Daily Market Briefing: Nvidia's board weighs ousting Jensen Huang and the stock sheds about $350 billion after hours, just as Treasuries reopen with the 10-year set to break 5%

Geopolitics and trade

Washington moves to close the offshore-compute loophole that China's AI labs rely on

The Commerce Department is finalizing a rule that would stop Chinese AI companies from renting advanced chips in data centers outside China, The Information reported, as relayed by Investing.com. The rule would extend controls to seven more countries, with most reports naming Malaysia, Singapore and Thailand. It would require licenses for related chip imports into those countries and disclosure of who uses the chips and for what. One report says US companies running data centers there may be exempt if they block remote access from arms-embargoed countries such as China and Russia. Timing is uncertain: some reports say it could be announced this month, while others say interagency review is still under way. Tencent and Alibaba fell in Hong Kong on the news.

The rule targets the route Chinese labs have used since chip shipments were restricted. Reuters reported on Thursday that Chinese AI firms are rushing to lock in Nvidia capacity at overseas data centers, fearing the Huang spy scandal will bring new US curbs. Reports say Tencent, Alibaba and ByteDance have signed agreements with offshore operators. The Megaspeed affair at the center of the Huang allegations is itself about a Southeast Asian data center operator that rented compute to Chinese clients.

The legal footing is weaker than the headlines suggest. Export-control lawyers doubt Commerce can enforce controls on remote access under current law; a Baker McKenzie attorney said that view is widely held among practitioners. The fix, the Remote Access Security Act, passed the House 369–22 in January and has stalled in the Senate Banking Committee.

Our view: This is a bigger issue for the AI supply chain than the H200 licensing debate. Licensed China sales are close to zero, but rented compute in Southeast Asia is a real and growing source of demand for GPUs, servers and colocation. A rule with a US-operator exemption would shift that business toward US hyperscalers and away from local and Chinese-linked operators, rather than remove it. The most exposed are independent data center developers in Johor and Singapore that serve Chinese tenants. The legal doubts make it likely that the rule ends up folded into the chip measures already in the Senate's defense bill, which would give it statutory force in 2027.

Iran denies any talks and says Hormuz stays shut, while Trump calls for "total victory"

Iran's security chief Mohsen Rezaei dismissed reports of negotiations with Washington, saying Tehran is still waiting for a US answer to its seven conditions and that the Strait of Hormuz will stay closed until they are met, according to Al Jazeera. Foreign Minister Abbas Araghchi reportedly said the strait could reopen within two days if the demands are met. NBC News reported that the US rejected Tehran's terms as "outrageous" and signaled that a breakthrough is unlikely. Iran's Revolutionary Guards said three tankers caught fire after hitting mines on an "unauthorized route" in the eastern strait, disputing a US Central Command statement that the main transit routes had been cleared. The UK's maritime trade monitor confirmed an incident involving one tanker.

At Arlington National Cemetery on Veterans Day, Trump said the US wants complete victory over Iran, "not a 93% victory," and predicted the war will end soon, according to The Jerusalem Post and Yahoo News. He said 18 US service members have died since operations began seven months ago. Brent recovered from a two-month low: Euronews put it up 0.6% at about $92 during European hours, while Al Jazeera reported a gain of nearly 3% to about $93.90 after the denial. Brent had fallen about 21% since the start of November on deal hopes.

Our view: The market had priced a settlement that neither side now describes. Iran's public line is that the strait opens only on its terms, Washington calls those terms unacceptable, and the Gulf states, as we noted on Wednesday, prefer the blockade. Even with a deal, LSEG analysts point out that flows depend on mine clearance, insurance and shipowners' willingness. With the Fed reacting to core inflation, oil now matters to tech investors mainly as an upside risk: a return to $100 Brent would make a second Fed hike in early 2027 more likely.

Washington and Beijing set up next week's Shenzhen meeting, with rare earths as the main grievance

Treasury Secretary Scott Bessent called for a more balanced US–China economic relationship ahead of the Trump–Xi meeting at the APEC summit in Shenzhen on 18–19 November, according to The Epoch Times and Plataforma Media. US Trade Representative Jamieson Greer asked for "concrete actions" on rare-earth supplies, which Washington says are arriving too slowly. Some in the administration believe China has overpromised and underdelivered, according to reporting summarized by Yahoo News. Beijing's Foreign Ministry voiced concern about restrictive US trade measures. Secretary of State Rubio and Foreign Minister Wang Yi spoke by phone to prepare the meeting, the South China Morning Post reported, and Wang said Beijing is ready to strengthen communication and cooperation.

