Markets worldwide took a step back on Tuesday, with Asian indices mostly falling in response to a weak lead from Wall Street. However, the tech sector received a jolt from political news. Nvidia shares rose after President Trump announced on social media that he had informed Chinese President Xi Jinping that Nvidia would be allowed to sell its advanced H200 chips to China. Trump noted that Xi “responded positively,” signaling a potential shift in high-tech trade relations.
The implications of this decision are vast. Analysts believe this will allow China to accelerate its buildout of AI infrastructure, potentially catching up to U.S. capabilities. This geopolitical maneuver occurred against a backdrop of falling stock prices, with the S&P 500, Dow, and Nasdaq all closing lower. In Asia, Hong Kong’s Hang Seng and the Shanghai Composite both declined, while Japan’s Nikkei managed a small gain.
Corporate drama was not limited to chips. A battle for Warner Bros. Discovery intensified as Paramount offered $30 per share in cash, trying to steal the deal away from Netflix. Netflix shares slumped 3.4% as the hostile bid and potential regulatory hurdles—highlighted by Trump—spooked investors. Meanwhile, IBM’s $11 billion purchase of Confluent sent that company’s stock soaring.
Investors are now turning their attention to the Federal Reserve. A rate cut is expected on Wednesday to help the labor market, but persistent inflation remains a thorn in the side of policymakers. The market is anxious to see how the Fed navigates this delicate balance and what it signals for interest rates in the coming years.
In other markets, crude oil prices fell, and the U.S. dollar gained ground against the yen. As the week continues, the interplay between political decisions in Washington and monetary policy at the Fed will likely dictate the direction of global equities.