TL;DR

US-China trade talks ongoing; Fed cuts expected; Israel strikes Yemen port, raising Red Sea risk.

Highlights

• US-China trade talks in London continue, described as “fruitful” but with no major breakthroughs; rare earth exports and supply chains remain key topics 56.
• Asian and European equities advance; US and European equity futures edge higher on trade optimism 19.
• Citigroup now expects 75bps in Fed rate cuts in 2025 after weak US payrolls; UK jobless rate rises to 4.6%, with markets pricing in a September BoE cut 16.
• EU prepares 18th Russia sanctions package: lowers Russian oil price cap to $45/bbl, targets shadow fleet, bans Nord Stream use 2.
• Israel launches first naval strikes on Yemen’s Hodeidah port in response to Houthi missile attacks, raising Red Sea shipping risk 1.
• China’s BYD-led EV price war wipes $21.5B in market value; Tesla China sales fall 30% YoY in May; MIIT urges automakers to halt further price cuts 3.
• TSMC May revenue up 39.6% YoY; Quanta, Gigabyte, and ChipMOS also report strong growth on AI chip demand 12.
• Nvidia powers Europe’s fastest supercomputer (JUPITER) and partners with HPE for next-gen Blue Lion system 14.
• US Senate to vote Wednesday on GENIUS stablecoin bill; CFTC nominee Quintenz faces hearing amid crypto regulation debate 89.
• BlackRock, Fidelity, and Bitwise buy $362M in Bitcoin and $47M in Ethereum as US crypto ETFs see $386M net inflows 10.
• Paramount to cut 3.5% of US workforce amid industry TV declines; Skydance merger approval pending 17.
• OpenAI’s ChatGPT experienced a global outage for several hours, now resolved 4.

Commentary

US-China trade negotiations remain in the spotlight, with both sides signaling constructive engagement but no concrete progress 56. The focus on rare earths and supply chain security is particularly relevant for US tech, auto, and defense sectors. While equities in Asia and Europe are higher on hopes of de-escalation, the lack of a breakthrough means US markets will likely remain headline-driven, especially in sectors exposed to supply chain or tariff risk 19.

Expectations for US monetary policy are shifting after soft payrolls data, with Citigroup now forecasting 75bps in Fed cuts for 2025 16. This is supporting risk appetite in equities and weighing on the dollar. In the UK, a rising unemployment rate and slowing wage growth have pulled forward BoE rate cut expectations, pressuring sterling 16. Meanwhile, the Bank of Japan maintains a dovish stance, keeping the yen near 145/USD 20.

Geopolitical risk is elevated following Israel’s first naval strike on Yemen’s Hodeidah port, which could disrupt Red Sea shipping and raise energy market volatility 1. The EU’s latest Russia sanctions package, including a lower oil price cap and shadow fleet measures, may further constrain Russian oil flows, although Brent and WTI remain rangebound for now 2.

In tech, TSMC and related AI hardware suppliers continue to report strong revenue growth, reflecting persistent demand for AI chips 12. Nvidia ’s role in powering Europe’s top supercomputers underscores ongoing investment in high-performance computing 14. The China EV price war is pressuring sector valuations and impacting global players like Tesla , while regulatory scrutiny intensifies 3.

Crypto flows remain robust, with significant ETF inflows into Bitcoin and Ethereum , and US regulatory momentum building as the Senate prepares to vote on stablecoin legislation 108. Paramount ’s workforce reduction highlights ongoing challenges in traditional media 17, while OpenAI’s resolved outage is a reminder of operational risks in AI-driven businesses 4.