U.S. Markets Sink as Tariffs, Jobs Report, and Geopolitics Weigh on Sentiment
U.S. equities closed sharply lower on Friday, with the NASDAQ and Russell 2000 each dropping more than 2%, as a toxic mix of economic, political, and geopolitical developments spooked investors.
What Dragged Markets Lower:
Tariffs went live: Trump’s August 1 tariff package officially took effect, reigniting trade war fears.
Jobs shock: July’s nonfarm payrolls came in well below expectations, and prior-month revisions erased 258,000 jobs from the books.
Nuclear saber-rattling: U.S. naval forces reportedly moved nuclear submarines into strategic zones following inflammatory rhetoric from former Russian President Medvedev.
BLS scandal: The head of the Bureau of Labor Statistics was dismissed for allegedly manipulating jobs data to damage Trump politically.
Thursday: Eli Lilly, ConocoPhillips, Block, Pinterest, Sony, Twilio
Friday: Wendy’s
Atlanta Fed GDPNow Slips to 2.1% After Weak Data
The Atlanta Fed’s GDPNow model revised its Q3 U.S. growth estimate downward to 2.1%, from 2.3% previously, following disappointing macro data including the jobs report.
Though early in the quarter, the adjustment reflects fading momentum as hiring and manufacturing slow.
In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 2.1 percent on August 1, down from 2.3 percent on July 31. After this morning’s releases from the US Bureau of Labor Statistics, the US Census Bureau, and the Institute for Supply Management, the nowcasts for third-quarter real personal consumption expenditures growth and real private fixed investment growth declined from 1.9 percent and 2.5 percent, respectively, to 1.6 percent and 2.0 percent. These declines were partially offset by an increase in the nowcast of the contribution of inventory investment to third-quarter real GDP growth from 0.63 percentage points to 0.74 percentage points.
ISM Manufacturing Index Falls to 48.0, Below Forecast
The ISM Manufacturing Index dropped to 48.0 in July, missing expectations for a 49.5 reading and falling from 49.0 in June—signaling a deeper contraction in the sector.
Component Highlights:
Production: 51.4 (↑ from 50.3) – only key metric in expansion.
New Orders: 47.1 (↑ from 46.4)
Employment: 43.4 (↓ from 45.0)
Prices Paid: 64.8 (↓ from 70.0)
Supplier Deliveries: 49.3 (↓ sharply from 54.2)
Inventories: 48.9
Customer Inventories: 45.7
Backlog of Orders: 46.8
New Export Orders: 46.1
Imports: 47.6
Most indicators remained below the 50 mark, suggesting widespread weakness, with production being the only strong spot.
U.S. Consumer Sentiment Dips Slightly in Final July Reading
The University of Michigan’s final sentiment index for July came in at 61.7, slightly below the preliminary 62.0 reading but still above June’s 60.7.
Details:
Current Conditions: Rose sharply to 68.0 (from 58.6 prelim), indicating stronger present-day economic perceptions.
Expectations: Fell significantly to 57.7 from the earlier 66.8, suggesting growing consumer concern about the future.
Inflation Expectations:
1-Year: Increased to 4.5% from 4.4%.
5-Year: Eased to 3.4% from 3.6%.
While current sentiment improved, falling expectations and a slight uptick in short-term inflation concerns suggest a more cautious outlook heading into the fall.
U.S. Construction Spending Drops Again in June
June construction spending declined 0.4% month-over-month, underperforming the flat consensus estimate. It follows a 0.3% decline in May.
Breakdown:
Total Spending: $2.14 trillion (SAAR)
YoY: -2.9%
YTD vs. 2024: -2.2%
Private Construction:
Total: -0.5% MoM to $1.62 trillion
Residential: -0.7% to $883.1 billion
Nonresidential: -0.3% to $738.8 billion
Public Construction:
Total: +0.1% to $514.3 billion
Educational: +0.4%
Highway: +0.6%
Private-sector softness drove the decline, while government-funded projects provided a minor lift.
U.S. Manufacturing PMI Contracts in July, First Time in 2025
S&P Global’s final U.S. Manufacturing PMI for July fell to 49.8, confirming the first contraction of the year after June’s 52.9.
Key insights:
Demand softened, with new orders showing only slight growth and export orders slipping.
Employment dropped as companies held back hiring amid cost pressure.
Tariff-related uncertainty weighed heavily on sentiment and purchasing decisions.
Inventories declined as firms leaned on stockpiles built earlier in the year.
Input costs stayed elevated, but the pace of inflation eased from June highs.
Selling prices rose sharply—second fastest since November 2022.
Confidence dipped to a three-month low, although firms still expect output to improve over the next year.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said
“July saw the first deterioration of manufacturing operating conditions since last December as tariff worries continued to dominate the business environment.
