Issue #22💥- How China’s Moves & Tariffs Could Change Your Portfolio Now

What’s in this issue

Welcome back, this week’s newsletter we highlight a strong market rebound with the S&P 500 rising 2.4% and Nasdaq up 3.9%, supported by strong tech stock gains, encouraging earnings from Disney, AMD, and others, and renewed optimism over Russia-Ukraine peace talks following US-Russia dialogue.

Despite tariff tensions as new US trade barriers come into effect, Apple’s major US investment helped ease concerns. In Europe, markets showed mixed moves after the Bank of England cut interest rates.

The newsletter also covers significant macroeconomic factors including China’s tightening of critical mineral exports impacting defense manufacturing, inflation trends in the US and Europe, and ongoing geopolitical risks.

Looking ahead, key economic releases such as US inflation data and upcoming earnings from major companies will guide market sentiment amid cautious optimism.

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Weekly Movement - Heatmaps

Markets had its best week since late June, helped by strong gains in tech stocks, positive company earnings, and hopes for progress in Russia-Ukraine peace talks.

The week started with markets rebounding from a disappointing jobs report, dipped briefly on weak services data, then surged again as Apple announced a huge U.S. investment to avoid tariff impacts.

President Trump’s trade barriers finally went into effect, with threats of steep tariffs on foreign-made semiconductors but exemptions for U.S. manufacturers, keeping tariff news in focus.

On Thursday, markets were quiet, but by Friday, investors became more optimistic as Trump reported constructive conversations with Russia’s President Putin and considered a meeting with Ukraine’s leader to negotiate an end to the war.

Earnings reports from major companies like Disney, AMD, Pfizer, Palantir, and McDonald’s added to the positive mood. Ultimately, the S&P 500 rose by 2.4% and the Nasdaq by 3.9%, showing a strong recovery from earlier dips.

Moving To Europe

The Stoxx 600 rose modestly by 0.25%, France’s CAC 40 gained 0.44%, Germany’s DAX was flat, and the UK’s FTSE 100 dipped 0.14% after the Bank of England’s rate cut.

Meanwhile, gold futures soared above $3,500 due to fears that US tariffs would hit imported gold bars, particularly impacting Swiss refiners.

Notable corporate moves included Bechtle’s share price jump on strong earnings, TBC Bank’s slump despite higher profits, and Munich Re’s decline after cutting its insurance revenue outlook.

What is Moving the Markets This Week

China Tightens Grip on Critical Minerals

China is significantly restricting the export of critical minerals essential for Western defense manufacturing, causing production delays and sharp price increases.

Beijing controls about 90% of the global rare earth elements supply, which are vital for military technologies such as jet-fighter magnets, drones, and precision munitions.

The Chinese government now demands strict documentation proving civilian use to approve exports, heavily limiting minerals for defense purposes.

This has pushed prices of some key minerals, like samarium, up to 60 times higher than normal and forced defense companies to seek alternative suppliers with limited success, leading to concerns over stock shortages.

In response, the US Department of Defense is working to reduce reliance on Chinese rare earths by investing in domestic production and diversifying supply chains, although scaling up production will take years

Federal Reserve rate cut hopes

Boosted global stocks, lifting indices such as the S&P 500 (+1.47%), Nasdaq (+1.95%), and Dow (+1.34%). Investors reacted positively to softer July jobs data and revised weaker prior months, increasing optimism about future interest rate cuts.

Sector rotation

Was evident, with communication services and technology leading gains, while energy lagged amid rising supply concerns weighing on crude oil prices.

Disney Faces Challenges Balancing AI Use and Intellectual Property in Filmmaking

Disney is navigating the complexities of integrating artificial intelligence into its movie production, particularly with plans to use AI to digitally replicate actor Dwayne Johnson for the live-action Moana adaptation.

While AI could reduce the need for the actor’s physical presence during filming, Disney has also scrapped AI use in projects like Tron: Ares due to concerns about negative public reaction.

