TL;DR

Trump tariff threat hits EU, US arms Ukraine, S&P 500 narrows, Bitcoin surges above $122K.

Highlights

• Trump threatens 30% tariffs on EU and Mexican imports from Aug 1; European stocks and US futures fall, autos hit hardest 13.
• EU keeps retaliatory tariffs suspended but prepares €21B countermeasures; Germany and France warn of export risks 37.
• US considers record arms and long-range missiles for Ukraine; bipartisan push for 500% tariffs on Russian energy buyers 46.
• NATO Secretary General Rutte in Washington for Ukraine arms talks; US policy announcement on Russia expected 5.
• China exits deflation as June CPI rises 0.1% YoY; exports beat forecasts, but PPI deflation persists 2.
• South Korea’s exports rebound 4.3% on record chip sales; US/China demand weak, tariff risks remain 15.
• S&P 500 market breadth at 20-year low; mega-cap techs drive gains, US equity valuations stretched, retail inflows at record highs 19.
• Bitcoin breaks above $122,000 on ETF demand; $1B in shorts liquidated ahead of US ‘Crypto Week’ 18.
• Macron accelerates French defense spending to €64B by 2027, citing Russia and security autonomy 8.
• Middle East: Turkish Airlines suspends flights to Iran, Iraq, Jordan, Syria, Lebanon; Syria sees deadly clashes and Israeli airstrikes 1113.
• DP World signs $800M deal to upgrade Syrian ports after US sanctions ease 14.
• White House questions $2.5B Fed HQ renovation; Trump team signals legal review of Powell’s position 20.
• Iran nuclear talks with US remain unscheduled; Tehran accuses Israel of shaping US stance 910.

Commentary

Trade and geopolitical risk are front and center as Trump’s 30% tariff threat on EU and Mexican imports triggers declines in European equities, especially autos, and weighs on US futures 13. The EU’s decision to keep retaliatory tariffs suspended signals a preference for negotiation, but with €21B in countermeasures ready and German/French leaders warning of export pain, the risk of a disruptive trade escalation is real 37. This environment will likely drive sector rotation, with exporters and cyclicals under pressure, and may support defensive assets if talks stall.

US policy toward Russia and Ukraine is also shifting. Washington is preparing record arms shipments, including potential long-range missiles for Ukraine, while bipartisan support grows for 500% tariffs on countries buying Russian energy 46. NATO Secretary General Rutte is in Washington for talks, and a major US announcement on Russia is expected 5. Defense and energy sectors could see renewed interest, while further sanctions risk complicates commodity flows and emerging market exposures.

China’s end to deflation and stronger-than-expected exports provide a modest positive for global demand, but persistent PPI deflation and weak US/China demand for Korean goods highlight ongoing supply chain and trade headwinds 215. South Korea’s export rebound is driven by semiconductors, but tariff uncertainty remains a drag for regional manufacturers 15.

US equity markets remain highly concentrated, with the S&P 500 ’s rally driven by a handful of mega-cap tech stocks and record retail inflows. Valuations are stretched, and breadth is at a two-decade low, raising fragility if leadership falters 19. Crypto markets are strong, with Bitcoin surging above $122,000 on ETF inflows and ahead of key US regulatory discussions 18.

Elsewhere, Middle East instability is underscored by Turkish Airlines’ flight suspensions and renewed violence in Syria, while easing US sanctions enable new foreign investment in Syrian infrastructure 111314. The White House’s scrutiny of the Fed’s renovation and Powell’s position adds another layer of policy uncertainty as legal and political risks to central bank independence rise 20. Iran nuclear talks remain stalled, keeping regional risk elevated 910.