Tech rally in U.S. and China stocks gaining traction as tariffs ease

Investing.com -- A simultaneous rebound in U.S. and Chinese tech stocks is gaining momentum, driven in part by a shift in trade rhetoric and easing tariff fears under President Donald Trump’s administration, Capital Economics analysts highlighted in a note Thursday.

“The rolling back of tariffs has coincided with a recovery in big tech in the US and China,” analysts wrote. 

The synchronized rally marks a departure from the early months of Trump’s presidency, when “US big tech had a rough ride” amid rising concerns over China’s growing prowess in artificial intelligence and fears of a trade war.

Chinese tech stocks initially outperformed after Inauguration Day on Jan. 20, buoyed by optimism around domestic innovation and the rise of firms like DeepSeek. 

However, that rally faltered in mid-March as tariff concerns escalated ahead of the administration’s so-called “Liberation Day.” 

The downturn “prompted much, if not all, of the remaining rally there to unwind,” Capital Economics said, while also deepening losses for U.S. tech.

Since then, Capital Economics noted that Trump’s more conciliatory tone on trade has helped spark a rebound in both markets. 

“Big tech has turned around sharply in both countries,” the note said.

Despite structural challenges in China’s economy, Capital Economics sees reasons for optimism. 

“China big tech may still be able to make healthy profits,” the firm wrote, assuming authorities “refrain from another crackdown in their enthusiasm for ‘common prosperity.’”

Capital Economics also highlighted that forward twelve-month earnings per share for big tech in both countries have grown at similar rates in recent years, and Chinese tech stocks remain attractively valued. 

“The big-tech sectors in China are still trading at discounts to their peers in the US,” the analysts said.

Still, they cautioned that sustained outperformance by Chinese firms remains “rather unlikely” as investment in cutting-edge AI continues to drive U.S. tech gains.