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Markets Open Lower Amid US Credit Downgrade and Weak Chinese Data

US stock futures slid Sunday evening following Moody’s downgrade of the US credit rating to Aa1, citing growing deficits and refinancing challenges in a high-rate environment. Dow futures dropped 0.8%, while the S&P 500 and Nasdaq fell 1.1% and 1.3%, respectively. This bearish sentiment follows a strong rally last week, fueled by optimism over a temporary US-China tariff truce. Meanwhile, Asian markets mirrored the downturn, weighed down by softer-than-expected Chinese retail sales growth (5.1% vs. 5.5% forecast) and slowing industrial output. Investors are now closely watching manufacturing and jobs data, alongside developments in the Republican tax-and-spend negotiations.

Investment Insight: The downgrade underscores rising fiscal risks, pressuring US Treasuries and reinforcing a cautious tone for equities. Investors should brace for near-term volatility, especially in tech-heavy indices like the Nasdaq, while seeking opportunities in defensive sectors and dividend-paying stocks that can weather credit-related uncertainty.

Diageo Unveils $500M Cost-Saving Plan Amid Reduced Tariff Concerns

Diageo, the global spirits leader behind Johnnie Walker and Guinness, announced a $500 million savings initiative by 2028 to counter prolonged sales pressure and bolster cash flow. The move aims to generate $3 billion in annual free cash flow by 2026 and reduce debt, according to CEO Debra Crew. Meanwhile, the company lowered its projected tariff impact on U.S. sales to $150 million annually, down from $200 million, as proposed levies on Mexican tequila and Canadian whisky were delayed. Diageo’s third-quarter organic sales rose 5.9%, driven by accelerated North American shipments ahead of potential tariff implementation—an effect expected to fade by Q4.

Investment Insight: Diageo’s strategic focus on cost efficiency and cash flow generation positions it well for shareholder returns, even in a challenging macro environment. Investors should monitor the company’s ability to navigate tariff risks and sustain U.S. sales, while its premiumization strategy and strong North American presence remain key growth drivers.

Market price: Diageo plc (DGE): GBX 2,152.00

Goldman Revises Oil Demand Upward, Maintains Bearish Price Forecast

Goldman Sachs raised its global oil demand growth forecast to 600,000 barrels per day (bpd) in 2025 and 400,000 bpd in 2026, citing stronger global GDP prospects from easing tariff tensions. Despite this revision, the bank held its price forecasts steady at $60 for Brent and $56 for WTI this year, expecting both benchmarks to decline further in 2026 due to the potential U.S.-Iran nuclear deal. While the deal could increase supply pressure, persistent disagreements on uranium enrichment conditions leave its outcome uncertain. Goldman warned that prolonged tariff disputes and OPEC+ supply normalization could push Brent as low as $40 by late 2026 if global growth falters.

Investment Insight: Goldman’s outlook highlights a delicate balance between demand recovery and supply risks. Investors should remain cautious of geopolitical developments, particularly U.S.-Iran negotiations, while considering short-term opportunities in oil-related equities. Hedging against prolonged price declines may be prudent as structural oversupply risks loom into 2026.

Xiaomi to Launch YU7 EV and New Mobile Chip, Expanding Tech Ecosystem

Xiaomi will unveil its YU7 electric SUV on Thursday, positioning it as a direct competitor to Tesla’s Model Y in the world’s largest EV market. The launch follows the success of Xiaomi’s SU7 sedan, which has outsold Tesla’s Model 3 monthly since December, despite a recent dip in orders due to a fatal March accident. Alongside the YU7, Xiaomi will debut its self-developed Xring O1 mobile chip, a milestone in its $1.87 billion investment in chip design, with plans to inject an additional $7 billion over the next decade. CEO Lei Jun emphasized Xiaomi’s ambition to dominate both EVs and smartphones through tighter ecosystem integration, leveraging its success in hardware innovation.

Investment Insight: Xiaomi’s aggressive push into EVs and semiconductors underscores its diversification strategy to reduce reliance on smartphones amid intensifying competition. Investors should monitor its ability to scale EV production profitably and capture market share from established players like Tesla, while its chip investments signal long-term growth potential in high-margin technology.

Market price: Xiaomi Corp (HKG: 1810): HKD 52.35