“The downturn at the start of the third quarter in part reflects the passing of a busy period of tariff-related inventory accumulation in prior months. Factories reported little change in inflows of new orders and reduced stock holdings of both raw materials and finished goods in July. This comes after companies had built up inventories in May and June amid concerns over higher import prices and worsening supply availability resulting from tariff hikes.
“Input prices continued to rise at a steep rate, with these higher costs often being passed on to customers to drive another month of elevated selling price inflation, but there are signs that these price pressures may have peaked back in June. “Optimism about the year ahead has meanwhile taken a knock as factories worry about reduced demand from customers, especially in export markets, and the inflationary impact of tariffs. Employment consequently fell as factories trimmed headcounts amid concerns over rising costs and lower sales.”
July Jobs Report Misses the Mark; Big Revisions Add to the Weakness
The July U.S. nonfarm payrolls report came in well below expectations, showing just 73,000 jobs added versus the 110,000 forecast. But the bigger shock was in the revisions: June’s figure was slashed from 147,000 to just 14,000—a massive 133,000 drop.
Breakdown:
Private Payrolls: +83,000 (vs. 100k est.)
Manufacturing: -11,000
Government: -10,000
Unemployment Rate: 4.2% (in line)
Average Hourly Earnings: +0.3% m/m, +3.9% y/y
Labor Force Participation: 62.2%
U6 Underemployment: 7.9% (up from 7.7%)
The revised total for the past two months now reflects a net loss of 258,000 jobs. Health care and education added most of July’s gains (+79,000), while sectors like manufacturing, professional services, and wholesale trade saw losses.
Fed’s Bostic: Jobs Market Slowing, But No Need to Panic Yet
Atlanta Fed President Raphael Bostic said the weaker July jobs report and downward revisions suggest the labor market is losing momentum, but not enough to derail current Fed policy.
Sees inflation risk as still higher than employment risk.
Doesn’t believe the latest data would have changed the FOMC’s decision this week.
Thinks the labor market remains resilient and businesses aren’t laying off in large numbers.
Reiterated his outlook for one rate cut this year, depending on how the data evolves.
Warned tariffs could affect consumer psychology for longer than expected.
Urged the Fed to be cautious with assumptions about how quickly firms will adjust pricing to new tariffs.
Emphasized active internal debate about whether policy is too restrictive or just right.
Fed’s Hammack: Inflation Still the Bigger Problem
Federal Reserve Governor Jeff Hammack acknowledged the July jobs report was weaker than hoped, but emphasized that inflation remains the more urgent issue.
Says the labor market is still “broadly healthy” but could soften later this year.
Noted that companies are struggling with cost increases and will need to raise prices.
Believes current policy is slightly restrictive and near the long-term neutral rate.
Sees risks on both sides of the mandate but more pressing inflation pressures for now.
Says more data is needed: another jobs report and two inflation reports are due before the Fed’s next meeting.
Described the current policy environment as “a tricky time” and committed to staying open-minded heading into the fall.
U.S. Commerce Gridlock Freezes Export Approvals—AI Firms Hit Hard
Reuters reports a deepening crisis at the U.S. Commerce Department, where internal dysfunction has stalled thousands of export licenses, including high-profile AI chip shipments from Nvidia.
No export licenses were issued this week, according to sources.
The backlog is affecting billions in tech deals and is described as the worst licensing freeze in over 30 years.
The jam underscores rising concerns over bureaucratic breakdown as Washington grapples with broader policy volatility.
Fed’s Waller and Bowman Defend Push for Rate Cut
Federal Reserve Governors Christopher Waller and Michelle Bowman explained why they broke ranks during this week’s policy vote, both backing a 25-basis-point rate cut.
Waller’s view:
Tariffs are a one-off shock, not a persistent inflation threat.
Inflation expectations remain stable.
With the economy showing signs of moderation, rates should be closer to neutral—not restrictive.
He respects the broader committee’s stance but sees the current “wait and see” strategy as overly cautious.
Warned that holding rates too high could trigger a sudden deterioration in the labor market.
Bowman’s view:
The Fed needs to put more weight on the employment side of its dual mandate.
Delaying action risks deeper job losses and weaker growth.
A gradual shift toward neutral would help preserve job market strength.
She remains committed to consensus-building within the Fed but believes action now would prevent future harm.
USTR Greer: Will be finishing paperwork on deals over the next week’s/months
USTR Greer speaking on Bloomberg TV
Will be finishing up paperwork over the next weeks/months.
Tariff levels are based on trade deficits with the US.
It is a challenging situation was Switzerland
U.S. Confirms Taiwan’s Statement on Tariff Talks Reflects Reality
A U.S. official speaking to Reuters affirmed Taiwan’s account of ongoing tariff negotiations, noting that the current 20% interim rate is accurate and seen as a stepping stone toward a final agreement.
The U.S. source described Taiwan’s proposal as “well received,” adding that the temporary rate is significantly lower than what several other major trade partners face. This suggests talks are nearing the finish line.
