Issue #18 - Strategic Shifts and Earnings Insights Amid Global Tensions

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What’s in this issue;

This week, markets are caught in a fierce tug-of-war between Trump's new tariff threats and promising corporate earnings. As Nvidia makes history with a $4 trillion valuation, Starbucks seeks a strategic partner to reclaim its footing in the competitive Chinese market.

Meanwhile, CoreWeave's bold $9 billion acquisition signals seismic shifts in AI and data infrastructure.

With Q2 earnings kicking off, major players like JPMorgan, Netflix, and Johnson & Johnson reveal their resilience amid trade tensions.

Will these updates inspire confidence or caution? Dive in to uncover the forces driving this volatile market landscape.

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Weekly Movement

Markets ended the week slightly lower as trade war escalation—driven by President Donald Trump’s new tariff threats—dampened sentiment, even as U.S. stocks remained near record highs, with the S&P 500 posting a new intraday peak of 6,290.22 points.

Trump dominated headlines by issuing letters to several countries, including Japan, South Korea, Canada, Brazil, and the Philippines, outlining new tariff rates, such as a 50% levy on copper imports and up to 200% on pharmaceuticals.

Despite these tensions, the market celebrated a milestone as chipmaker Nvidia became the first public company to reach $4 trillion in market capitalisation.

Attention will shift to the upcoming earnings season, although Delta Air Lines already reported strong quarterly results and upbeat guidance this week.

For the week, the S&P 500 slipped 0.3%, the Dow fell 1%, and the Nasdaq Composite edged down 0.1%.

What is Moving the Markets This Week

Start of Q2 Earnings Season: Investors are focused on company earnings reports, especially from major U.S. banks, to assess whether the modest expected profit growth (around 4.6–4.8% year-over-year for the S&P 500) supports the ongoing bull market. Forward-looking guidance and commentary on business resilience amid tariffs and inflation will be closely watched.

Starbucks China Seeks Strategic Partner Amidst $10 Billion Valuation Bids and Intense Local Competition: Starbucks is currently evaluating bids for a stake in its China operations, with offers from nearly 30 domestic and international private equity firms valuing the business between $5 billion and $10 billion, and final bids are expected to settle near the upper end of that range. The company, which operates 7,758 stores in China and generates over 8% of its global revenue from the market, intends to retain a meaningful stake and is seeking a strategic partner who shares its vision for delivering a premium coffeehouse experience. This move comes as Starbucks faces declining market share in China—down to 14% in 2024 from 34% in 2019—amidst fierce competition from local brands and shifting consumer preferences, prompting initiatives such as price cuts and new product offerings to regain momentum. Goldman Sachs is advising on the transaction, and while the shortlist of buyers will be determined within two months, the entire process may extend beyond the end of the year, with Starbucks emphasising its long-term commitment to the Chinese market and openness to maintaining a substantial interest in the business.

CoreWeave to acquire Core Scientific in $9 billion all-stock deal

CoreWeave, an AI hyperscaler, has agreed to acquire Core Scientific, a leading data center infrastructure provider and crypto miner, in an all-stock deal valued at approximately $9 billion, with Core Scientific shareholders set to receive 0.1235 newly issued CoreWeave Class A shares for each Core Scientific share, representing a 66% premium over Core Scientific’s prior closing price. The acquisition, expected to close in the fourth quarter of 2025 pending regulatory and shareholder approval, will give CoreWeave control of about 1.3 GW of gross power across Core Scientific’s national data center footprint, with potential for an additional 1 GW+ expansion, furthering CoreWeave’s strategy to verticality its data center operations, enhance profitability, and solidify its position in the rapidly growing AI and high-performance computing market.

Top Economic News

China’s economic growth is under scrutiny, with Q2 GDP expected to slow from 5.4% to 5.2% amid mixed signals: manufacturing activity improved slightly, but the services sector weakened, and employment indicators remained soft as the country adjusts to recent government stimulus and ongoing tariff uncertainty.

Looking Forward: What We Anticipate Next Week

Markets attention this week will pivot from President Donald Trump’s escalating trade moves—most notably his announcement of 30% tariffs on imports from the European Union and Mexico starting August 1—to the kickoff of second-quarter earnings season, with major banks like JPMorgan and Bank of America, as well as Johnson & Johnson and Netflix, set to report results.

Despite the shift, trade tensions remain front and center after Trump’s tariff threats rattled global markets and drew criticism from EU and Mexican leaders, who labeled the measures as “unfair treatment” but signaled a willingness to negotiate before the deadline.

Meanwhile, investors will also focus on a busy economic calendar, including June’s consumer and producer price index reports and retail sales data, as markets brace for the dual impact of trade policy uncertainty and upcoming corporate earnings.

Monday 14th July

Earnings: Fastenal (FAST), FB Financial (FBK)

Tuesday 15th July

Earnings: JPMorgan Chase (JPM), Wells Fargo (WFC), BlackRock (BLK), Citigroup (C)

Economic Events:

China GDP Growth Rate YoY

Forecast: 4.1% (Previous: 5.4%)

Why it matters: A significant slowdown is expected; an upside surprise would be positive for global growth.

Canada Inflation Rate

Forecast: 1.5% (Previous: 1.7%)

Why it matters: Continued declines in prices are good news for Canadian consumers.

US Inflation Rate

Forecast: 2.5% (Previous: 2.4%)

Why it matters: With inflation trending lower, this release will be closely watched for signs of continued moderation.

Wednesday 16th July

Earnings: Johnson & Johnson (JNJ), Bank of America (BAC), Morgan Stanley (MS), Goldman Sachs (GS)

Economic Events:

UK Inflation Rate

Forecast: 3.7% (Previous: 3.4%)

Why it matters: A key input for Bank of England policy decisions.

US Producer Price Index (PPI)

Forecast: 2.8% (Previous: 2.6%)

Why it matters: Producer prices are a leading indicator for consumer inflation.

Thursday 17th July

Earnings: Taiwan Semiconductor (TSM), Netflix (NFLX), GE Aerospace (GE), Abbott Laboratories (ABT), PepsiCo (PEP)

Economic Events:

Australia Unemployment Rate

Forecast: 4.1% (Previous: 4.1%)

Why it matters: Reflects labor market health and influences Reserve Bank of Australia decisions.

UK Unemployment Rate

Forecast: 4.6% (Previous: 4.6%)

Why it matters: Alongside inflation, this will guide UK interest rate policy.

US Retail Sales

Forecast: +0.2% MoM (Previous: -0.9%)

Why it matters: Signals consumer spending trends, a major driver of US economic growth.

Friday 18th July

Earnings: American Express (AXP), 3M (MMM), Charles Schwab (SCHW)

Economic Events:

Japan Inflation Rate

Forecast: 3.7% (Previous: 3.5%)

Why it matters: In Japan, rising inflation is generally seen as a positive sign for economic momentum.

🏁 Q2 Earnings Season Highlights

This week features reports from major banks and large-cap companies including JPMorgan, Wells Fargo, BlackRock, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, Charles Schwab, American Express, Johnson & Johnson, ASML Holding, Taiwan Semiconductor (TSMC), GE Aerospace, Abbott Laboratories, Netflix, PepsiCo, and 3M.

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