In a dramatic pivot that sent shockwaves through global markets, the U.S. Commerce Department on Wednesday evening lifted its recent export restrictions on chip design technology to China. This move, viewed as a significant concession in the ongoing U.S.-China trade negotiations, came just weeks after Washington imposed a licensing mandate on companies like Synopsys, Cadence Design Systems, and Siemens for exporting chip-related software and materials. Synopsys announced that it had been informed by the Commerce Department that the restrictions were rescinded effective immediately, and that the firm is now working to restore access to its previously restricted products in China. Cadence and Siemens were also reported to have received similar notices. Shares of Synopsys and Cadence surged in extended trading, with Synopsys rising 6% to $555 and Cadence gaining 5.1% to $326.99. The rollback suggests a step forward in the trade détente between Washington and Beijing, which have been working toward a framework agreement announced in June. However, the policy reversal does not apply to all players in the semiconductor space. Nvidia remains under strict restrictions on sales of high-end AI chips to China, a move CEO Jensen Huang recently described as a “failure” of U.S. export policy. It remains uncertain whether the broader regulatory environment for tech exports to China will ease further.
Back in Washington, Federal Reserve Chair Jerome Powell found himself once again in the political crosshairs as President Donald Trump called for his immediate resignation. Powell, speaking earlier in the day, had suggested that the Federal Reserve might already have eased monetary policy if not for the significant uncertainty created by Trump’s aggressive tariff stance. Traders interpreted his comments as dovish, ramping up expectations of rate cuts. Markets now price in a roughly 25% chance of a rate reduction at the Fed’s upcoming July 29–30 meeting, with a 25 basis-point cut in September considered all but certain. Expectations for two rate cuts before year-end are high. Weaker labor market data added to the dovish tilt. The latest ADP report showed private sector payrolls fell by 33,000 jobs in June, missing expectations by a wide margin. Moreover, May’s figures were revised lower to show a gain of just 29,000 jobs, down from 37,000. The disappointing data reinforced concerns about a softening labor market and raised the likelihood that Friday’s official nonfarm payrolls report will show the unemployment rate ticking up to 4.3% from 4.2% in May. These developments weighed heavily on the U.S. dollar, which has failed to recover meaningfully from recent lows as investors question the Federal Reserve’s independence and await further economic clarity.
Meanwhile, Trump’s trade agenda took another aggressive turn as he expressed frustration over stalled negotiations with Japan, threatening to raise tariffs on Japanese imports to 30% or even 35%—far above the 24% rate he previously announced in April. At issue is Japan’s alleged reluctance to purchase American-grown rice, which Trump cited as a “matter of fairness.” The threat injects fresh uncertainty into trade relations ahead of the July 9 deadline, with markets on edge over how Japan might respond. Japan’s central bank, in contrast to the Fed, is expected to tighten policy further, as Bank of Japan Governor Kazuo Ueda noted this week that rates remain below neutral and may need to rise again if inflation persists. Japan has seen consumer inflation stay above the central bank’s 2% target for more than three years, driven by higher raw material costs and a tight labor market.
Oil markets also reflected the volatile global picture. After surging Wednesday on geopolitical tensions tied to Iran’s suspension of cooperation with the UN nuclear watchdog, oil prices reversed course Thursday amid fresh concerns over fuel demand. U.S. government data showed a surprise inventory build of 3.85 million barrels for the week ending June 27, far above expectations for a 3.5 million barrel draw. Gasoline inventories rose by 4.19 million barrels, a sharp contrast to previous weeks’ drawdowns and a potential warning sign for summer driving demand. Brent crude for September delivery slipped 0.6% to $68.68 a barrel, while WTI fell 0.7% to $65.58. Markets now await the upcoming July 6 OPEC+ meeting, where the cartel is expected to raise production once again, possibly adding further pressure to already fragile prices. Although ceasefire agreements between Israel and Hamas and between Israel and Iran have helped reduce geopolitical risk in the Middle East, they have also dampened oil’s safe-haven premium and added to fears of oversupply.
As the week unfolds, investors will be closely watching the official U.S. jobs data, central bank guidance, and trade maneuvering from the White House. The intersection of monetary instability, labor market softness, and unpredictable tariff policies continues to roil asset markets and cloud the outlook for the second half of 2025.