US‑China Trade Truce: The Countdown Is Real
Tomorrow marks the last day of the US‑China trade truce, and markets are on their toes. The default stance has everyone hoping the deal gets a fresh extension—because a sudden collapse could stir a storm of headline‑driven jitters.
What the Market Saw on Monday
- FTSE 100 ticked up a modest 0.25%.
- DAX stayed flat.
- US futures were a little firmer than usual, hinting at cautious optimism.
Nvidia & AMD: A Strange Deal With Trump
Nvidia and AMD will hand over 15% of certain China revenues to the US Treasury— a quirky twist that’s a trade‑good for export licences on Nvidia’s H‑200 and AMD’s MI‑308 chips. It’s not a blockbuster move for the stocks, but it sure feels like a footnote in a Trump‑driven drama.
Heads‑Up: Trump Meets Putin in Alaska
On August 15th, President Trump is set to meet Russian President Putin in the frosty state of Alaska to hash out the Ukraine conflict. While the news dampened gold prices – perhaps the market is shedding some geopolitical risk premium – it reminds us how global chess matches keep commodity traders on edge.
Gold Talk: The White House Wants to Clarify Tariffs
ComEx futures in New York fell even more than the spot price after the White House announced an executive order to crystalise its stance on gold bar tariffs.
This Week’s Economic Calendar
- CPI and PPI inflation readings.
- Retail sales and industrial production figures.
The real hinge for the Federal Reserve is the CPI. Core inflation is poised to jump 0.3% month‑on‑month in July; markets will zero in on Fed policy repercussions. Core inflation climbed 0.2% last month, nudging the annual rate to a brisk 2.9%. The headline CPI rose from 2.4% in April to 2.7%, with a target of 2.8% for the future. If it keeps inching toward the 3% mark, the Fed’s leeway shrinks.
The Cleveland Fed’s “Inflation Nowcasting” model projects CPI at 3% in both July and August. That’s effectively too hot for Fed easing, but markets already priced in a tight stance.
UK Labor Market: The Silent Alarm
In the UK, crucial employment data drops tomorrow. Just last week, four MPC members voted to hold rates despite signs of a labor‑market slump. Unemployment climbed to 4.7%, a four‑year high, reflecting a sinking payroll pipeline. Since the October Budget, unemployment has risen from 4.3% to 4.7%. Sterling may need to feel the chill of a weak structural backdrop.
US Tech Stars & the Mag 7
- The S&P 500 almost hit a new all‑time high.
- The Nasdaq followed suit.
- Meta, Apple, Amazon, Google, Microsoft, Netflix, and Nvidia (the “Mag 7”) are still the show‑stoppers.
During this earnings season, tech stock performance is glowing, thanks to AI investments and a wave of capex. Concentration risk rears its head because it’s unclear where capital should be best deployed; yet the story is clear: the Magnificent Seven outpaced the rest of the S&P 500 with a 25.7% YoY earnings growth in Q2 versus 6.3% across the broader index.
Materials stocks, on the other hand, slipped 5%. Investors felt a bargain in April, but the narrative shift toward Europe stumbles because its earnings aren’t keeping pace—and 15% tariffs on European exports add a serious sting.
The Dollar’s Dwindling Power
This year, the dollar has been losing strength. That’s good news for US exporters, boosting their earnings in USD terms. It also gives the S&P 500 a boost relative to UK and European indices. The FX effect shouldn’t be underestimated: the S&P 500 is up about 8% YTD in USD, but flat in sterling terms. Many investors are long on US tech but aren’t reaping the year‑long upside.
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