Beijing condemned new U.S. export controls on high-tech semiconductors as "bullying" and "protectionism" as The U.S. Commerce Department released guidelines against the use of China-made hardware, especially targeted to limit China's distribution of advanced AI chips like Huawei's Ascend series, citing national security risks of technology transfer to adversaries, while China accused the U.S. of abusing export controls to suppress its development. Nvidia's CEO, Jensen Huang, stated that these restrictions have backfired, accelerating China's domestic chip industry and slashing Nvidia's market share in China from 95% to 50%. Meanwhile, U.S. senators raised alarms over AI chip sales to Saudi Arabia and the UAE, fearing leakage to China and Russia and supply shortages for American firms, urging the Trump administration to impose safeguards in light of the new partnerships.
EQUITY
The S&P 500’s six-day winning streak was broken with a Federal Reserve official’s comments on tariffs slowing economic activity and weakening the labour market, a driver of inflation. Sector performance was mixed, with utilities leading gains, while communication services, energy, and technology sectors caused the overturn, including notable declines in Alphabet, Nvidia, and Airbnb. On the bright side, Moderna gained 6% on a softer FDA ruling, and Dollar Tree grew on a Deutsche Bank upgrade.
GOLD
Gold prices had a strong push in price, adding $60 on Tuesday, primarily due to U.S. dollar weakening following Moody's downgrade of the U.S. credit rating from AAA to Aa1, citing recession control risk in the face of deficits. This downgrade increased appetite for safe-haven assets like gold, as it raises questions about the long-term stability of U.S. sovereign risk.
OIL
Crude benchmark prices jumped, with factors at play being an Israeli threat to strike Iranian nuclear facilities that could disrupt Middle Eastern supply. Rising U.S. crude inventories and increased production from Kazakhstan limited gains, countering fears of shortages. Against President Trump's tough talk, the U.S. government is extending a sanction waiver for Chevron to continue operating in Venezuela for another 60 days as negotiations progress.
CURRENCY
The U.S. dollar index extends a two-day decline as President Trump’s tax bill projected to increase national debt by $3 trillion to $5 trillion faces opposition from Republican holdouts. The "sell America" wave continues to erode confidence in U.S. assets, a sentiment worsened by Moody’s downgrade of the U.S. sovereign debt and an IMF official calling on the US to reduce its fiscal deficit. Meanwhile, Bitcoin continues its rally, nearing all-time highs after 4 months.