Taiwan previously announced it had entered the final negotiation phase with the U.S. and confirmed the 20% rate as a temporary measure—expected to fall further once a deal is finalized.
White House: No Final Word Yet on China Trade Path
A senior U.S. official confirmed that the White House has not made a final call on future trade policy toward China. While tensions remain elevated, no formal agreements or extensions have been finalized.
Meanwhile, Taiwan has already been hit with a new 20% tariff.
Trump Hints at Trade Talks With Canada Despite New Tariff Hike
President Trump told NBC News his administration remains open to further dialogue with Canada, despite enacting a tariff increase from 25% to 35% on Canadian goods not covered under the USMCA.
He said a potential call with Canadian Prime Minister Mark Carney could happen later Thursday, signaling that trade talks are still on the table.
The tariff escalation—signed earlier that day—has drawn warnings from economists who say the move risks straining cross-border trade and supply chains. Still, Trump insists it’s part of a broader campaign for more “equitable” trade arrangements.
Trump Slaps Switzerland With 39% Tariff, Hits Asia-Pacific Region Too
The Trump administration has ramped up tariffs on several nations. Switzerland was hit the hardest with a 39% rate.
Tariffs by Country:
Taiwan: 20%
Cambodia, Thailand, Malaysia, Indonesia: 19%
Vietnam: 20%
Australia: 10%
New Zealand, Israel, Venezuela, Turkey: 15%
Markets responded sharply, with the Swiss franc falling hard.
Goldman Sachs Maps Out S&P 500 Reactions Ahead of Jobs Data Release
Goldman Sachs has issued a tactical guide for how U.S. equities may respond following Friday’s nonfarm payrolls report, projecting mild market moves tied to the headline figure.
The bank sees a print of +100,000 jobs—its central forecast—as the sweet spot, with the S&P 500 likely climbing 0.40% in that case.
Expected S&P 500 Moves Based on Jobs Number:
Under 50,000: -0.75%
50,000–74,000: -0.50%
75,000–99,000: +0.25%
100,000–124,000: +0.40% (Goldman forecast = 100k)
125,000–150,000: +0.25%
Above 150,000: ±0.25% (minimal directional bias)
Implied volatility from options suggests a ~0.79% move by Friday’s close, hinting at contained expectations. Goldman views a “just right” figure as ideal—strong enough to quiet recession fears but not so hot it revives inflation concerns. Job growth over 150,000 is seen as murky due to potential Fed tightening.
In a separate note, Goldman’s credit team flagged that global corporate bond spreads have narrowed to levels not seen since 2007, recommending hedges in case of market disruption.
Canada’s Carney Slams U.S. Tariff Hike to 35%
Canadian Prime Minister Mark Carney expressed clear frustration after the U.S. increased tariffs on Canadian exports—outside of the USMCA framework—from 25% to 35%.
Carney said the Canadian government is “disappointed but focused on what we can control,” pointing to the national “Building Canada Strong” strategy. However, he acknowledged that key sectors—lumber, autos, steel, and aluminum—will take a hit from the tariff surge.
Negotiations with the U.S. are reportedly still active.
U.S. Hikes Canada Tariff to 35%, Spares USMCA Goods
Trump signed an executive order increasing tariffs on Canadian imports from 25% to 35%, effective August 1. However, items covered under the USMCA remain exempt.
The White House emphasized the move is part of a broader security-driven tariff overhaul, noting that goods routed through third countries to evade the tariff will face a 40% transshipment duty.
Gold Bounces Sharply After U.S. Jobs Data Undermines Fed’s Hawkish Tone
Gold plunged below $3,300 midweek but ended the week on a high note, surging past $3,350 Friday after weak U.S. employment data triggered a sharp pullback in the U.S. dollar and Treasury yields.
Key Drivers of the Rebound:
The NFP report showed only 73,000 jobs added in July, versus 110,000 expected.
May and June payrolls were revised down by a combined 258,000, sparking concerns about economic softness.
The unemployment rate ticked up to 4.2%, while the Fed rate cut odds for September jumped from 30% to nearly 70%.
Gold’s Weekly Journey:
Monday saw losses as markets celebrated a new U.S.–EU tariff framework and truce talk with China. Gold dropped toward $3,300.
Tuesday’s mixed U.S. data gave gold a reprieve; job openings fell, but consumer confidence rose.
Wednesday brought another slide, with GDP beating estimates at 3% annualized, and ADP jobs surprising to the upside at 104,000.
Powell’s post-FOMC press conference gave no firm clues on rate cuts, calling policy “modestly restrictive but appropriate.”
Despite a small Thursday rebound, gold lacked follow-through ahead of Friday’s employment report.
The Friday Turnaround:
The BLS bombshell pushed yields lower and the dollar weaker, allowing gold to break out of its bearish pattern.
By market close, gold had decisively regained bullish footing, with short sellers caught off-guard.
Investors now turn their focus to upcoming Fed commentary, as the market recalibrates its expectations ahead of the September meeting.
