Biden gone by weekend? Trump formally accepts Republican nomination 👀

TRADE NEWS

Chip Stocks Plummet Amid US Export Crackdown

Global semiconductor stocks experienced significant declines, with companies like ASML, Nvidia, and TSMC facing notable drops. This downturn was triggered by reports of potential tighter export restrictions from the U.S. and heightened geopolitical tensions.

ASML’s shares in the Netherlands fell by 11%, while Japan's Tokyo Electron saw a 7.5% decrease. Other major players like Arm, AMD, Marvell, Qualcomm, and Broadcom also dropped over 7%.

Bloomberg reported that the Biden administration is considering extensive regulations to restrict companies from exporting critical chipmaking equipment to China. Central to these potential restrictions is the Foreign Direct Product Rule (FDPR). The FDPR grants the U.S. the authority to control the export of foreign-produced goods derived from U.S. technology. This means even if a product is manufactured outside the U.S. but incorporates American technology or software, it can still be subjected to U.S. export regulations. Originally introduced in 1959 and later expanded, the FDPR aims to prevent adversaries from leveraging U.S. technological advancements. Its impact extends beyond U.S. borders, affecting international companies that use American technology in their production processes.

Despite ASML reporting better-than-expected earnings for Q2, its stock fell due to the potential risk of tighter restrictions, with 49% of its sales coming from China. ASML produces machines essential for manufacturing advanced chips.

Former President Trump’s comments further negatively impacted semiconductor stocks. In a Bloomberg Businessweek interview, Trump suggested Taiwan should pay the U.S. for defense and claimed Taiwan took "about 100%" of America’s semiconductor business. These remarks cast doubt on the U.S. commitment to defend Taiwan if Trump were to become president again, particularly in the face of potential Chinese aggression.

Taiwan Semiconductor Manufacturing Co. shares fell 2.4%, and U.S. chip stocks also suffered. The VanEck Semiconductor ETF dropped over 7%, with companies like Super Micro Computer and Applied Materials also seeing declines.

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VIDEO OF THE WEEK

Why McDonald’s, Apple and Other U.S. Brands Are Losing in China

Major American brands like Apple, Nike, Starbucks and McDonald’s are rapidly losing market share in China to new domestic rivals. Chinese tech company Huawei, sportswear brand Anta, Luckin Coffee and fast-food restaurant Tastien are eating away at these American brands' market dominance.

GLOBAL TRADE SNIPPETS

Maersk's entire shipping network hit by Red Sea disruption. A.P. Moeller-Maersk said disruption to its container shipping operations due to hostilities in the Red Sea has expanded, with its entire ocean network now affected.

EU countries divided votes on Chinese EV tariffs, claim sources. The European Commission, which is responsible for overseeing the EU's trade policies, has proposed provisional duties of up to 37.6 per cent on Chinese-built EVs. The Commission argues that these tariffs are necessary to counter what they perceive as unfair subsidies provided by the Chinese government to their EV manufacturers.

Japan's trade deficit for first half declines as exports recover. Japan posted a trade surplus in June, the first in three months, highlighting a recovery in exports, government data showed Thursday.

Asia freight rates stay elevated on heavy congestion at key ports. Ocean container freight rates in Asia are expected to remain high in the near term amid persistent congestion at key ports in the region, particularly Singapore.

GEOPOLITICS

Biden Pressured to Exit. Trump Shines as Global Trade Watches

The effort to push Joe Biden out of the presidential race has intensified, with new reports suggesting he may exit by the weekend. The Washington Post reports that former President Barack Obama has told Biden’s allies that his chances of winning have dwindled, urging him to reconsider his candidacy against Donald Trump. Obama, who remains influential within the Democratic Party, reportedly believes Biden, at 81, should assess the viability of his campaign.

This follows an Axios report indicating Biden is increasingly open to stepping aside, even questioning Vice President Kamala Harris's chances of defeating Trump. Biden’s resistance seems to be waning as more Democrats urge him to exit the race. Notably, influential figures like Nancy Pelosi and Chuck Schumer have privately advised Biden to drop out, believing his continued candidacy risks the party's prospects in the upcoming election.

In stark contrast, Donald Trump is thriving on the campaign trail, bolstered by a heroic narrative and unwavering support. Throughout a 92-minute speech at the Republican National Convention, Trump recounted the harrowing attempt on his life, vividly describing how a bullet grazed his ear, coming within a quarter-inch of taking his life. Despite the near-fatal incident, Trump remained defiant, rallying the crowd with his tale of survival and resilience.

Trump's speech, marked by a mix of unity and condemnation of "witch-hunts," showcased his ability to captivate and mobilize his base. He honored volunteer firefighter Corey Comperatore, who was killed in the assassination attempt, and paid tribute to other brave individuals affected by the incident. Trump's poignant recounting of the event and his show of gratitude towards his supporters painted a picture of a candidate resilient in the face of adversity, further solidifying his position as a strong contender.

Amid these domestic political dramas, the stakes extend beyond U.S. borders. The outcome of the election will influence global trade policies, affecting international markets and economies. Trump's America-first stance and Biden's contrasting global cooperation approach are pivotal to how trade relationships with key partners like China and the European Union will evolve. As Biden faces growing pressure from his party to step down, Trump’s dramatic resurgence following the assassination attempt has only amplified his momentum. Public appearances and heartfelt tributes have not only rallied his supporters but also underscored his enduring appeal. As Biden grapples with internal party conflicts and health concerns, Trump's narrative of survival and strength continues to shine, potentially reshaping the dynamics of the upcoming election and its impact on global trade.

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