Wall St futures steady, chip stocks slip on China sales deal
Semiconductor giant Nvidia (NVDA.O), opens new tab dropped 1% in premarket trading and Advanced Micro Devices (AMD.O), opens new tab lost 2%.
A U.S. official told Reuters that the companies had agreed to give the United States government 15% of revenue from the sales of their advanced computer chips to China, days after the Commerce Department began issuing licenses for the sale of Nvidia's H20 chips.
Sale of the semiconductors was an integral issue in the U.S. agreement with China signed earlier this year and could strain the relationship between the two economies just before Tuesday's deadline for the deal's expiration.
"The Trump administration reckons higher prices and snarled-up supply chains are an acceptable price to pay to encourage more U.S. manufacturing," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
"The unusual arrangement is another example of a mega tech company acquiescing to the U.S. administration's demands, to gain an upper hand as trade relations are redrawn."
Markets also await clarity on the sector tariffs U.S. President Donald Trump has announced.
At 05:45 a.m. ET, Dow E-minis were up 98 points, or 0.22%, with 7,922 contracts changing hands, S&P 500 E-minis were up 6.25 points, or 0.10%, and Nasdaq 100 E-minis were up 11.5 points, or 0.05%.
Traders took breather after last week's rally helped the S&P 500 (.SPX), opens new tab and the Nasdaq (.IXIC), opens new tab log their strongest weekly performance in more than a month.
Investors expect the recent shake-up at the U.S. Federal Reserve and signs of labor market weakness could nudge the central bank into adopting a dovish monetary policy stance later this year, fueling much of the optimism.
Tuesday's consumer inflation report will either cast more doubt or offer clarity for investors, who are currently anticipating the Fed will lower borrowing costs by about 60 basis points by December, according to data compiled by LSEG.
A better-than-feared earnings season was also a relief and BofA's monthly fund manager survey showed that owning megacap stocks was once again the most popular trade.
Apple (AAPL.O), opens new tab was a standout last week following its biggest weekly showing in five years, after the iPhone maker unveiled a series of U.S. investment pledges. The company's shares were down 0.7% on Monday.
Gene therapy developers fell, with Sarepta Therapeutics (SRPT.O), opens new tab dropping 7.6% and Capricor Therapeutics (CAPR.O), opens new tab declined 9% as Vinay Prasad, a fierce critic of U.S. COVID-19 vaccine and mask mandates, was expected to return to the Food and Drug Administration.
Intel (INTC.O), opens new tab was up 1.6% and focus turned to a report that said CEO Lip-Bu Tan was expected to visit the White House after Trump called for his removal last week.
In geopolitical news, Trump and Russia's President Vladimir Putin are expected to meet on Friday to try and negotiate an end to the Ukraine war, which could also affect the outlook for crude prices.
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Reuters
4 minutes ago
- Reuters
Emerging countries' debt payments to private lenders dwarf those to China
LONDON, Aug 11 (Reuters) - Lower-income countries' external debt payments to private lenders remain three times higher than payments to China, research shows, shedding light on the complex, costly web of creditors they face as they struggle to keep up repayments. The research, by advocacy group Debt Justice UK, underscores the power private lenders - from bondholders to commodity trading houses - have in countries across the developing world which juggle debt repayments with spending on other needs, from education to infrastructure. Tim Jones, policy director at Debt Justice, said the data countered a narrative that China has played a primary role in creating debt crises in lower-income countries. China has lent hundreds of billions of dollars for infrastructure and other projects in developing countries and has used earnings of commodity exports, or cash held in restricted escrow accounts, from borrower nations as security for the loans. "Commercial high-interest lenders are receiving the greatest debt payments by lower-income countries," Jones said in a statement. "Where debt payments are too high, all external creditors need to cancel debt, in proportion to the interest rates they charged." While a post-pandemic wave of defaults has largely crested, developing countries still struggle with unsustainable debt as concessional financing shrinks, borrowing costs remain high and spending needs for infrastructure and climate resilience rise. Ethiopia is locked in debt restructuring negotiations with bondholders who have rejected taking haircuts, while Ghana and Zambia are still negotiating deals with some private creditors. The International Monetary Fund also recently wrote that Malawi was in default on $439 million in loans to Afreximbank and $464 million to Trade and Development Bank. Debt Justice's research, using World Bank data, found that between 2020 and 2025, 39% of external debt payments by 88 lower-income countries and small island developing states - a total of $354 billion - went to private lenders, compared with 34% to multilaterals, 13% to Chinese public and private lenders and 14% to repay bilateral loans to other governments. Of the 32 countries with the highest external debt payments, 21 of them sent more than 30% of payments to private lenders. Only six of them - Angola, Cameroon, Congo Republic, Djibouti, Laos and Zambia sent more than 30% of external debt payments to Chinese lenders. The data also showed a sharp increase in repayments to multilateral lenders - from $30 billion in 2020 to $70 billion in 2025. Jones said the rise followed a rapid increase in multilateral lending from 2019, which accelerated during the COVID-19 pandemic. Many of those loans are starting to come due now, he said, while those with floating interest rates would have become more expensive during the global interest rate hiking cycle.
