Key Points

• Trump-Putin Alaska Summit Puts Ukraine and Markets on Alert: Leaders meet in Alaska for high-stakes talks on Ukraine, with potential implications for security, energy, and global trade.
• Hot U.S. Inflation Data Tempers Fed Cut Optimism, Lifts Yields: July PPI rose 0.9%, exceeding forecasts and pushing Treasury yields higher, trimming expectations for aggressive Fed easing.
• China’s July Data Misses Underscore Growth Risks: Retail sales and industrial output fell short of forecasts, highlighting slowing momentum and policy headwinds despite a temporary U.S.-China tariff pause.
• Intel Shares Surge on Report of Potential U.S. Government Stake: Stock rose 7% on reports Washington may invest to bolster domestic chip production and support Intel’s Ohio factory projects.

Trump-Putin Alaska Summit

Trump and Putin will meet Friday at Alaska’s Elmendorf Richardson military base for closed-door talks expected to focus on resolving the Ukraine conflict, with a joint press conference to follow. The summit comes amid fears from Kyiv and European allies that Washington could accept concessions on Ukrainian territory and NATO ambitions in exchange for a ceasefire.

Russia’s delegation, led by top ministers, is also expected to discuss broader security issues and potential economic cooperation with the U.S. Markets are watching for any breakthrough or shift in geopolitical risk, given the implications for energy, defense, and global trade flows.

Hot U.S. Inflation Data Tempers Fed Cut Optimism, Lifts Yields

Global equities eased Thursday as stronger-than-expected U.S. producer prices challenged market confidence in aggressive Federal Reserve rate cuts. The S&P 500 closed fractionally higher at a fresh record, while the Dow and Nasdaq ended flat. July PPI rose 0.9% versus expectations of 0.2%, pushing U.S. Treasury yields higher and tempering bets on a September 25-basis-point cut, now seen as a 92.5% probability.

The dollar strengthened against major peers, while Brent crude climbed 1.84% to $66.84 on geopolitical tensions ahead of the U.S.-Russia summit. Gold retreated as risk sentiment stabilized and yields moved higher.

China’s July Data Misses Underscore Growth Risks

China’s economy lost momentum in July as retail sales rose 3.7% and industrial output increased 5.7%, both missing forecasts and marking the weakest factory growth since November. Fixed-asset investment slowed to 1.6% year-to-date, with property investment plunging 12%, reflecting weak demand and tighter controls on excess capacity in sectors like steel and coal. Adverse weather further disrupted activity, while youth unemployment excluding students remained above 14%. Despite 5.3% growth in H1, economists warn of downside risks to Beijing’s 5% annual target, urging fresh policy support.

A 90-day U.S.-China tariff pause offers temporary relief but leaves core disputes unresolved.

Intel Shares Surge

Intel stock jumped 7% Thursday after reports the Trump administration is in talks to acquire a stake in the chipmaker to support domestic semiconductor manufacturing. The move would help fund Intel’s Ohio factory projects and bolster U.S. capacity for advanced chips, an area where Intel remains the only domestic producer. The reported plan follows President Trump’s push for more high-tech production in the U.S. and recent government interventions in strategic industries.

Intel shares are now up 19% year-to-date after a 60% plunge in 2024, though its foundry business still faces challenges securing major customers.

Conclusion

Global markets remain attuned to a convergence of geopolitical and macroeconomic drivers.

The Trump-Putin summit could redefine the trajectory of the Ukraine conflict and broader U.S.-Russia relations, with spillovers for energy and defense sectors. U.S. inflation surprises have tempered expectations for aggressive Fed easing, lifting yields and reinforcing a cautious stance among investors.

China’s weaker July data underscores lingering growth vulnerabilities despite temporary trade relief, while strategic U.S. industrial policy moves, such as a potential stake in Intel — highlight Washington’s focus on securing critical supply chains.

These developments frame a complex environment demanding selective, risk-aware positioning.

Investment Insights

• The Trump-Putin summit outcome: could shift geopolitical risk pricing, particularly in energy, defense, and emerging market debt.
• Hot U.S. PPI data: supports maintaining duration hedges and a cautious stance on rate-sensitive equities until Fed policy clarity improves.
• China’s July slowdown: reinforces the case for selective exposure to sectors benefiting from policy support while avoiding overreliance on cyclical demand recovery.
• A potential U.S. government stake in Intel: underscores strategic reshoring trends, favoring domestic semiconductor and critical tech supply chain plays over foreign-dependent peers.

Economic Calendar

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.

Economic Calendar