Our view: Both sides are protecting the summit, but the agenda is getting heavier. Washington wants rare-earth deliveries; Beijing will want relief from chip controls, which are moving the other way this week through Congress and the Commerce remote-access rule. The likeliest outcome is another short extension of the 10 January truce deadlines with small purchase commitments. The risk is that Beijing answers new chip rules by slowing heavy rare-earth licenses, which were never part of the pause.

Ukraine talks in Abu Dhabi end without a breakthrough

The second and final scheduled day of US–Russia–Ukraine talks in Abu Dhabi ended without an announced result, according to ABC News and Reuters. Russian state media said Wednesday's session lasted about two hours, after four and a half hours on Tuesday. Zelensky called the talks constructive and substantive, but Russian Foreign Minister Sergei Lavrov again rejected a truce, and the two sides traded drone strikes overnight. Territory, security guarantees and the sequencing of a ceasefire remain unresolved. European officials held separate consultations in Abu Dhabi but were not part of the talks. No date for another round has been set; the next market-relevant step is Europe's funding decision (see EU).

Global Events

Gaza ceasefire keeps fraying while stray drones trigger shelter alerts in the Baltics

Israeli strikes killed at least eight Palestinians in Gaza City and Khan Younis, including a father and his 13-year-old son, despite the US-brokered ceasefire, according to Democracy Now's daily roundup of wire reports. The Israeli military said it targeted militants. In the occupied West Bank, Israeli troops killed a 14-year-old boy during a raid on the village of Burqa. Separately, NATO scrambled jets overnight into Wednesday after at least four drones strayed into Baltic airspace during Ukrainian strikes on Russia, briefly triggering shelter alerts in Lithuania, Latvia and Estonia, according to the same roundup.

Our view: Neither story is likely to move markets on its own. The Baltic incidents matter for European defense budgets: each alert strengthens the case for spending on air defense and counter-drone systems, which supports European defense contractors.

Economy

Treasuries reopen with the 10-year set to break 5%, a 30-year auction ahead and a December hike fully priced

The cash Treasury market reopens today after the Veterans Day closure. Treasury futures, which did trade on Wednesday, point to yields rising another 2 to 4 basis points at the open, Bloomberg reported, which would put the 10-year above 5% from Tuesday's close of 4.99%. The 2-year closed Tuesday at 4.74% after an 18 basis point jump. The Treasury will sell $25 billion of 30-year bonds at 13:00 ET, with the new long bond indicated near 5.35%. Tuesday's 10-year auction was weak, with dealers taking about 10%.

The Fed outlook behind the move has hardened. Futures fully price a 25 basis point hike at the 8–9 December meeting, with the odds of a half-point move near 12.5%. All 101 economists in a Reuters poll taken 6–10 November expect a quarter-point hike. Dallas Fed President Lorie Logan said at least two more quarter-point increases may be needed, possibly faster than the Fed has moved this fall, according to Yahoo Finance and Bloomberg. Richmond Fed President Tom Barkin was more cautious and said policy should move "with care." Gold fell another 1.25% to about $3,982 on Wednesday, according to Trading Economics, and Bitcoin held near $73,900 after losing $80,000 earlier this month.

Our view: The 30-year auction is today's most important event for growth stocks. After a soft 10-year sale and a fully priced hike, weak demand for duration would push the long end higher without any new Fed signal, and the 5% level on the 10-year is where long-duration tech has repeatedly struggled this year. Friday's PPI (core expected at 0.3% after 0.7%) is the next test. Logan's call for two more hikes matters because it moves the debate from December alone to the path into 2027, which is what equity valuations are actually exposed to.

The dollar hits an 18-month high as rate gaps widen

The dollar index rose to about 102.97 in Asian trading on Thursday, its highest since April 2025, according to a Reuters-based report, with Investing.com tying the move to a likely Fed hike next month. That is up about 0.7% from Tuesday. The yen weakened to about 159.6–159.8 per dollar, close to the level that preceded this summer's intervention (see Other News).

