TL;DR

China GDP beats, U.S.-EU/Russia tariff threats escalate, Nvidia resumes China chip sales.

Highlights

• China Q2 GDP grew 5.2% y/y, beating forecasts; industrial output strong, property sector weak 1.
• China restricts exports of battery cathode and lithium extraction tech, tightening EV supply chain controls 4.
• Nvidia receives U.S. approval to resume H20 AI chip sales in China; shares and sector rally 3.
• Trump threatens 30% tariffs on EU imports by August 1; EU pauses countermeasures, talks ongoing 26.
• U.S. threatens 100% tariffs on Russian imports (and secondary sanctions) if no Ukraine ceasefire in 50 days 9.
• EU close to 18th Russia sanctions package; France, UK, Germany warn of possible UN snapback sanctions on Iran 78.
• U.S. Commerce opens Section 232 probes into drone and polysilicon imports, targeting China’s market share 5.
• Japanese investors increase U.S. Treasury purchases as long yields approach 5%; global bond liquidity remains thin 11.
• Japan’s defense white paper labels China its top strategic challenge; regional military tensions highlighted 13.
• India-China diplomatic thaw signaled after Jaishankar-Xi meeting, but trade and border frictions persist 12.
• Drone strike shuts Kurdistan’s Sarsang oilfield, raising regional energy supply concerns 10.
• Bitcoin hits record $123,000 as U.S. “Crypto Week” starts; Standard Chartered launches institutional BTC/ETH spot trading in UK 2019.

Commentary

China’s Q2 GDP beat expectations, driven by strong industrial production and resilient exports outside the U.S., but domestic demand remains hampered by a deepening property slump 1. The government’s fresh export controls on battery and lithium technologies 4 will likely complicate global EV and battery supply chains, especially for non-Chinese automakers and materials producers 4. This move underscores China’s intent to preserve its technological edge in critical sectors 4.

Trade tensions are escalating on multiple fronts. The U.S. is threatening steep tariffs on both EU and Russian imports 29, with the EU preparing but pausing retaliatory measures pending talks 6. The risk of a transatlantic trade war and tighter sanctions on Russia—potentially extending to secondary sanctions—could disrupt global trade flows, increase volatility in European assets, and impact commodity markets, particularly energy 279. Section 232 probes into Chinese drone and polysilicon imports further signal a U.S. push to shield strategic industries 5.

In tech, Nvidia ’s restored access to the Chinese AI chip market is a clear positive for the semiconductor sector, reflected in a rally across related equities 3. However, China’s new export restrictions may prompt Western firms to accelerate investment in alternative supply chains and domestic innovation, particularly in EV and battery technologies 4.

Fixed income markets saw Japanese investors ramp up U.S. Treasury buying as long yields approached 5%, reflecting ongoing global demand for yield even as liquidity remains thin and volatility risk elevated 11. Regional security concerns remain in focus, with Japan’s defense white paper highlighting China as its main strategic challenge 13 and a drone strike disrupting Kurdish oil production 10, both of which could influence risk sentiment and energy prices 10.

Crypto markets continue to attract institutional flows, with Bitcoin reaching record highs amid supportive U.S. legislative developments 20 and Standard Chartered (via its UK branch) launching institutional spot trading 19. The sector’s rising integration with mainstream finance is reducing volatility and broadening its appeal as a portfolio diversifier 20.