Fed holds rates as US–China trade tensions escalate;
semiconductor supply chains under fresh pressure
The Federal Reserve's decision to hold interest rates steady intersects with renewed tariff rhetoric from Washington, creating a dual headwind for technology stocks most exposed to Asian manufacturing — particularly in the advanced chip sector.
Following the G7 summit in Rome, US trade officials signalled an extension of semiconductor export restrictions targeting advanced AI accelerators. The move, framed as a national security measure, widens the list of restricted components and adds additional compliance burdens for chipmakers operating in allied markets.
Markets are pricing in a 68% probability of no rate cut in June, per CME FedWatch data. Bond yields edged lower on the session as investors rotated toward perceived safe havens — gold extended its rally above $3,200 while the dollar index softened against a basket of Asian currencies.
The semiconductor sector faces simultaneous pressure on two fronts: margin compression from export restrictions limiting addressable markets, and supply chain uncertainty stemming from Taiwan Strait tensions that have resurfaced in diplomatic channels ahead of the UN General Assembly.