U.S. Rig Count Falls Again; Canada Also Declines
Baker Hughes weekly rig data:
U.S. Total: -2 to 540
Oil rigs: -5 to 410
Gas rigs: +2 to 124
Miscellaneous: +1 to 6
YoY: -46 rigs (oil -72, gas +26)
Offshore U.S.: 13 (unchanged); -7 YoY
Canada Total: -5 to 177
Oil rigs: -4
Gas rigs: -1
YoY: -42 rigs (oil -26, gas -16)
Drilling activity continues to cool on both sides of the border, with oil rigs driving the declines.
OPEC+ Poised for Modest Output Boost This Weekend
Sources tell Reuters that OPEC+ is likely to greenlight another production increase during Sunday’s meeting.
The group is expected to approve a hike in the range of 548,000 barrels per day or possibly less. The final figure remains under discussion.
Commerzbank: No Real Substitute for Russian Oil
Commerzbank analyst Carsten Fritsch argues that Russian oil supplies cannot be fully replaced, and stricter sanctions would drive prices sharply higher.
OPEC+ spare capacity is estimated around 4 million barrels/day, but Saudi Arabia is unlikely to tap it due to its alignment with Russia.
U.S. output hit a record 13.49 million barrels/day in May but is not projected to increase further before late 2026, limiting its flexibility.
Hopes for Iranian supply relief remain slim as the U.S. expands sanctions. Washington recently blacklisted 115 additional parties across 17 countries involved in evading existing Iran sanctions—making this the most expansive Iran-focused sanction package since 2018.
U.S. Copper Tariffs Hit Semi-Finished Goods Only
Commerzbank analysts confirmed that the U.S.’s new 50% copper tariff—effective August 1—only targets semi-finished products like pipes and rods, sparing refined copper like cathodes and anodes.
This led to a steep 20% selloff in Comex copper prices, while the LME market remained mostly unchanged. The price premium in New York collapsed from 30% amid reduced import fears.
Analyst Barbara Lambrecht notes the move aims to stimulate U.S. production of semi-finished copper goods but warns domestic capacity may not be competitive with global suppliers, potentially reducing demand.
Gold Demand Driven by Surging Investment in First Half of 2025
According to the World Gold Council, global gold demand in Q2 2025 rose to nearly 1,250 tons—up 3% from a year earlier. Excluding “OTC and other” flows, demand climbed by over 10%.
Commerzbank’s Carsten Fritsch highlighted a massive 78% jump in investment demand, largely fueled by ETF inflows, which outpaced traditionally dominant jewelry buying.
Central bank gold purchases fell 21%, the lowest in three years. For the first half of 2025, investment demand more than doubled, with the strongest bullion and coin buying in 12 years. Jewelry and central bank demand both saw sharp drops.
The WGC expects investment to stay strong in the second half, while fabrication and official sector demand may continue to weaken.
European Markets Sink on Growth, Tariff, and Inflation Fears
Major European stock indices closed deep in the red on Friday, hammered by a triple threat of soft U.S. economic data, inflation worries, and escalating trade tensions.
Closing Numbers:
DAX: -639.50 pts (-2.66%) at 23,425.98
CAC 40: -225.80 pts (-2.91%) at 7,546.17
FTSE 100: -64.21 pts (-0.70%) at 9,068.59
Ibex 35: -270.30 pts (-1.88%) at 14,126.71
FTSE MIB: -1,044.87 pts (-2.55%) at 39,942.81
Weekly Performance:
DAX: -3.27% (worst since March)
CAC: -3.68%
FTSE 100: -0.57%
Ibex: -0.78%
FTSE MIB: -1.92%
Yields:
Switzerland: ▼ 2.1 bps to 0.338%
UK: ▼ 4.7 bps to 4.525%
Germany: ▼ 2.1 bps to 2.677%
Spain: ▼ 0.7 bps to 3.265%
France: ▼ 0.5 bps to 3.348%
Italy: ▲ 0.9 bps to 3.541%
Markets reacted to the U.S. jobs miss and tariff threats with broad selling, reflecting mounting fears of a global economic slowdown.
Eurozone Manufacturing Steady at 49.8 in July
The final Eurozone manufacturing PMI for July matched the flash reading of 49.8, up from June’s 49.5.
Production saw modest growth even as new orders slipped slightly. The stabilization suggests manufacturing may be finding a floor, though conditions remain mixed across member states.
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“Manufacturing in the eurozone is cautiously regaining momentum. It is primarily the smaller economies that offer reasons for optimism. The PMIs from Spain and the Netherlands indicate accelerated economic growth, while Ireland and Greece remain in expansion territory. In the three largest economies as well as Austria, the PMI signals that the industrial recession has significantly eased. This broadens the scope of the recovery. With the newly agreed trade framework between the EU and the U.S., uncertainty should decline, and the signs point to a continued upward trend in the coming months.