Our view: A Fed that is hiking while other central banks hold is the cleanest recipe for a stronger dollar. For US multinationals, including big tech with large overseas revenue, each sustained leg higher in the dollar trims reported earnings, which will start to show up in guidance for the first half of 2027. It also tightens financial conditions in emerging markets with dollar debt.

US

Nvidia's board meets on whether to remove Jensen Huang after a second relationship is reported

Nvidia's board met late Wednesday to decide Jensen Huang's future, after The Wall Street Journal reported that directors were preparing to oust him, according to NBC News, CBS News and The Korea Times. The New York Times reported that Huang had a relationship with Kimberly Powell, Nvidia's vice president of health care, who reports to him; this follows the affair with Megaspeed executive Alice Huang, whom US officials suspect of links to Chinese intelligence. Bloomberg reported that the board is working with an outside firm to identify possible successors and is considering an interim CEO; Semafor reported that CFO Colette Kress is under consideration for the interim role. No decision had been announced as of 02:15 ET, and Nvidia did not comment to Reuters. Huang has not been charged with any wrongdoing.

The stock closed up 2.87% at $173.73 on Wednesday and then fell about 8.6% to roughly $158.80 in extended trading. If that holds, the fall would erase more than $350 billion of market value, after a 9.5% drop on Monday and Tuesday. Huang owns only about 3.6% of Nvidia and has no super-voting shares, so a simple board majority can remove him. The White House was briefed on the meeting and will not intervene, The Washington Post reported, even as Trump publicly called Huang an "honorable guy." Prediction markets put the odds of Huang leaving by year-end at 83% to 88%. Nvidia reports earnings on 17 November, and House chairs have asked Huang to attend a closed-door briefing on 18 November; Nvidia has not said whether he will.

The shock spread through Asia's AI supply chain on Thursday. Taiwan's Taiex fell 2.6%, TSMC lost 2.3%, and server makers Quanta and Wiwynn each fell 6.5%. SK Hynix fell 2% in Seoul, while Samsung Electronics rose. Bernstein, which keeps an outperform rating, said demand for Nvidia's products seems unlikely to be affected but flagged key-man risk because Huang "pulls most of the company's strings," according to Investing.com.

Our view: The market is right to separate demand from leadership. Orders for Nvidia GPUs are set by hyperscaler capex budgets that are already committed for 2027, and a CEO change does not alter them. The risks sit elsewhere: Huang personally runs Nvidia's relationships with Washington, TSMC and Gulf governments, and he sets a product cadence that no successor has run before. A clean, quick transition to an interim CEO could, paradoxically, reduce political risk, because it removes the main argument behind Congress's push to write chip-export limits into the defense bill. A drawn-out process that overlaps with earnings and the House briefing is the worst case. Rivals such as AMD and Broadcom's custom-chip business may gain some negotiating leverage with customers in the interim, but the supply chain remains tied to Nvidia's roadmap, which makes Taiwan's server makers more exposed than Nvidia's competitors are likely to benefit.

China

China's chipmakers rally on the prospect of tighter US curbs while Hong Kong tech slides

Mainland chip stocks rose on Wednesday as investors bet that new US restrictions on remote compute access would push Chinese AI labs further toward domestic suppliers, according to Investing.com and Business Recorder. SMIC jumped 3.7% in Hong Kong. The Hang Seng still fell 0.98% to 24,315 on Wednesday, weighed by tech and EV shares, The Standard reported, and slipped another 0.92% to 24,092.89 by Thursday's midday break, with the Hang Seng Tech index down 1.4%. Alibaba fell below HK$100, and Tencent lost more than 1%.

The policy backdrop explains the split. Beijing has slowed approvals for large-volume H200 imports to favor domestic chips; Reuters reported last week that about 600,000 H200s are sitting in Hong Kong awaiting clearance. Macquarie's chief China economist attributed the weak performance of Chinese equities this year to the lack of stimulus for domestic demand.

Our view: Each new US control widens the gap between China's chip builders and its internet platforms. SMIC, Hua Hong and the domestic AI chip designers gain a captive market, while Alibaba, Tencent and ByteDance lose access to the best offshore compute and pay more for slower domestic alternatives. That raises their capex per unit of AI capability, a margin headwind that the market has started to price into Hong Kong tech.

