Nasdaq Composite Index Rises 0.26% on US-China Trade Progress

The Nasdaq Composite Index rose by 0.26% from Monday’s close, driven by positive developments in US-China trade relations. This increase was largely attributed to the US government's decision to grant Nvidia licenses to resume exports of its advanced H20 artificial intelligence chips to China. This move reverses a ban that was imposed in April by the administration of President Donald Trump.

According to a blog post from Nvidia on Monday, the US government had officially approved the exports to China, the world’s second-largest economy. This decision was seen as a significant breakthrough in the ongoing trade tensions between the two nations. Economic commentators have highlighted this as a major step forward in the trade talks, with Nvidia's chips being likened to the US dollar in terms of their technological significance.

Jim Cramer, the host of CNBC’s Mad Money, praised the development, stating that Nvidia’s chips are akin to the reserve currency of technology. He also commended Nvidia’s CEO, Jensen Huang, for his perseverance in advocating for the resumption of chip exports to China. Huang has been a vocal proponent of reopening the channel for Nvidia chips, arguing that cutting off the market would undermine US companies and benefit competitors like Huawei.

Huang’s efforts appear to have influenced key figures within the Trump administration, including David Sacks, the White House’s AI and crypto czar. Speaking during a podcast with the Special Competitive Studies Project, Huang confirmed that he had received the green light from Washington to sell H20 chips in China. He emphasized that while China is a competitor and adversary, it should not be seen as an enemy. Huang believes that the American tech stack should be the global standard, much like the American dollar is the standard currency.

Nvidia developed the H20 chip in compliance with US export restrictions implemented under President Joe Biden’s administration in 2023. Although less powerful than Nvidia’s flagship H100 chips, the H20 chip has memory capabilities that are crucial for AI inference processes. This development comes at a time when the US-China trade relationship is showing signs of improvement, although many issues remain unresolved. The overall volume of trade has decreased, and the US merchandise trade deficit continues to grow.

In May, China’s share of total US trade fell to 5.89%, the lowest monthly figure in over two decades. Despite President Trump’s efforts to reduce the US trade deficit, it has increased in six of the past eight years, exceeding $1 trillion annually in recent years. For the first time in decades, the US trade deficit with Mexico and Canada combined surpasses that with China. China now ranks as the United States’ third-largest trade partner, trailing Mexico and Canada.