The Independent
32 minutes ago
- The Independent
Nvidia, AMD to pay 15% of China chip sale revenue to U.S. government
Nvidia and AMD agreed to share 15% of their revenues from chip sales to China with the U.S. government, a U.S. government official has confirmed. President Donald Trump 's administration had halted the sale of advanced computer chips to China back in in April, but Nvidia and AMD revealed in July that Washington would allow them to resume sales of the H20 and MI308 chips, which are used in artificial intelligence development. The official, who insisted on anonymity to discuss a policy not yet formally announced, confirmed to The Associated Press the revenue sharing terms of the deal, and said the broad strokes of the initial report by The Financial Times were accurate. The FT reports that Nvidia and AMD agreed to the financial arrangement as a condition for obtaining export license to resume sales to China. "We follow rules the U.S. government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' Nvidia wrote in a statement to the AP. 'America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race.' AMD did not immediately reply to a request for comment. Restrictions on sales of advanced chips to China have been central to the AI race between the world's two largest economic powers, but such controls are also controversial. Proponents argue that these restrictions are necessary to slow China down enough to allow U.S. companies to keep their lead. Meanwhile, opponents say the export controls have loopholes — and could still spur innovation. The emergence of China's DeepSeek AI chatbot in January particularly renewed concerns over how China might use advanced chips to help develop its own AI capabilities.
The Guardian
33 minutes ago
- The Guardian
We expected dominance but Peak China may finally have arrived
Proclamations about the inevitability of China's dominance of the global economic system, or the so-called Chinese century, are much less validated by contemporary Trumpian angst than what should be the Communist party's appeal to its intrinsic values and virtues. Common concerns about coercive politics and human rights aside, some notions of China as an unstoppableeconomic, technological and military behemoth sit alongside others focused more on an increasingly sclerotic, over- centralised political economy, that depends on wasteful economic stimulus, and features poor governance and institutions. The fusion of these notions suggests that we may already have reached 'peak China'. At the time of the 2008 financial crisis, China's official, and probably exaggerated, GDP was about $14tn (£10.4tn), or about a third of that of the US. By 2021, it had risen to three-quarters of America's $23.7tn, and there was widespread talk about in which year of the 2020s China would overtake the US. By 2024, however, China's $18tn economy had fallen back to just over 62% of the almost $30tn of the US. In GDP per head terms, China is still no more than 20% of the US. A rising China uniquely lifted its share of global GDP between 2000 and 2021 from 3.5% to 18.5%, but since then it has slipped back to about 16.5%. There is no question that China's rise is at least stalling. The working age and total population are now in relentless decline. The urbanisation rate, just over 60%, is flattening out. Productivity growth has stalled. The long surge in China's share of global manufacturing exports and production has levelled off, and the external environment for China is now much harder and more hostile. A 90-day pause in the US-China tariff war is due to expire on Tuesday, and it is unclear whether it will be extended. Part of the problem is that China has reached the end of extrapolation. The past really is another country. Some of its growth engines could only ever fire once, for example, enrolling children in primary and secondary schools; improving basic healthcare; reaping the demographic dividend of falling dependency rates; and moving people from the countryside to higher-productivity, urban jobs. Some growth also flowed from a number of highly effective policy initiatives such as those captured by the era of reform and opening-up, inspired by Deng Xiaoping: joining the World Trade Organization; creating a genuine market in housing, and exploiting globalisation. None of these can happen again. China's growth model, moreover, based on unrealistically high growth targets and uniquely high investment and savings rates, is becoming swamped by stagnant productivity, debt service difficulties, and misallocation of capital. At the Central Economic Work Conference in December last year, China's premier, Li Qiang, summarised his country's condition by saying candidly that the foundation for sustained economic recovery and growth is not strong, demand is weak, there are pressures on job creation and 'fiscal difficulties' among several local governments. Although consumption has been made a top priority, actual policy measures to make it so have been underwhelming, partly because redistributing economic power to companies and citizens also entails changes in political power, which are anathema to the Communist party. The structural downturn in the property sector, which had at one stage accounted for more than a quarter of the economy, is likely to shrink for the foreseeable future, dogged by lower rates of household formation and smaller cohorts of first-time buyers, both linked to demographics, and a chronic oversupply of unsold and uncompleted real estate. The government has softened its approach to private enterprises and approved a new private economy promotion law to bolster AI, technology clusters and hubs, and reduce regulatory barriers. Low business confidence, though, is not really about regulations but about political interference, and weak demand and profits. The super-globalisation from which China benefited is pretty much over, and the world's biggest export nation is now confronted by a fragmenting and fracturing trade and investment environment in which commerce within blocs is holding up better than trade between them. China's bloc includes a majority of the world's population, but very small proportions of world GDP, investment and wealth. At the same time, developed and middle-income economies, as well as emerging nations, are pushing back against what they perceive to be predatory trade policies by a mercantilist China. Peak China does not stem from doubts about China's industrial prowess and pedigree. It is, though, about two things that can be simultaneously true: China can have world-class companies and trendsetters such as Alibaba, Tencent, BYD, CATL, Huawei and DeepSeek, as well as an economy with systemic imbalances, debt capacity limits, and political and economic contradictions. Put another way, China has islands of technological excellence and leadership in a sea of macroeconomic turbulence and trouble. This characterised Peak Japan 40 years ago, and China is shaping up for the encore. George Magnus is a research associate at Oxford University's China Centre and at Soas University of London. He is the author of Red Flags: Why Xi's China is in Jeopardy
