Market Report.
🌍 U.S. President Donald Trump has arrived in Britain for an unprecedented second state visit, which the two nations will use to seal investment deals and renew their “special relationship”. U.S. Treasury Secretary Scott Bessent and British finance minister Rachel Reeves have announced a “Transatlantic taskforce” to deepen work between the two countries’ financial centers.
📉 While the Fed is expected to cut rates by 25 basis points this week, the BoE is widely seen holding steady, which in theory would attract more investors to the higher-yielding pound. UK jobs data showed payrolls fell for a seventh consecutive month and private sector wage growth slowed, suggesting the labor market is cooling, but this is unlikely to move the needle for the BoE’s rate decision.
🤝 It is expected to sign a deal between Starmer and Trump to “unlock investment and collaboration in AI, Quantum, and Nuclear technologies.”
🇬🇧 Starmer wants to pitch Britain as a destination for U.S. investment, with major companies like Microsoft and Google announcing multi-billion dollar investments. Microsoft announced a $30 billion investment in the U.K. by 2028, including $15.5 billion in capital expansion and $15.1 billion in its U.K. operations. This will enable Microsoft to build the U.K.’s “largest supercomputer” with over 23,000 advanced GPUs.
💻 Nvidia, Google, OpenAI, and Salesforce also announced major AI-focused investments in the U.K. totaling over $40 billion.
🇨🇳 Meanwhile, UBS has identified Alibaba and Tencent as the two leading Chinese companies in the artificial intelligence (AI) space, based on their strong execution and growth prospects. Both companies have reported tangible AI benefits in their recent quarterly results, with Alibaba accelerating its AI-related capital expenditure by over 50% and Tencent more than doubling its capex year-over-year.
📊 Despite chip restrictions, the Chinese internet giants have emphasized the availability of multiple options for inference chips, reducing their reliance on imported chips. UBS believes the AI sector in China has not yet fully priced in the growth prospects, making Alibaba and Tencent attractive investment opportunities.
🤝 U.S. Treasury Secretary Scott Bessent said he expected further trade discussions between Washington and Beijing to take place before punitive tariffs are set to take hold in November, indicating progress in the negotiations.
📉 The initial “liberation day” tariffs announced by President Trump in April would have seen 145% duties on Chinese imports, but those were suspended as talks continued. Bessent said U.S. trading partners have reported that “Chinese goods are flooding their markets” and they are “slightly apoplectic” about it. The U.S. trade deficit with China is on pace to decline significantly in 2025, down from nearly $300 billion in 2024 to $128 billion through July. U.S. Trade Representative Jamieson Greer expects the trade deficit “will narrow by at least 30% this year and probably more in 2026.”
📊 President Donald Trump has floated the idea of companies switching from quarterly to semiannual earnings reporting, which the SEC says it is actively looking into at Trump’s request. Trump argues that semiannual reporting would save money and allow managers to focus on properly running their companies, rather than the “unhealthy focus on short-term profits” that quarterly reporting can encourage.
🕒 Logistically, the process of switching to semiannual reporting would likely take 6-12 months and would require a majority vote at the SEC, where Republicans currently hold a 3-1 voting majority. Supporters of the current quarterly reporting system argue it provides investors with timely information and transparency, and that the use of GAAP standards helps ensure reliable reporting.
🔍 The SEC says it is prioritizing this proposal to eliminate “unnecessary regulatory burdens” on companies.
🇯🇵 Japan’s exports fell for a fourth straight month in August, as elevated U.S. tariffs took a deeper toll on the country’s automotive and other manufacturing sectors. Japanese automakers are still mostly absorbing the tariff costs by cutting export prices to maintain U.S. sales volumes, but some have begun increasing prices to pass them on to consumers.
📉 Exports to the United States plunged 13.8% in August, the largest drop since February 2021, dragged down by a 28.4% fall in automobiles and 38.9% plunge in chipmaking equipment. Washington agreed on a baseline 15% tariff rate on nearly all Japanese imports, down from the initial 27.5% on autos and a 25% duty, offering some relief to Japanese exporters.
⚔️ Geopolitics: Israel launched a ground offensive, “Operation Gideon’s Chariots II,” to seize Gaza City, with tanks advancing after airstrikes leveled high-rises.
🇪🇸 The Spanish government has cancelled a contract worth nearly €700 million for Israeli-designed rocket launchers. The decision follows Prime Minister Pedro Sanchez’s pledge to enshrine in law a ban on arms trade with Israel over its offensive in Gaza. In addition, Sanchez has also urged Israel’s exclusion from international sport events in response to the conflict in Gaza.
🔄 This move by the Spanish government represents a significant policy shift, as it seeks to take concrete action to restrict military cooperation with Israel over the ongoing violence in the region.
⚖️ Utah authorities have officially announced that they will seek the death penalty for Tyler Robinson, who has been charged with the assassination of Charlie Kirk. If Robinson is convicted of aggravated murder, he could face execution by firing squad under Utah law, as the state currently allows both lethal injection and firing squad as legal methods of capital punishment.
🕵️♂️ The FBI Director Kash Patel now defends Jeffrey Epstein and says there’s no evidence Jeffrey trafficked children and women: “There is no credible evidence in the ‘Epstein files’ that Jeffrey Epstein trafficked women to others”.
📈 Market View: Diabolical levels are being reached by the S&P 500 futures, currently at 6666 points. They have retraced from the highs achieved yesterday following the rollover. The Nasdaq 100 futures stand at 24,525 points. We do not expect many changes until the Fed comments on the interest rate cuts.
💵 The dollar is finally starting to consolidate the support losses we announced last week, with the DXY index now falling below 97 points, currently at 96.75. Of course, the EUR/USD pair has risen above 1.1850 due to the dollar’s weakness.
🇪🇺 In Europe, DAX 40 futures have lost the 23,500 points support, having fallen to the current 23,400 points. Euro Stoxx futures, which managed to stay close to 5,450 points, have retraced sharply in yesterday’s session and currently stand at 5,385 points.
🛢️ Crude oil has advanced again; we have identified the fundamental keys behind these bullish movements over the past few days, with Brent crude now approaching $68.50 per barrel.
💰 Gold futures remain at historic highs, having exceeded $3,735 per ounce yesterday, from which they have retraced to the current $3,712 per ounce.
💻 Bitcoin appears to be surpassing the resistance of $116,500, currently at $117,215. Our sentiment is that it will continue to be bullish in the coming sessions.