October credit data should show a policy-driven boost, not a lending recovery

China's October credit figures are due around mid-month. A Caixin survey of 11 institutions expects new yuan loans of only about CNY 89.7 billion, down from CNY 1.08 trillion in September and CNY 220 billion a year earlier, while total social financing is forecast at about CNY 1.28 trillion, up from CNY 815 billion a year ago. CICC expects the new CNY 800 billion policy-backed financing tool to lift social financing before it shows up in bank lending. M2 growth is seen unchanged at 7.2%.

Our view: The gap between strong total financing and weak bank loans confirms the story of this week's CPI and Singles' Day data: credit is going into state-backed projects, while households keep borrowing little. That supports industrial and materials demand, but not the consumer platforms.

EU

Ukraine funding takes over Friday's Dublin summit, with a EUR 45 billion loan the leading option

EU leaders meeting informally in Dublin on Friday will discuss how to cover Ukraine's 2027 needs after German Chancellor Friedrich Merz asked Council President António Costa to put the issue at the top of an agenda that was meant to focus on artificial intelligence, according to The Irish Times and Yahoo News. Brussels is weighing about EUR 45 billion for 2027, roughly two-thirds of a projected EUR 70 billion gap. The most likely route is another loan borrowed against the headroom in the EU budget; Commissioner Valdis Dombrovskis has called a second loan modeled on the existing EUR 90 billion facility "one of the central options." Diplomats say using frozen Russian assets is off the table for now. Merz has tied German approval of the 2028–2034 budget to an agreement that all members contribute. Dublin is not a decision point; the formal summit is on 26–27 November.

Our view: The new detail since Wednesday is the instrument. A loan backed by EU budget headroom means more common EU debt, which supports the euro's reserve role and keeps Ukraine's bill off strained national budgets. Leaving the frozen assets untouched lowers the legal and retaliation risk for European banks and Euroclear. Hungary and Slovakia remain the obstacle, but Merz's budget leverage makes a deal by late November more likely than not.

Europe's record high shows the AI trade spreading to power equipment

The Stoxx 600 rose 0.72% to a record close of 663.05 on Wednesday, its third straight gain, according to MarketScreener and Trading Economics. Siemens Energy jumped 10.8% after raising its margin outlook, and CoreWeave's profitability target revived AI trades. Germany's DAX rose 1.2% and the Euro Stoxx 50 about 1%.

Our view: Europe's AI exposure runs mainly through grid and power equipment rather than chips, which makes it less sensitive to Nvidia's leadership drama than Taiwan or Korea. That is one reason European indexes have held up better than US tech this month. The vulnerability is the same as in the US: the whole chain depends on the profitability of hyperscaler AI spending, which a strategist quoted by Reuters called the market's biggest open question.

Other News

Japan's currency chief warns the summer intervention should not be forgotten as the yen nears 160

Atsushi Mimura, Japan's vice finance minister for international affairs, said on Thursday that the yen's recent moves have been too fast and that it is too early to forget this summer's intervention, according to Bloomberg. He declined to name a level. The yen traded around 159.6–159.8 per dollar. In July, the US and Japan carried out a rare joint intervention after the yen hit a 40-year low, and Finance Minister Satsuki Katayama said on 2 November that the joint FX statement with Washington is still in force. The Nikkei fell 0.71% to 60,816 on Thursday, giving back part of Wednesday's 1.31% gain.

Our view: The warning is stronger than usual because it points directly to a past joint action with the US. The 160 level is the most likely trigger. An intervention would cause a sharp yen rebound that hurts Japanese exporters and could force some unwinding of yen-funded carry trades, which tends to hit crowded global growth trades first. With the Fed hiking, any yen relief from intervention is likely to be temporary unless the Bank of Japan raises rates on 18 December.

UK growth accelerates to 0.7% in the third quarter, in line with forecasts

The UK economy grew 0.7% in the third quarter after 0.5% in the second, matching consensus, the Office for National Statistics said on Thursday, according to City AM. Services grew 0.9%, production rose 0.1% and construction fell 0.7%. September output rose 0.2% against expectations of no growth. City AM said business investment in AI contributed to the gain. The Bank of England's next decision is on 17 December.