Ives "US-China Trade Agreement Expected to Create Bull Market Environment for Technology"

Tech stocks with high exposure to China, such as Nvidia and Tesla, surge pre-market

"Drug price cuts help stabilize inflation, July rate cut also expected"

Wedbush Securities technology analyst Dan Ives stated that the US-China trade agreement is expected to create a bull market environment for the technology sector once again.

According to CNBC Pro on the 12th (local time), Dan Ives said on CNBC's 'Worldwide Exchange' that if the effective tariff rate on most Chinese imports drops to 30%, it would be a dream scenario for tech investors. He particularly pointed out Nvidia as the stock that would benefit the most from the tariff deferral in the short and medium term.

He mentioned Nvidia's AI chips, which are subject to export controls, saying, "We need to watch what happens with the H20 chip in particular." Nvidia announced that due to the new China-specific chip export regulations announced by the Trump administration last month, it expects an additional cost of $5.5 billion this year.

Analyst Ives also mentioned that Palantir is likely to be a beneficiary related to the federal deficit and spending cuts, and if investment in software increases, Oracle and Microsoft would also be advantageous.

In pre-market trading on the New York Stock Exchange that day, most tech stocks with high exposure to China, such as Nvidia, Apple, Tesla, and Amazon, surged nearly 5%.

Jeff Kilburg of KKM Financial mentioned that it is time to unwind some "defensive trades" like utility stocks, which have gained attention in the bear market, rising 5% this year. He emphasized, "Today, Wall Street's fear index, the VIX, fell below 20." In April, the VIX exceeded 60.

Gilbert Garcia of Garcia Hamilton & Associates said, "There are great opportunities in bonds after the US-China trade agreement." With recession fears easing, the likelihood of the Federal Reserve cutting rates in July has decreased.

According to CME Group's FedWatch tool, with the announcement of the US-China tariff deferral that day, the probability of the Fed cutting rates in July dropped from 69% last week to 42% in just one day.

Garcia stated that as the market assumes a Fed rate cut, we are considering investing in the opposite direction. He mentioned that if the president issues an executive order on prescription drugs, reducing the price paid by the US government by 30-80%, inflationary pressures would decrease, potentially leading the Fed to cut rates earlier than the market expects.

Guest reporter Kim Jung-ah kja@hankyung.com