Key Points

• Kospi Hits Record High: South Korea’s Kospi reached 3,420 after the government scrapped plans to raise stock investment taxes, marking its 10th consecutive session of gains.
• U.S.-U.K. Nuclear Pact: Washington and London are set to sign multi-billion-pound nuclear power deals, including 12 modular reactors, in a bid to fuel data centers and drive a “nuclear renaissance.”
• Fed Decision in Focus: U.S. futures traded mixed as investors await a widely expected Fed rate cut, while U.S.-China talks in Madrid continued with little progress on trade and tech disputes.
• France Credit Downgrade: Fitch cut France’s rating to A+ from AA-, citing political fragmentation and rising debt, pushing bond yields higher and fueling concerns over fiscal stability.

Kospi Hits Record as Tax-Hike Plan Scrapped

South Korea’s Kospi index climbed to a record 3,420.23 on Monday before settling 0.35% higher at 3,407.31, its tenth consecutive gain, after the government scrapped plans to raise taxes on stock investments, bolstering investor sentiment.

The Kosdaq also advanced, while broader Asia-Pacific markets traded mixed amid U.S.-China talks in Madrid and anticipation of Chinese economic data, which later showed weaker retail sales and worsening property sector contraction.

Hong Kong’s Hang Seng edged up 0.23% and the CSI 300 gained 0.24%, while Australia’s ASX slipped 0.13%. U.S. futures were steady, with investors focused on this week’s Fed meeting and potential rate cuts.

U.S.-U.K. Nuclear Pact Targets “Golden Age” of Energy

The U.S. and U.K. are set to sign sweeping nuclear power agreements during President Trump’s state visit, launching the Atlantic Partnership for Advanced Nuclear Energy. Plans include constructing up to 12 modular reactors in Hartlepool and developing SMR-powered data centers in Nottinghamshire, with projects estimated to deliver over £50 billion in economic value and thousands of jobs.

U.K. Prime Minister Keir Starmer hailed the deal as positioning both nations at the forefront of energy innovation, as nuclear power gains traction as a low-carbon solution to meet surging demand from AI-driven data centers and industrial growth.

Futures Mixed as Fed Decision and U.S.-China Talks Dominate

U.S. equity futures traded unevenly Monday, with S&P 500 and Nasdaq contracts modestly higher while Dow futures slipped, as investors braced for a pivotal Federal Reserve policy meeting. Markets are pricing in at least a 25-basis-point rate cut on Wednesday, reflecting signs of labor market weakness and sticky inflation pressures.

Meanwhile, U.S. and Chinese officials resumed talks in Madrid, with expectations centered on a potential extension of the deadline for ByteDance to divest TikTok’s U.S. arm.

Oil prices edged higher as Ukrainian drone strikes on Russian energy facilities fueled supply concerns, reinforcing volatility in commodity markets.

France’s Borrowing Costs Rise After Fitch Downgrade

French government bond yields briefly spiked Monday after Fitch cut the nation’s credit rating to A+ from AA-, citing rising debt and persistent political fragmentation. The 10-year yield climbed 7 basis points to 3.51% before easing, while 30-year OATs touched 4.34%.

The downgrade follows last week’s collapse of Prime Minister Francois Bayrou’s government, with newly appointed PM Sebastien Lecornu facing resistance to €44 billion in proposed budget cuts. Fitch warned France’s debt could reach 121% of GDP by 2027, far above eurozone peers, underscoring investor concerns about fiscal sustainability amid ongoing political turmoil.

Conclusion

South Korea’s Kospi surge reflects investor optimism on domestic reforms, while the U.S.-U.K. nuclear pact underscores the role of strategic energy investment in powering future industries.

In the U.S., traders remain focused on the Fed’s upcoming rate decision as labor market weakness contrasts with persistent inflation.

Meanwhile, France’s downgrade highlights the risks of political fragmentation for fiscal stability.

Global markets are navigating a pivotal week defined by central bank decisions, geopolitical negotiations, and shifting credit dynamics. These developments signal both opportunity and caution, reminding investors to balance near-term momentum with structural vulnerabilities in global markets.

Investment Insights

• South Korea Rally: The Kospi’s record high following scrapped tax hikes signals how policy reversals can quickly reprice equities; investors should watch for similar pro-market moves in Asia.
• U.S.-U.K. Nuclear Pact: Massive investment in modular reactors highlights nuclear energy’s growing role in powering data centers and AI infrastructure, creating long-term opportunities across energy and tech supply chains.
• Fed Watch: With a rate cut expected despite sticky inflation, bond and equity markets may diverge; positioning in quality growth stocks and rate-sensitive assets could benefit from easing.
• France Downgrade: Rising sovereign risk in Europe underlines the importance of monitoring political stability as a driver of bond spreads and eurozone market sentiment.

Economic Calendar