“France is currently the biggest drag on growth in the eurozone’s manufacturing sector. It is particularly discouraging that production in France has declined over the past two months, while employment has slightly increased during the same period. The problem lies in the resulting drop in productivity, which makes economic growth even harder to achieve.
“In Germany, the situation is reversed: production is growing while employment is being reduced. France is also burdened by the prospect of an austerity budget and the associated risk of the current government stepping down. This contrasts with Germany, where much of the growth hopes rest on expansionary fiscal policy and the political situation is significantly more stable than in France. Less political and fiscal uncertainty in the eurozone’s second-largest economy would be important to help the eurozone manufacturing sector achieve sustainable growth overall.
“Supply chains remain relatively strained. Delivery times have lengthened. Given the fragility of the recovery, it is not demand that is causing customers to wait longer for their goods. Volatile U.S. tariff policies and uncertainty stemming from geopolitical tensions may play a key role here. We expect that companies will continue to face sudden supply chain disruptions for the foreseeable future.”
Eurozone July CPI Matches 2.0%, Core Inflation Holds at 2.4%
Eurostat’s flash CPI reading for July showed headline inflation holding steady at 2.0%, in line with June’s rate and slightly above the 1.9% forecast.
Core inflation also came in unchanged at 2.4%. These figures support the ECB’s current approach of holding interest rates steady, likely through September.
Germany’s final July manufacturing PMI came in at 49.1, just under the 49.2 preliminary reading and up slightly from June’s 49.0.
The pace of job losses slowed to the mildest level in nearly two years. While demand remains soft, the labor market within manufacturing appears to be stabilizing.
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“The recovery in the manufacturing sector remains sluggish. Although the headline index has been rising almost continuously since the beginning of the year, the expansion threshold has still not been reached. Among other things, the continued and rapid reduction in inventories signals that companies have not yet switched to a sustained recovery mode and prefer to remain cautious. This is also reflected in the fact that optimism has recently weakened somewhat again.
“The recovery in demand has recently been driven primarily by foreign markets. Export orders have increased for four consecutive months. While this was initially linked to front-loaded U.S. imports in the spring, the continued foreign demand into early summer suggests a more fundamental improvement in conditions. The tariff agreement reached at the end of July between the EU and the U.S. may mean that U.S. importers will buy fewer goods from Germany in the near future. At the same time, however, uncertainty is likely to settle at a lower level, which should support overall demand.
“The clearest indicator of a recovery is the production index, which has shown an expansion in output for five months now. However, the rate of growth has recently slowed significantly, mainly due to the consumer goods industry, while production in the capital goods sector has grown robustly. This suggests that domestic demand, which depends on private consumption, is somewhat weakening, while foreign demand – crucial for the capital goods industry – is performing better.”
French Manufacturing PMI Revised Lower to 48.2
France’s final July manufacturing PMI slipped to 48.2, under the 48.4 flash estimate but slightly above June’s 48.1.
Factory orders fell at the fastest rate since January, highlighting continued strain on both domestic and external demand. Confidence dipped to its lowest level since February, underlining broader industrial weakness.
HCOB notes that:
“The economic outlook for France’s manufacturing sector has noticeably deteriorated at the beginning of the second half of the year. While the first half showed moderate signs of recovery, with the output index even registering growth in two successive months, the latest data point to another slowdown. Although the headline manufacturing index edged up slightly and the decline in output was only marginal, the sharp deterioration in order intakes and business expectations are causes for concern.
“This downturn in orders and expectations stands in stark contrast to the growing hopes for an economic turnaround in the first half of 2025. Recent interest rate cuts by the European Central Bank, announced defense-related investments, and regulatory easing proposals at the EU level made the soil fertile for a rebound in industrial activity. Instead, the significant drop in new orders signals growing uncertainty in the manufacturing sector. This is likely attributable both to the tense global trade environment and to the austerity agenda outlined by prime minister François Bayrou in Parliament recently. The resulting political framework is currently not conducive to investment, likely leading to cancellations or postponements of orders.
“Delivery times have lengthened at the sharpest rate in two-and-a-half years. Anecdotal evidence points to a combination of labor shortages at suppliers, scarcity of certain intermediate goods, and sporadic strikes as contributing factors. Against the backdrop of trade frictions, further headwinds are likely in the coming months. Global supply chains may undergo structural adjustments in response to new tariffs and strategic shifts by firms aiming to reduce their exposure to the United States, although the latest EU–US agreement with 15 percent base tariffs for US imports might provide at least some planning certainty for businesses. Unfortunately, the question arises as to how long the agreements will remain in place. Given the recent unpredictability of US trade policy, one might also ask whether the US administration could backtrack and push for higher tariffs after all.”
Italy’s Factory Activity Nears Stabilization in July
Italy’s July manufacturing PMI printed at 49.8, outperforming the 49.0 forecast and improving from June’s 48.4.
