an early rally while Shanghai dipped into negative territory.
Elsewhere, Tokyo, Sydney, Singapore, Wellington, Taipei and Jakarta rose, with Seoul and Manila in the red.
Trump also said yesterday that he will impose antidumping duties on most imports of fresh tomatoes from Mexico, with the US commerce department accusing its neighbour of engaging in unfair trade.
That came after he said he would hit the country and the EU with 30% levies, having announced a slew of measures against key partners last week if deals are not struck by Aug 1.
However, analysts said investors viewed the warnings as negotiating ploys rather than a genuine move, citing previous threats that were later rowed back.
The mixed performance in Asian markets followed a healthy day on Wall Street, where the Nasdaq hit another record high.
Bitcoin edged down after hitting a record high above US$123,200 yesterday thanks to optimism over possible regulatory changes for crypto assets in the US.
Nvidia, AMD to resume some AI chip sales to China in US reversal
Bloomberg, July 15, 2025
Nvidia Corp and Advanced Micro Devices Inc plan to resume sales of some AI chips in China after securing Washington’s assurances that such shipments would get approved, a dramatic reversal from the Trump administration’s earlier stance on measures designed to limit Beijing’s AI ambitions.
US government officials told Nvidia they would green-light export licences for its H20 artificial intelligence accelerator, the company said in a blog post on Monday — a move that may add billions to Nvidia’s revenue this year, restoring its ability to fulfil orders it had written off as lost due to government restrictions. Nvidia designed the less-advanced H20 chip to comply with earlier China trade curbs from Washington, which Trump’s team tightened in April to block H20 sales to the Asian country without a US permit.
AMD received similar assurances from the US Commerce Department and plans to restart shipments of its MI308 chips to China once licenses for sales are approved, the company said in a statement Tuesday. Shares of AMD jumped more than 5% in pre-market trading while Nvidia rose as much as 4.5%.
Chief executive officer Jensen Huang — who met with President Donald Trump last week and is currently in Beijing attending a government-sponsored conference — appeared on Chinese state broadcaster CCTV shortly after Nvidia announced the decision, saying the company had secured approval to begin shipping. The Commerce Department, which oversees US export controls on chips and the tools used to make them, did not immediately respond to a request for comment on whether the agency has already issued any H20 licences.
The US move comes after weeks of thawing relations between Washington and Beijing, guided by an opaque trade truce that’s designed to see both sides approve exports of crucial technologies. After meeting his Chinese counterpart last week, US Secretary of State Marco Rubio said there’s a “strong desire on both sides” for a meeting between Trump and President Xi Jinping later this year.
Washington in recent weeks has lifted a spate of export controls — including on chip design software — imposed ahead of last month’s trade talks in London. That’s in return for China allowing more sales of rare-earth minerals needed to make a range of high-tech products, something US negotiators thought they’d achieved the month prior during talks in Geneva. Throughout and after those negotiations, Trump’s team insisted that controls on Nvidia’s H20 chips were not up for discussion.
Treasury Secretary Scott Bessent acknowledged Tuesday that the restrictions on Nvidia’s H20 chips had come up during the talks in London. The two sides emerged from those discussions with an agreement that paved the way for China to resume shipments of rare earths to American customers and the US to ease some export curbs, including on chip-design software.
“You might say that that was a negotiating chip that we used in Geneva and in London,” Bessent said in an interview on Bloomberg Television. “It was all part of a mosaic. They had things we wanted, we had things they wanted.”
The about-face marks a massive win for Huang, who has branded US chip curbs a “failure” that fuelled the rise of Huawei Technologies Co as Nvidia’s top Chinese rival. H20 shipments also would be a boon to companies from DeepSeek to Alibaba Group Holding Ltd that — despite Huawei’s semiconductor progress — seek Nvidia hardware to train, expand and operate the AI services they’re building to compete with the likes of OpenAI.
