TL;DR

US-EU trade deal cuts tariffs; global tech stocks tumble; UK inflation jumps, sterling rallies.

Highlights

• US and EU finalize trade pact: US caps most tariffs on European imports at 15%; EU drops tariffs on US industrial goods, commits to $750B in US energy purchases and $600B in US investments1.
• Nasdaq 100 falls 3% in two sessions, led by a 3.5% drop in Nvidia ; tech selloff spreads to Asia and Europe amid AI skepticism and MIT study questioning AI profitability7.
• UK July inflation rises to 3.8% YoY, above expectations; sterling strengthens as markets reduce near-term BoE rate cut bets8.
• Eurozone flash PMI hits 15-month high (51.1), led by German manufacturing rebound; services and employment lag9.
• Russia launches large-scale drone and missile strikes on western Ukraine, damaging Flex US-owned electronics plant and energy sites; Ukraine hits Russian oil refinery, disrupting Russian fuel exports3.
• Israel approves Gaza City offensive, mobilizes 60,000 reservists as cease-fire talks stall; regional tensions increase2.
• Chinese regulators move to restrict Nvidia H20 AI chip purchases after US remarks; Chinese tech firms accelerate shift to domestic AI chips5.
• Microsoft cuts Chinese firms from early cyber-flaw access amid US defense review; tighter controls on tech exports6.
• Boeing in talks to sell up to 500 jets to China; shares rise 2.6%. Separately, 3,000 Airbus UK workers plan 10-day strike, threatening global wing production1213.
• Codelco cuts 2025 copper output by 33,000 tons after fatal El Teniente mine accident; projects $350M loss14.
• PBOC to issue ¥45.4B in Hong Kong bills as offshore renminbi bond issuance reaches record pace10.
• BlackRock sells $493M in Bitcoin and Ether amid ETF outflows; UK sanctions two crypto exchanges linked to Russia1918.

Commentary

The US-EU trade agreement marks a significant shift in transatlantic trade, with tariff reductions poised to benefit US and European industrials, autos, semiconductors, and energy1. The EU’s commitment to large-scale US energy purchases and investments could support US energy equities and the dollar 1, while improved market access may boost select European exporters. The deal’s provisions on digital trade and future negotiations on steel, aluminum, and rules of origin are worth monitoring for sector-specific impacts1.

Tech sector volatility remains in focus as the Nasdaq 100’s sharp drop, led by Nvidia , spreads globally. The selloff is driven by skepticism over AI profitability, highlighted by new research and regulatory headwinds in China7. Chinese authorities’ moves to restrict Nvidia H20 chip purchases5 and Microsoft ’s curbs on Chinese access to cyber-flaw data6 signal further tightening of US-China tech relations, with implications for global supply chains and semiconductor stocks. Asian and European tech shares are under pressure, and further regulatory developments could exacerbate volatility7.

Macro data show diverging inflation and growth trends. UK inflation’s upside surprise is forcing markets to reassess the Bank of England’s rate path, strengthening sterling and weighing on rate-sensitive assets8. In contrast, the eurozone’s PMI rebound, led by German manufacturing, suggests tentative recovery, though services and employment remain soft9. The PBOC’s large offshore bill issuance and record “dim sum” bond activity reflect sustained demand for renminbi assets amid China’s ongoing capital market reforms10.

Geopolitical risk is elevated. Russia’s drone and missile barrage on Ukraine, including damage to a US-owned plant (Flex ), and Ukraine’s retaliatory refinery strike, highlight persistent energy and supply chain risks3. Israel’s mobilization for a Gaza City offensive adds to regional uncertainty2. In commodities, Codelco’s copper output cut tightens supply14, while Boeing ’s potential China deal and Airbus strike risk may disrupt global aerospace supply chains1213. BlackRock’s crypto sales and UK sanctions on Russia-linked exchanges underscore volatility and regulatory pressure in digital assets1918.