Key takeaways:
Output and new orders declined more slowly.
Input inventories increased for the first time in nearly three years.
Pricing returned to inflationary territory, indicating rising input costs.
Commenting on the PMI data, Nils Müller, Junior Economist at Hamburg Commercial Bank, said:
“Italy’s manufacturing sector showed tentative signs of stabilisation in July, with the HCOB PMI rising to 49.8 from 48.4 in June. Although the headline index remained just below the 50.0 threshold that separates growth from contraction, the softer declines in output and new orders suggest that the worst of the recent downturn may be behind us. Notably, the investment goods segment registered an improvement in business conditions, bucking the broader trend of decline.
“In July, Italian manufacturers began rebuilding input inventories for the first time in nearly three years – a development that may reflect a shift in sentiment. While firms reported that part of this stock accumulation was driven by supply chain concerns and lower order numbers, it also coincided with a marked improvement in business confidence. With optimism among manufacturers rising to levels above the long-run average, some firms may be positioning themselves for a potential recovery in demand later in the year. In past cycles, such inventory rebuilding often signalled that the downturn is nearing its bottom.
“Overall, July’s data suggest that Italy’s manufacturing sector may be approaching a turning point. The recent EU–US trade agreement has prevented a sharp escalation in tensions and provides a welcome dose of planning certainty for Italian exporters. However, while the deal replaces the threatened 30 percent tariff with a reduced 15 percent duty on selected industrial goods, this rate remains substantial and continues to put Italian firms at a competitive disadvantage in the US market. How long this agreement will hold remains uncertain – especially given the volatility of recent US trade policy and the possibility that the terms could shift again.”
Spain’s Manufacturing Growth Accelerates in July
Spain’s manufacturing PMI rose to 51.9 in July, slightly above expectations (51.5) and up from June’s 51.4.
The report noted the strongest rise in new orders so far in 2025. Production also improved, and firms continued to expand headcount during the month, signaling growing confidence in the recovery.
HCOB notes that:
“The latest PMI data once again underscores the resilience of Spain’s manufacturing sector. The headline index improved for the third consecutive month, with key sub-indices also posting solid readings. This development aligns with the cyclical upswing recently captured in the HCOB Flash PMI survey for the Eurozone.
“At the outset of the second half of the year, order volumes have picked up both domestically and abroad, albeit only moderately in each case. Industrial production has now been expanding for three consecutive months and is likely to receive further support in the coming months from this improved demand environment. The recent agreement in the US–EU tariff negotiations should also contribute to short-term planning certainty for firms, although the erratic policy stance of the US administration continues to cast a shadow over trade-related predictability.
“Trends in employment and capacity utilization are consistent with the current growth trajectory. Backlogs of work have been building up in factories for three months now, while stocks of finished goods are declining. Nevertheless, firms have so far refrained from significantly increasing their purchases of intermediate goods, suggesting that existing inventories are still sufficient to support ongoing production growth. Overall, the picture is one of rising output, growing backlogs, falling inventories, and improving order books. This constellation is mirrored in a growing willingness among manufacturers to expand their workforce.
“Price dynamics shifted in July. After two consecutive months of declines in both input and output prices, both categories are now on the rise again. This is likely linked to tariff measures that are disrupting international supply chains and exerting upward pressure on prices. In line with this, delivery times for inputs are also lengthening. Survey respondents report that they are passing on at least part of the increased costs to end consumers through higher prices.”
UK Final Manufacturing PMI Confirms Contraction at 48.0
The UK’s final July manufacturing PMI was revised down to 48.0 from the 48.2 preliminary reading, although still up from June’s 47.7.
Key notes:
Employment declined at a faster rate.
Both input and output price pressures remained broadly stable.
Rob Dobson, Director at S&P Global Market Intelligence
“The UK manufacturing sector is starting to send some tentatively encouraging signals, with the downturn moderating in July as factory output came close to stabilising and future output expectations hit the highest since February.
“However, it’s clear that there’s no assured path back to strong growth. Clients in the home market often remain unwilling to spend due to cost factors such as higher minimum wages and employer NICs, while export markets are being buffeted by geopolitical stresses and trade and tariff uncertainties.
“The biggest concern remains the labour market, with the rate of job cutting through much of 2025 among the steepest since the pandemic year of 2020. “With the Autumn budget only a few months away, manufacturers will likely remain cautious and focussed on stabilisation while waiting to see if future budget announcements provide much needed support or further challenges to overcome.”
UK House Prices Climb in July, Affordability Improves
Nationwide reported that UK house prices rebounded 0.6% in July, beating the expected 0.3% increase. June’s figure was revised lower to -0.9%.
The average UK home now costs £272,664. Nationwide noted that affordability has steadily improved due to rising incomes, slower home price inflation, and softer mortgage rates. The price-to-income ratio now stands at 5.75, its lowest in over ten years—well below the 2022 peak of 6.9.
