Market Report.
📈 The socialisation of the economy that we suggested last week seems to be getting closer every day in the US: As promised by President Trump, the White House’s revenue-sharing arrangement with Nvidia and AMD and its 10% ownership in Intel appear to be the first of a number of agreements. Top Pentagon officials are “thinking about” whether the U.S. government should acquire equity stakes in leading defense contractors like Lockheed Martin, according to Commerce Secretary Howard Lutnick.
🤔 Lutnick suggested Lockheed is “basically an arm of the U.S. government” since it derives most of its revenue from federal contracts. Senators like Rand Paul have questioned whether this would be a step towards socialism, with the government owning parts of major private companies.
🇺🇸 U.S. President Donald Trump has warned of steeper tariffs on China if exports of rare-earth magnets were curbed, threatening the fragile trade truce between the two largest economies. Trump said if China doesn’t give the U.S. magnets, then the U.S. will have to charge them 200% tariffs or something similar. He also claimed that 200 Chinese planes were unable to fly because the U.S. was not providing Boeing parts, using this as leverage against China’s grip on rare earths.
🤝 In June, the U.S. and China agreed on a trade framework that included easing controls on Chinese rare-earth exports and rolling back some American tech restrictions. The temporary trade truce is set to expire in mid-November, and whether it holds will depend on continued bilateral engagement, including upcoming meetings between senior Chinese and U.S. trade officials.
🇫🇷 The French government under Prime Minister Francois Bayrou is facing a high-stakes confidence vote on September 8th, which it is increasingly likely to lose. Three major opposition parties – the National Rally, the Greens, and the Socialists – have said they will not back Bayrou in the confidence vote. If Bayrou loses the vote in the National Assembly, his government will fall. This has spooked investors, pushing up the risk premium on French bonds.
💰 Bayrou has called the confidence vote to gauge support for his proposed 44 billion euro budget cuts, including scrapping two public holidays and freezing welfare spending. Even if the government wins the confidence vote, it would only mean support for Bayrou’s views on France’s fiscal issues, not the actual budget itself, which will be voted on later.
🚨 The confidence vote comes just two days before planned nationwide protests, drawing comparisons to the 2018 “Yellow Vest” protests that challenged Macron’s economic reforms.
📉 Bank of England Governor Andrew Bailey highlighted the “acute challenge” facing Britain’s economy due to its weak underlying economic growth and reduced labor force participation since the COVID-19 pandemic. Bailey said an aging population and an apparent illness-driven drop in working by younger Britons have increased the need to boost economic productivity.
📊 Reduced labor force participation is one reason why some BoE policymakers fear Britain’s high inflation rate of 3.8% may be slow to return to the 2% target. Official data shows the percentage of 16-64 year olds active in Britain’s labor market is lower than before the pandemic, unlike in other advanced economies.
🏭 The downturn in the German industrial sector is accelerating. German industrial firms generated revenue of over 533 billion euros in Q2 2025, down 2.1% year-on-year, following a 0.2% decline in Q1. The number of people employed in German industry declined by 2.1% in Q2, to 5.43 million. Compared to 2019, the workforce has contracted by 4.3%, with around 245,500 jobs lost.
🚗 The sharpest job losses were seen in the car manufacturing sector, down 6.7% in Q2, amounting to around 51,500 jobs lost in a year. Exports to the U.S., Germany’s most important foreign market, slumped by 10% in Q2, while exports to China were down 14%.
🛠️ German carmakers are facing challenges from stiff competition from Asia, the costly transition to electric vehicles, and high U.S. import tariffs, leading to job cuts at companies like Volkswagen, Mercedes, and Continental.
📉 China’s industrial profits fell for a third consecutive month in July, highlighting the challenges businesses are facing amid subdued demand and persistent factory-gate deflation. Industrial profits fell 1.5% in July from a year earlier, following a 4.3% slump in June. The profit decline eased slightly to 1.7% in the January-July period.
📦 Exports beat expectations last month, but a slew of underwhelming indicators have kept pressure on Beijing to roll out more stimulus measures. Ongoing deflationary pressures and a prolonged housing downturn are weighing on businesses, with top solar manufacturers and a major state-owned automaker reporting wider losses.
📊 Market View:
📈 US futures regain optimism as they await NVIDIA’s results tonight. At ATFX, we have prepared a special video report on this company. The Mini S&P 500 futures are returning to the area of historical highs, currently trading at 6,485 points. The Nasdaq 100 futures have recovered from the weakness with which they started the week, but they are still about 400 points away from historical highs, currently trading at 23,620 points.
📉 Market divergences are apparent. Poor data from the German industry and the political crisis in France are weighing on the European market compared to the American one. The French budget crisis is also causing larger declines in Eurostoxx 50 contracts than in DAX 40 contracts. The Eurostoxx 50 is currently trading at 5,405 points, having surpassed 5,500 points last Friday. The DAX 40 is currently trading at 24,230 points.
💵 The dollar remains stable, approaching the 98.50 mark in its DXY index. However, the problems in Europe seem to be weakening the euro against the dollar, with the EUR/USD pair falling to 1.1620.
🛢️ Crude oil has fallen again after the increases seen in recent days. Brent crude has retreated from nearly $68.50 to the current $66.55.
💰 Gold futures are rising, having exceeded $3,440 yesterday, from which they have retraced to the current $3,430.
📈 Bitcoin bounced back from the $109,250 area as we expected, and is now trading at $111,115, but the charts indicate that its downward corrections may not yet be finished.
