Market Beats | US Clears Some AI Chip Sales to China; Apple Signs $500 Million Rare Earth Deal; Citigroup Profit Surges 25% in Q2; US Inflation Hits 2.7% in June; China’s Q2 GDP Grows 5.2%

—— US Clears Some AI Chip Sales to China; Apple Signs $500 Million Rare Earth Deal; Citigroup Profit Surges 25% in Q2; US Inflation Hits 2.7% in June; China’s Q2 GDP Grows 5.2%

1. US Clears Some AI Chip Sales to China

The US government has granted Nvidia Corp. and Advanced Micro Devices Inc. permission to resume sales of certain AI chips to China, marking a major reversal from the Trump administration’s previous hardline stance on curbing Beijing’s tech ambitions.

Nvidia said in a blog post Monday that US officials have assured the company it can obtain export licenses for its H20 AI accelerator, potentially restoring billions in revenue that was previously deemed lost. The H20 was engineered to comply with earlier trade rules but was swept up in stricter April restrictions requiring US permits for sales to China. AMD received similar assurances and said it plans to restart shipments of its MI308 chips once licenses are approved.

Shares of AMD surged over 5% in pre-market trading, while Nvidia climbed as much as 4.5%.

Nvidia CEO Jensen Huang — who met with President Donald Trump last week and is currently attending a government-hosted conference in Beijing — appeared on state broadcaster CCTV shortly after the announcement, confirming approval to begin shipments. The US Commerce Department has yet to comment on whether any licenses have formally been issued.

The export clearance comes amid improving US-China relations under an informal trade truce framework. US Secretary of State Marco Rubio said after meeting his Chinese counterpart last week that both sides strongly desire a meeting between Trump and Chinese President Xi Jinping later this year.

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2. Apple Signs $500 Million Rare Earth Deal

Apple Inc. has agreed to a $500 million supply deal with US rare-earth producer MP Materials Corp., aiming to strengthen domestic access to critical minerals used in high-tech products.

The two companies will also collaborate to build an advanced rare-earth recycling facility in Mountain Pass, California, and develop next-generation magnet materials and processing techniques to improve magnet performance, Apple said in a statement Tuesday.

“American innovation drives everything we do at Apple,” CEO Tim Cook said. “This partnership will help secure the supply of essential rare earth materials here in the United States.”

The announcement comes as rare earths have emerged as a flashpoint in the US-China trade war. After the Trump administration slapped a 145% tariff on Chinese rare earths, Beijing responded by nearly halting exports of permanent magnets — components critical to smartphones, electric vehicles, wind turbines, and military aircraft.

MP shares rose 8.2% in pre-market trading, while Apple’s stock was little changed. Fox News first reported aspects of the deal earlier Tuesday.

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3. Citigroup Profit Surges 25% in Q2

Citigroup reported a nearly 25% year-over-year increase in second-quarter profit to $4 billion, surpassing analysts’ estimates of $3.3 billion. Revenue rose 8% to $21.7 billion as the bank posted solid growth across its core units — trading, investment banking, and wealth management.

Citi benefited from heightened market volatility driven by President Donald Trump’s protectionist tariffs and global geopolitical tensions. The markets division saw a 16% revenue jump to $5.9 billion. Wealth management revenues climbed 20%, and investment banking fees increased 13%.

Return on tangible common equity, a key profitability gauge, rose to 8.7% from 7.2% a year earlier. CEO Jane Fraser is aiming to lift that figure to 10%–11% by the end of next year.

“We’re improving the performance of each of our businesses to take share and drive higher returns,” Fraser said Tuesday.

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4. US Inflation Hits 2.7% in June

US inflation rose to 2.7% in June, exceeding both May’s 2.4% figure and analysts’ expectations of 2.6%, as President Donald Trump’s escalating tariffs begin to push prices higher. Data released Tuesday by the Bureau of Labor Statistics also showed that core inflation — which excludes food and energy — rose 2.9% year-on-year, in line with forecasts.

The inflation spike comes as Trump intensifies his tariff campaign, warning that significantly higher levies will begin next month if trade deals aren’t reached. Since returning to office, the president has imposed a 10% baseline tariff and introduced targeted sector-specific duties. A previously announced round of steep reciprocal tariffs has been delayed to August 1.

In response to the data, US Treasury yields dipped, and stock futures climbed, as investors priced in greater odds of rate cuts.

Trump has pressured Federal Reserve Chair Jay Powell to slash rates by up to three percentage points, but most Fed officials prefer to wait until the full inflationary effects of the tariffs are evident.

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5. China’s Q2 GDP Grows 5.2%

China’s economy grew 5.2% year-on-year in the second quarter, slightly ahead of the 5.1% average forecast by Reuters, underscoring resilience in exports and investment despite escalating trade pressure from US President Donald Trump.

The performance positions Beijing to hit its full-year GDP growth target of around 5%, even as domestic demand remains sluggish. Exporters ramped up shipments in anticipation of new US tariffs, helping lift headline growth.

“There will be some headwinds,” said Shuang Ding, chief economist for Greater China and North Asia at Standard Chartered. He noted that frontloaded trade and increased fiscal spending supported the first-half results, but that “higher tariffs will take a toll on China’s exports” going forward.

Market reaction was muted: China’s CSI 300 Index fell 0.5% on Tuesday, while the renminbi weakened 0.1% to 7.18 per US dollar. In Hong Kong, the Hang Seng Index edged up 0.2%.

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6. Nvidia Hits $4 Trillion Market Value, First in History

Nvidia Corp. has become the first company ever to reach a $4 trillion market valuation, solidifying its dominance in the global financial arena.

Shares rose 2.8% to $164.42 on Wednesday, pushing the company over the milestone in a dramatic rebound from earlier-year jitters sparked by China’s DeepSeek and President Donald Trump’s trade war.

The stock is up more than 20% in 2025 and has soared over 1,000% since the start of 2023. Nvidia now represents 7.5% of the S&P 500 Index, approaching its highest-ever weight.

The latest rally is fueled by continued AI spending commitments from Nvidia’s biggest customers, including Microsoft, Meta, Amazon, and Alphabet.

Those four tech giants are projected to invest about $350 billion in capital expenditures in their next fiscal year, up from $310 billion, according to Bloomberg analyst estimates. Collectively, they generate more than 40% of Nvidia’s total revenue.

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7. Mercedes-Benz Q2 Sales Drop 9% as Tariffs Hit US and China Demand

Mercedes-Benz reported a 9% drop in global car sales for the second quarter of 2025, totaling 453,700 vehicles, as trade tensions and tariffs driven by President Donald Trump’s policies weighed on key markets. Sales declined 12% in the US and 19% in China, where import duties on American-made SUVs further dampened demand.

Although the numbers slightly exceeded company guidance and improved modestly over Q1, analysts say they underscore the growing toll of tariffs. Mercedes produces large SUV models like the GLE and GLS in Alabama and exports them to China — now subject to a 10% retaliatory tariff by Beijing.

The company also continues to struggle in the EV market, with EV sales down 24% year-on-year. Competition from local Chinese manufacturers like BYD is squeezing foreign brands.

However, Mercedes noted encouraging early interest in its upcoming CLA electric sedan, based on a new EV-first platform focused on maximizing range.

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