Improved mortgage access, including higher loan-to-value products, is helping ease barriers for first-time buyers.
Swiss Pres. Keller: Government disappointed by US tariffs imposed on country
Swiss Pres. Keller is speaking after US imposed 39% tariff on Swiss imports
The government disappointed by US tariff imposed on country.
Previous talks had been very constructive, 39% tariff is much higher than what was negotiated.
US tariffs will have very bad effect on Swiss economy.
Although pharmaceuticals not affected, US tariffs are very bad for Swiss machinery watch sectors.
Swiss government staying in touch with US side, has already made contact.
Switzerland already has no industrial tariffs, and has pledged investment in the US.
Very difficult for Switzerland to offer more concessions to the US.
Switzerland Clarifies Pharma Exemption from 39% U.S. Tariff
Switzerland confirmed that its pharmaceutical exports—which make up about 40% of its total export value and are mostly U.S.-bound—will not be subject to the new 39% U.S. tariff.
Malaysia also noted its 19% tariff would exempt pharmaceuticals and semiconductors. The country said no talks had been held with the U.S. about supplying rare earths, though it remains the second-largest exporter of these materials to the U.S. after China.
EU trade commissioner Sefcovic says the work continues on trade deal with US
Sefcovic says new US tariffs reflect only the first results of the deal
The tariffs reflect only the first results of the deal, especially the all-inclusive cap of 15%
This reinforces stability for businesses
EU exports can now benefit from a more competitive position
China Freezes U.S.-Directed Corporate Investments Amid Trade Dispute
According to a Nikkei report, Chinese authorities have put a stop to outbound investments targeting the U.S., pausing both new projects and acquisitions since April.
The decision, reportedly led by local governments in coordination with the NDRC, affects sectors ranging from manufacturing to tech and EVs.
The freeze appears to be a calculated response to rising U.S. tariffs and trade restrictions under the Trump administration. While no official policy change has been announced, the pause is indefinite and may evolve depending on Washington’s next steps.
The development reflects a shift in Beijing’s approach—using regulatory levers to push back against intensifying U.S. pressure.
China’s July Manufacturing PMI Falls Back Into Contraction at 49.5
China’s private Caixin Manufacturing PMI fell to 49.5 in July, down from 50.4 in June and below the 50.3 forecast, indicating renewed contraction in the industrial sector.
Export orders slumped for a fourth month, with a quicker decline than in June. Production also slowed, and firms increasingly tapped inventory instead of ramping output.
Staffing levels were reduced amid tepid demand and rising cost burdens.
Despite the gloomy headline, business sentiment edged higher, albeit still below the historical average. Input prices climbed for the first time in five months, driven in part by Beijing’s effort to curb destructive pricing. Still, final goods prices kept falling due to stiff competition—though export prices rose on costlier logistics.
The disappointing print follows a weak official PMI and raises fresh concerns about deflation risks and factory overcapacity as the second half of 2025 begins.
China’s Economic Planners Outline Support Measures and AI Integration Push
China’s National Development and Reform Commission (NDRC) laid out a comprehensive policy roadmap Friday aimed at bolstering economic resilience, improving job support, and accelerating artificial intelligence deployment.
The NDRC committed to a staggered rollout of new economic and employment initiatives, with an emphasis on macroeconomic stability and readiness to respond to external shocks.
AI was spotlighted as entering a “key phase,” with regulators pledging to boost commercial adoption and better integrate the technology into the broader economy.
Regulators also plan to target “disorderly competition” in domestic markets, promising enforcement crackdowns and public identification of bad actors. The aim is to prevent price wars and deflationary spirals.
On trade and finance, the NDRC is eyeing new policy-based funding tools to stimulate investment and maintain cautious trade measures. Domestic strategies include expanding internal demand and encouraging private firms to participate in national infrastructure and strategic industries.
PBOC sets USD/ CNY reference rate for today at 7.1496 (vs. estimate at 7.2033)
PBOC CNY reference rate setting for the trading session ahead.
PBOC injected 126bn yuan via 7-day reverse repos at 1.40%
789.3bn yuan mature today
net 663.3bn yuan drain
Australia’s Q2 Producer Prices Show Signs of Slowing
Australia’s Producer Price Index (PPI) rose 0.7% quarter-over-quarter in Q2 2025, down from 0.9% in Q1 and below the 0.9% forecast. On a year-over-year basis, prices increased 3.4%, the slowest annual gain since Q3 2021.
This marks the most moderate quarterly rise since mid-2023 and points to softening price momentum in upstream sectors.
New Zealand Building Permits Tumble 6.4% in June
New Zealand’s building consents fell 6.4% month-over-month in June 2025, reversing the prior month’s +10.3% surge.
Stats NZ noted that year-over-year approvals are now up 1%, marking the first annual growth in housing approvals in two years.
New Zealand Consumer Confidence Dips Sharply in July
New Zealand consumer sentiment slid 4.1% in July, with the index falling to 94.7 from June’s 98.8. The data suggests weakening household optimism heading into the second half of 2025.
