Key Points

• UK Q2 GDP Beats Forecasts; BOE Easing Remains Delicate: UK GDP grew 0.3% in Q2, exceeding forecasts, but economists see limited momentum ahead as the BOE balances sticky inflation and slowing growth.
• Tencent Q2 Revenue Jumps 15% on Gaming and AI Gains: Tencent posted double-digit growth on strong domestic and international gaming sales and AI-driven advertising gains, with capex more than doubling to fund expansion.
• Asia-Pacific Stocks Mixed as Fed Cut Bets Weigh: Regional markets diverged as Japan’s Nikkei retreated from record highs, Australia’s ASX hit fresh records on bank strength, and India’s benchmarks traded flat.
• Gold Rises on Fed Cut Expectations; Geopolitics in Focus: Gold advanced for a third session as markets price a 95% chance of a September Fed cut, with safe-haven flows hinging on the outcome of U.S.-Russia talks.

UK Q2 GDP Beats Forecasts; BOE Easing Remains Delicate

UK GDP expanded 0.3% in Q2, surpassing forecasts for 0.1% but slowing from Q1’s 0.7% gain, as weakness in April–May was offset by a strong June rebound led by services and construction. The pound was little changed at $1.3577 following the release.

Economists cautioned the pickup is unlikely to persist amid a softening labor market, capacity constraints, and lingering global headwinds. The data follow last week’s Bank of England rate cut to 4%, with policymakers split on whether to ease further as they balance sticky inflation — 3.6% in June — against subdued growth prospects.

Tencent Q2 Revenue Jumps 15% on Gaming and AI Gains

Tencent posted Q2 revenue of 184.5 billion yuan ($25.7 billion), up 15% year-on-year, driven by strong domestic and international gaming sales alongside AI-driven advertising and Weixin upgrades.

Domestic gaming rose 17% to 40.4 billion yuan on the success of new title “Delta Force” and enduring hits like “Honor of Kings,” while international gaming surged 35% to 18.8 billion yuan. Marketing services revenue climbed 20% to 35.8 billion yuan as AI tools improved ad targeting.

Capital expenditures more than doubled to 19.1 billion yuan, underscoring Tencent’s push into AI, cloud, and expanded monetization across entertainment and social platforms.

Asia-Pacific Stocks Mixed as Fed Cut Bets Weigh

Asia-Pacific equities were mostly lower Thursday as investors positioned for a potential U.S. Federal Reserve rate cut next month.

Japan’s Nikkei 225 fell 1.45% to 42,649.26, retreating from recent record highs, with industrial names leading losses.

Australia’s S&P/ASX 200 gained 0.53% to 8,873.80 after touching an intra-day record, lifted by banking stocks, while July unemployment eased to 4.2% in line with expectations, boosting the Australian dollar to $0.6564.

Indian benchmarks traded flat, with the Nifty 50 near unchanged and the Sensex up 0.1% by midday.

Gold Rises on Fed Cut Expectations; Geopolitics in Focus

Gold extended gains for a third session, with spot prices up 0.2% to $3,361.87 an ounce, supported by heightened market expectations — now at 95% — for a U.S. Federal Reserve rate cut in September.

Softer U.S. CPI data reinforced the case for easing, while upcoming PPI and jobless claims reports may further shape policy bets.

Investors are also watching Friday’s Trump-Putin summit in Anchorage, where outcomes on Ukraine could sway safe-haven demand. Other precious metals were mixed, while copper markets held steady amid subdued industrial sentiment.

Conclusion

Global markets navigated a mix of upbeat corporate earnings, shifting monetary policy expectations, and geopolitical uncertainties.

The UK’s stronger-than-expected GDP data offered a brief lift to sentiment, though growth headwinds persist.

Tencent’s robust results underscored the earnings power of gaming and AI integration, while Asia-Pacific equities reflected investor caution ahead of potential Fed easing.

Gold’s steady climb highlighted heightened rate-cut bets and sensitivity to geopolitical developments, particularly the upcoming U.S.-Russia summit.

As policymakers and markets weigh inflation, growth, and risk, investors remain focused on positioning portfolios for resilience amid a complex macroeconomic backdrop in the second half of the year.

Investment Insights

• UK growth surprises: May provide near-term support for sterling assets, but structural headwinds and BOE caution suggest selective exposure.
• Tencent’s gaming and AI momentum: Reinforces the case for targeted allocations to Chinese tech leaders with diversified revenue streams.
• Asia-Pacific equity divergence: Highlights the importance of country-specific positioning, favoring markets with supportive domestic catalysts over those reliant on global risk sentiment.
• Gold’s resilience: Amid Fed cut expectations and geopolitical uncertainty supports maintaining a measured allocation to precious metals as a hedge against policy missteps and geopolitical shocks.

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