Nasdaq futures, Nvidia slide after new US curbs on chip exports to China

WASHINGTON: Nasdaq futures led declines on Wednesday and AI-chip heavyweight Nvidia slumped after it flagged steep charges from new US curbs on semiconductor exports to China.

The US Commerce Department late on Tuesday issued new export licensing requirements for Nvidia’s H20 and AMD’s MI308 artificial-intelligence chips to China.

Nvidia said it faces $5.5 billion in charges after the restrictions on exports to China, a key market for one of its most popular chips.

Shares of Nvidia slumped 6.4 per cent in premarket trading, while AMD shares lost 6.8 per cent.

Other chip stocks also lost ground, with Micron Technology down 4 per cent and Broadcom falling 3.9 per cent.

The export controls are the newest attempt from the administration of President Donald Trump to keep advanced semiconductors from being sold to China.

Nvidia’s warning highlighted the impact of the trade tensions on businesses and fueled worries that the constant shifts in US trade policy would hit domestic consumption and economic growth.

Investors are now hawk-eyed about the outlook from companies this earnings season.

“The trade escalation continues at full speed. (In response) China could well restrict its exports of rare earth metals and other commodities essential to building chips and machines to the US,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Ozkardeskaya said that the latest Chinese economic data was broadly positive and that “the stronger the Chinese data, the less likely it is to bend to US demands”.

Those worries have also led to sharp volatility in financial markets, with all three major Wall Street indexes losing ground so far this year.

The CBOE volatility index, Wall Street’s “fear gauge,” ticked up 1.46 points to 31.58 after falling for the last three sessions.

Separately, Trump ordered a probe into potential new tariffs on all critical minerals imports.

At 07:12 am, Dow E-minis 1YMcv1 were down 35 points, or 0.09 per cent, S&P 500 E-minis EScv1 were down 43.25 points, or 0.8 per cent and Nasdaq 100 E-minis NQcv1 were down 285.25 points, or 1.5 per cent.

Investors will closely monitor a speech by US Federal Reserve Chair Jerome Powell later in the day for indications on how the central bank will respond to the market’s volatility, coupled with growth worries.

Traders see a 20 per cent chance that the Fed will ease rates by 25 basis points at its May meeting, according to CME’s FedWatch.

March retail sales, due at 8:30 am ET, will also be scrutinized for clues on how consumers are faring amid uncertainty and rising inflation expectations.

Corporate results are now in focus, with many financial institutions set to report results before markets open.

United Airlines rose 6.4 per cent after the company reported stable bookings despite forecasting lower profit for the current quarter and flagging risks if the US economy slips into a recession.

US tariffs may cost chip equipment makers more than $1 billion

Tesla fell 2.2 per cent after Reuters reported that Trump’s tariffs on Chinese parts had disrupted the EV-maker’s production plans.