The company is trying to embrace AI advancements without compromising its valuable characters and brand, highlighting the tension between innovation and protecting intellectual property in Hollywood’s evolving landscape

Top Economic News

Bank of England Interest Rate Cut: The BoE cut the UK interest rate by 25 basis points from 4.25% to 4.00%, marking the fifth cut since August 2024. This move aims to address rising unemployment and persistent inflation above the 2% target (currently 3.6%) and signals ongoing economic cooling in the UK.

U.S. ISM Services PMI and Trade Balance Data: The U.S. ISM Services PMI, a key indicator for the large services sector, will show July performance amid tariff-related uncertainty affecting hiring and expansion plans. The U.S. Trade Balance data will reveal how imports and exports were influenced ahead of new tariffs implemented August 7, a key test for ongoing protectionist trade policies and their impact on global supply chains and currency markets.

U.S. Labor Market and Inflation Data Impact: Recent U.S. jobs reports show weak job growth outside healthcare, rising wages, and concerns over tariff-driven inflation risks. These have led to sharp moves in equity prices, bond yields, and the dollar, with investors increasingly pricing in potential Federal Reserve rate cuts this year due to slowing growth risks

Track Inflation Across Europe & US

Inflation in Europe and the US as of July-August 2025 reflects divergent but moderated trends.

In the Euro Area, inflation remains steady at around 2.0% year-on-year, consistent with the European Central Bank’s target.

The inflation rate has been stable from June to July 2025, with components such as services and food showing slight fluctuations but overall energy prices continuing to exert downward pressure.

This reflects a broader trend of moderated inflation across the Eurozone, supported by steady core inflation at about 2.3% and easing pressures in non-energy industrial goods.

Some European countries show variation, with inflation ranging from very low in Cyprus and France to higher rates in Romania and Estonia.

Meanwhile, in the United States, inflation shows a bit more persistence in core measures. The core consumer price inflation rate (which excludes food and energy) was about 2.9% year-on-year in July 2025, while the overall inflation rate was approximately 2.7% for the same period.

The US inflation data signals ongoing demand in sectors such as shelter, medical care, vehicle insurance, and household furnishings.

Month-to-month inflation has shown some increase, though overall rates suggest a gradual cooling compared to previous years.

Key inflation rates from July 2025:

• Euro Area Inflation: 2.0%

• US Core Inflation: 2.9%

• US Overall Inflation: 2.7%

Macro trends show moderate inflation and cautious economic growth outlooks in both regions, with inflation near central bank targets.

Europe is expected to see disinflation pressures weighing down inflation modestly in the near term, while in the US, inflation remains somewhat resilient but under close monitoring for policy adjustments.

These trends suggest a landscape of controlled inflation but ongoing challenges in the broader global economic context.

Hot Take 🔥 (Opinion Piece) Overall Thoughts 💭

The economy in mid-2025 is showing signs of tepid growth and moderate resilience, but with notable challenges ahead.

UK GDP growth is expected to hover around 1¼% annually, with some pickup projected in the latter half of the forecast period.

Inflation remains elevated but with some easing in wage growth and mixed price pressures, including rising food and administered prices.

Consumer spending and fixed investment have been modestly supportive, although manufacturing and consumer-facing sectors like retail and travel have shown weakness.

The global economy is similarly fragile, with the IMF noting downside risks such as tariff rebounds. Market reactions have been mixed, with stock markets showing gains but uncertainty persists due to policy and growth concerns.

Key highlights:

• The UK economy’s growth is moderate and somewhat stable but lacks strong momentum.

• Inflation is still above target with some components rising unexpectedly.

• The labor market shows moderated wage growth but remains relatively stable.

• US economic data indicate resilience but a loss of momentum in consumer spending and exports.

• Manufacturing struggles and sector-specific weaknesses cloud the near-term outlook.

• Global risks include trade policy uncertainties and potential tariff impacts.

• Market sentiment is cautious, reflecting concerns about slower economic growth ahead and tightening fiscal conditions in the UK.

Overall, the current environment suggests a cautious stance with expectations of slow but positive growth, persistent inflationary pressures, and ongoing global trade uncertainties.

Financial markets are digesting this mixed economic signal, balancing between optimism for further stimulus or easing and concerns about growth sustainability.

