The Trump administration has revised semiconductor export rules. German DAX breaks price records again

The Dow Jones Index (US30) was down 0.64% at Tuesday’s close. The S&P 500 Index (US500) was up 0.72%. The Nasdaq Technology Index (US100) closed higher by 1.58%. Weakening inflationary pressures boosted stocks after Tuesday’s smaller-than-expected US consumer price report for April. The US Consumer Price Index for April rose 2.3% y/y, slightly weaker than expectations of 2.4% y/y and the lowest increase in 4 years. The Consumer Price Index excluding food and energy for April rose by 2.8% y/y, unchanged from March and in line with expectations.

Additionally, a rally by chip makers on Tuesday supported the overall market on news that Nvidia and Advanced Micro Devices will supply semiconductors to Saudi Arabian artificial intelligence company Humain for a data center project. On Tuesday, the Commerce Department said it was rescinding President Biden’s artificial intelligence proliferation rule, and the Trump administration plans to overhaul export rules for semiconductors used in artificial intelligence, which could move toward customized deals with countries.

The Mexican peso strengthened to 19.4 per US dollar, hitting a seven-month high, as a sharp pullback in the US dollar drove it higher. Meanwhile, the Bank of Mexico is expected to make its seventh consecutive 50 basis point rate cut on Thursday, bringing the policy differential into line, although much of this has already been factored into the price.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.31%, France’s CAC 40 (FR40) closed 0.30% higher, Spain’s IBEX35 (ES35) Index gained 0.83%, and the UK’s FTSE 100 (UK100) closed negative 0.02%. Frankfurt’s DAX Index closed at a new record high of 23,620 on Tuesday, marking its fourth session of gains, helped by upbeat German sentiment data and a cooler-than-expected US inflation report. The ZEW Index of German economic sentiment rose to 25.2 in May, well above the expectation of 11.9, thanks to optimism about domestic stability and improved trade dynamics. European stocks rose in the previous session after the US and China eased the trade war for the next 90 days to renegotiate trade terms, which supported the macroeconomic backdrop for all sectors. The auto sector led the gains, with shares of Volkswagen, BMW, and Stellantis adding between 4.5% and 3%. Industrial companies also rose strongly, with Siemens, Airbus, and Schneider gaining 1.5%.

WTI crude prices rose to $63.8 a barrel on Tuesday, hitting their fourth consecutive high in more than a month, amid new sanctions threats against Iran and an improving outlook for global trade flows. Speaking to Saudi Arabian officials, US President Trump reiterated his threat to impose sanctions on Iranian oil unless they agree to a nuclear deal. In turn, fears of widespread economic pain eased after the US and China agreed to reduce tariffs against each other temporarily.

Silver prices rose nearly 2% to above $33 an ounce on Tuesday, recovering from losses in the previous session as initial enthusiasm over the US-China trade agreement began to wane, giving way to broader market caution.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 1.43%, China’s FTSE China A50 (CHA50) gained 0.31%, Hong Kong’s Hang Seng (HK50) declined 1.87%, and Australia’s ASX 200 (AU200) was positive 0.43%.

The Australian dollar climbed above $0.648 on Wednesday, posting its second consecutive session of gains, amid dollar weakness following softer-than-expected US inflation data. Given the heavy reliance of Australian exports on China, especially commodity exports, the local currency remains highly sensitive to trade dynamics between the US and China. On the domestic front, data showed that Australia’s first-quarter wage growth exceeded expectations. The Reserve Bank of Australia (RBA) is expected to cut interest rates by 25 basis points at its meeting next week, continuing to support economic growth amid global uncertainty.

India’s annual inflation rate for April 2025 fell to 3.16%, the lowest since July 2019, from 3.34% in the previous month and well below market expectations of 3.3%. This brought the inflation rate even lower than the Reserve Bank of India’s average target of 4%, strengthening the case for additional rate cuts by the Central Bank.