Nasdaq futures surged after Nvidia’s announcement, with Chinese stocks also reacting positively. Alibaba’s shares rose as much as 6% in Hong Kong on Tuesday, the Hang Seng Tech Index rose as much as 2.2% and data centre operators like Beijing Sinnet Technology Co jumped as much as 8.4%.
“Nvidia resuming the sale of H20 to China is obviously positive,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Not just for the company but also the AI semiconductor supply chain, as well as China tech platforms that are building AI capabilities. This is also a good development for US-China relations.”
The US first restricted Nvidia’s China sales in 2022, with sweeping curbs designed to prevent the Asian country from accessing advanced AI that could benefit the Chinese military. Nvidia has designed new processors for the China market several times to comply with those measures, which have become a central point of tension between Washington and Beijing.
Within months of the initial curbs, the chipmaker debuted the H800, which president Joe Biden’s administration effectively banned from sale to China in 2023. Nvidia responded with the H20, for which Biden officials weighed — but did not ultimately pursue — export restrictions. After Trump moved forward with H20 controls in April, Nvidia designed another China-focused product, the RTX PRO. The company described that chip as “fully compliant,” meaning that it falls below the technical thresholds that would necessitate Washington’s approval for export to the world’s second-largest economy.
“Let me stress that China opposes politicising and weaponising trade and tech issues,” Ministry of Foreign Affairs spokesman Lin Jian said at a regular briefing, when asked about Nvidia. Export curbs “will destabilise global industrial supply chains and will serve nobody’s interest.”
“The possibility that US officials will green-light Nvidia’s H20 exports to China reopens a key sales channel for the US chipmaker. The reversal could help recover a substantial portion of the US$15 billion (RM63.6 billion) in fiscal 2026 data centre revenue previously at risk, including US$4-5 billion originally expected in 2H, and part of the US$8 billion in unshipped 2Q orders,” Bloomberg Intelligence said.
The back and forth reflects the importance of the China market for Nvidia, which made history last week as the first company to hit US$4 trillion of market value — a testament to its central role in providing the hardware for a post-ChatGPT AI infrastructure building boom. Huang is currently seeking discussions with Chinese leaders, including the commerce minister, with Nvidia’s central role in the global AI rollout likely on the agenda.
Huang has also become increasingly vocal in Washington. He said recently that policymakers don’t need to worry about the Chinese military using Nvidia chips — one of the central justifications for US restrictions — since Beijing can’t rely on something that Washington could restrict at any point. He’s also warned that Nvidia’s loss of market share in the Asian country — from 95% to 50%, Huang said in May — directly benefits Huawei, the Shenzhen-based hardware giant at the centre of Beijing’s tech ambitions.
For months, though, it seemed the tech chief was fighting a losing battle. While some Trump officials are keen to boost Nvidia’s sales in markets like the Middle East, they held the line on China curbs.
“We obviously have huge respect for Jensen,” Sriram Krishnan, senior AI policy adviser at the White House, said in May. But “there is still bipartisan and broad concern about what can happen to these GPUs once they’re physically inside” China, Krishnan said.
The next month, during US-China trade negotiations in London, White House National Economic Council director Kevin Hassett said that Washington’s willingness to lift some chip-related export controls didn’t extend to the H20 measures. “The very, very high-end Nvidia stuff is not what I’m talking about,” he told CNBC at the time. Treasury Secretary Scott Bessent repeated that message to senators later that week, saying that “there is no quid pro quo in terms of chips for rare earths.”
Yet when lawmakers pressed Bessent on exactly which semiconductor curbs could be up for discussion, he stopped short of ruling out a possible easing on leading-edge chips and production equipment.
“What I’m saying is there’s no intent” to increase China’s access to advanced American semiconductors, Bessent said during congressional testimony in June. “In fact we have done just the opposite. We put export controls on the Nvidia H20, which I would regard as a very upper end chip, but not the highest end chip.”
My take: This is significant for Nvidia, as well as for China AI players like Alibaba. It is also positive for the data centre development in Malaysia.