Looking Forward: What We Anticipate Next Week

The spotlight is on inflation data and developments around trade and the Russia-Ukraine situation.

• Key economic releases:

• Tuesday: U.S. July Consumer Price Index (CPI)

• Thursday: U.S. July Producer Price Index (PPI)

• Friday: U.S. Retail Sales for July

President Trump is scheduled to meet Russian President Putin on Friday, with discussions possibly involving a truce and territorial swaps in Ukraine, which Ukraine’s president opposes.

WTI crude oil futures will be monitored amid geopolitical tensions.

Earnings season highlights include Dow 30 component Cisco (CSCO) and other major tech companies.

Monday 11th August

Earnings:

• AMC Entertainment (AMC)

• Barrick Mining (B)

• Oklo (OKLO)

• Plug Power (PLUG)

Tuesday 13th August

Economic Events:

• Reserve Bank of Australia Interest Rate Decision (Forecast: 3.6%, Previous: 3.85%)

• UK Unemployment Rate (Forecast: 4.6%, Previous: 4.7%)

• US Core Inflation (YoY) (Forecast: 3%, Previous: 2.9%)

Earnings:

• CoreWeave (CRWV)

• eToro (ETOR)

• Paysafe (PSFE)

Wednesday 13th August

Earnings:

• Cisco (CSCO)

• Alvotech (ALVO)

Thursday 14th August

Economic Events:

• UK GDP Growth Rate QoQ Prel (Forecast: 0.3%, Previous: 0.7%)

• US Producer Price Index (PPI) (YoY) (Forecast: 2.5%, Previous: 2.3%)

Earnings:

• Alibaba (BABA) (tentative)

• Applied Materials (AMAT)

Friday 15th August

Economic Events:

• Japan GDP Growth Rate QoQ Prel (Forecast: 0.3%, Previous: 0%)

• UK Manufacturing Production YoY (Forecast: 1.5%, Previous: 0.3%)

• US Retail Sales for July

Geopolitical Event:

Scheduled meeting between U.S. President Donald Trump and Russian President Vladimir Putin

Market Watch:

WTI crude oil futures (CL1:COM)

Earnings:

• Flowers Foods (FLO)

• So-Young International (SY)

Other companies reporting during the week:

• Deere and Co

• Sea Ltd

• NetEase

• JD.com

• Circle Internet Group

• Tencent Holdings

Notable Companies Reporting Earnings This Week:

Alibaba, Cisco, Applied Materials, Deere and Co, Sea Ltd, NetEase, CoreWeave, JD.com, Barrick Mining, Circle Internet Group, Tencent Holdings.

This week’s market activity will be closely guided by inflation readings, geopolitical developments, and earnings results from key technology and industrial sectors, with potential impacts on Fed policy expectations and trade-related market sentiment.

ICYMI

In the UK, the Met Office is preparing for Storm Dexter, which is expected to hit within hours, although the storm brings some relief from the heatwave. There are also warnings about upcoming changes to car tax that could result in extra charges for drivers.

The conflict in Ukraine continues with intense fighting and heavy casualties. Russian forces are pressing offensives particularly in the Pokrovsk area, with significant missile and drone strikes targeting Ukrainian civilian and military infrastructure.

Ukraine has also carried out drone attacks deep inside Russia, including an attack on an oil refinery in the Saratov region. European leaders have reiterated their support for Ukraine and emphasised that any peace talks must happen within the context of a ceasefire or reduction in hostilities.

Meanwhile, a summit between the US President Donald Trump and Russian President Vladimir Putin is planned for August 15 in Alaska to discuss a long-term peace plan for Ukraine, with the possibility of Ukrainian President Zelenskyy’s involvement being considered.

The US has implemented higher reciprocal tariffs on imports from over 60 countries, including a 10% tariff on goods from the UK and up to 50% on goods from some other countries like Brazil and India. These tariff changes are expected to raise substantial revenue but have also led to higher consumer prices in affected categories such as clothing and textiles.

Domestically in the UK, there have been protests related to various political issues, including arrests during demonstrations supporting the banned group Palestine Action. The government is also emphasising tougher measures on foreign criminals with immediate deportations possible after sentencing.

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