Donald Trump was finally convinced by Jensen Huang that the ban of exports of H20 chips to China will only benefit Huawei. Recall that Huawei has already successfully developed its 915C chips which may almost match the performance of Nvidia H20, and was developing the next generation AI chip 915D which would be better than H20.
The US may be forced to relax the export control of AI chips to China as the latter was not relaxing the exports of rare earth elements to the US as quickly and as much as the US wanted. The investment by a private company in Texas to develop a rare earth processing plant would only start producing certain elements of rare earth from 2028, and the US weapon supply industry cannot wait for so long.
This development is positive for Alibaba as it will be able to obtain Nvidia Ai chips required for its expansion in AI cloud infrastructure. Alibaba had earlier announced an aggressive capex program of spending RMB380 billion on AI expansion over 3 years. Huawei has not been able to produce so many high performance AI chips as required by the China AI players.
Bloomberg on July 16 reported:
US Commerce secretary Howard Lutnick said the US reversal’s of restrictions on sales of chips to China followed recent trade negotiations with Beijing over rare earths.
President Donald Trump curbed exports of Nvidia’s H20 AI chips to China in April as part of an escalation of his trade war with Beijing.
But a person familiar with the situation said the commerce department would start approving export licenses for these chips, after Nvidia on Monday said it expected to restart sales to Chinese companies.
Lutnick said on Tuesday the loosening of export controls had been part of recent talks between American and Chinese officials in London and Geneva as the two sides met in a bid to de-escalate trade tensions.
The US has pushed China to ease export controls on seven rare earth elements and magnets that are critical to the production of a range of defence and clean energy technologies.
“In the magnets deal with the Chinese, we told them that we would start to resell them,” Lutnick said on CNBC.
Lutnick added that the chip being sold to China, which was tailored to comply with 2022 Biden-era controls aimed at preventing the sale of the most powerful chips to Chinese companies, was the company’s “fourth best” chip.
We don’t sell them our best stuff, not our second-best stuff, not even our third best,” Lutnick said.
He added that it was in US interests to keep Chinese companies using American technology.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack. That’s the thinking.”
The easing of restrictions is a big win for Nvidia, whose CEO Jensen Huang, met Trump in the White House this month to warn that America would risk forfeiting its leadership in AI to Chinese companies if it cut off exports of critical technology.
In a visit to Beijing on Tuesday, Huang told reporters it was “important” for American companies to “compete and serve the market” in China.
When there is no export restriction on Nvidia H20 chips to China, there should be also no restriction on H20 chips export to Malaysia for AI players to use in the data centres in Malaysia. Chinese AI players like Alibaba will be able to get access to Nvidia H20 chips when they set up data centres in Malaysia, and YTL Power will be able to lease out data centres fitted with H20 chips to any China cloud service providers.
The initiative announced by MITI yesterday on AI chips controls in Malaysia will then apply to higher performance chips than H20, such as Nvidia Blackwell GPUs. Actually not all hyperscalers require the highest performance chips like Blackwell in their AI data centres, most just require H20 or equivalent.
Net short positions on YTL Power remained flat at 33.6m shares at close Tuesday. Net short positions on YTL decreased by 1m shares to 26.3m shares.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack. That’s the thinking.”
This thinking came too late already, the trust is already gone and China will very likely remain more low profile in developing their home grown platform. CUDA is still very well loved by the AI developers in China, that will take sometime to wean off, but the bad faith moves by the US definitely bifurcates the industry with another non american alternative in the next coming decade.
Trump could have made an icing on the cake by relaxing chinese companies to be able to produce chips made by newer nodes.....could have saved intel at the same time during their current struggling moment to give a proper ramp towards their in house fab for 18A node.....the chinese companies wouldn't mind the lower yields compared to tsmc as long as they get to procure chips using newer nodes.....they survived the low yield rates with their domestic and older nodes already, suboptimal yield rates of intel in current node compared to industry leader tsmc pales in comparison to what they faced back home.....