Japan’s PM Ishiba Struggles to Get U.S. Auto Tariffs Reduced
Japanese Prime Minister Shigeru Ishiba confirmed that Tokyo continues to push Washington to ease up on auto tariffs, though he admitted negotiations are proving difficult.
Ishiba remains in office despite internal pressure from his party following recent elections. With limited political leverage, Japan’s options appear constrained unless it offers more concessions. For now, Ishiba holds his ground—but leverage is thin.
Japan’s June Unemployment Rate Holds Steady at 2.5%
Japan’s unemployment rate stayed unchanged in June at 2.5%, matching expectations. The job-to-applicant ratio was 1.22, slightly below the prior reading of 1.24 and under the 1.25 forecast.
Japan’s Economy Minister Stresses Rate Patience, Presses U.S. on Tariffs
Japanese Economy Minister Ryosei Akazawa said Friday the government respects the Bank of Japan’s decision to hold rates steady, acknowledging the central bank’s cautious approach amid volatile global trends.
He underscored the need for coordination between fiscal and monetary authorities to achieve Japan’s 2% inflation goal sustainably.
Akazawa also pressed Washington to follow through on promises to reduce auto and parts tariffs as outlined in the latest bilateral pact. He warned continued tariff pressure would harm Japan’s export-driven economy.
Japan’s July Manufacturing PMI Slips to 48.9, Confirms Contraction
The final July reading of Japan’s Jibun Bank Manufacturing PMI came in at 48.9, confirming a slip back into contraction territory after June’s 50.1.
Weaker demand—both at home and abroad—dragged output lower, with the steepest drop in production since March. New orders fell again, though at a slower rate. Hiring continued but at the weakest pace in three months.
Input costs fell to the lowest in over four years, but output prices jumped—reflecting firms passing on rising expenses.
Still, business optimism improved to a six-month high, supported by hopes that a new trade deal with the U.S.—which trims tariffs to 15%—will help support demand.
Ethereum Falls Below $3,700 on Tariff Fears, Fed Caution
Ethereum (ETH) has dropped nearly 7% this week and is trading below $3,700, pressured by rising U.S. tariffs and the Federal Reserve’s hawkish stance.
Market Drivers:
Trump announced sweeping new tariffs, including a 50% rate on Brazilian goods and semi-finished copper products.
Fed held rates steady at 4.25–4.50%, with Chair Powell emphasizing no decision yet on a September cut.
CME data shows cut odds have dropped to 43%, down from 60% before the meeting.
Despite the pullback, whales and institutions continue accumulating ETH, signaling strong long-term belief in the asset’s value.
Stellar Faces Pressure as XLM Slips, Protocol Upgrade Looms
Stellar (XLM) is down 3% on Friday, marking a three-day losing streak. Open Interest has dropped $237M over the past two weeks to $351.13M, reflecting fading enthusiasm.
Protocol 23 Upgrade:
Expected to improve smart contract efficiency and reduce costs.
Testnet launched July 17.
Validator vote on August 26; Mainnet vote on September 3.
PayPal’s PYUSD stablecoin could launch on Stellar if the upgrade succeeds.
The decline in XLM’s OI may reverse if Protocol 23 sparks new institutional interest, but traders remain cautious for now.
XRP Rallies Back Above $3.00 After Brief Drop
XRP briefly fell to $2.89 before recovering above the $3.00 mark. It is currently down 16% from its July 18 all-time high of $3.66.
Market Snapshot:
Derivatives Liquidations: $41.4M in last 24 hours, $39M from long positions.
Futures Open Interest: $8.13B, down 26% from July peak ($10.94B).
Spot Volume: Neutral, hinting at seller exhaustion.
A potential short squeeze and drop in leverage could support further gains, but sentiment remains fragile.
Dogecoin Faces Selling Pressure as OI and Funding Collapse
Dogecoin (DOGE) has dropped for the fifth straight session, down to $0.2062, with bearish sentiment deepening.
Key Data:
Futures Open Interest: Plummeted to $3.42B, down 36% from July peak of $5.35B.
Although DOGE holds above its 100-day EMA, weakening technicals and declining trader interest could send the price below the critical $0.20 level.
Hyperliquid Dips Below $40 as Bearish Momentum Grows
After reaching a record high of $49.85 in July, Hyperliquid (HYPE) has dropped over 20% and is now trading at $39.48, with a bearish sentiment dominating.
Market Signals:
Technical indicators like MACD and RSI point to continued downside.
DeFi TVL: Slightly down from its $2.14B high to $2.05B.
Futures Open Interest (OI): Dropped to $1.86B, down from $2.19B on July 15.
HYPE’s weakened TVL and OI suggest waning trader confidence despite previously strong performance in the DeFi space.
Pump.fun, BTC, and Sui Dive Despite SEC’s Crypto Optimism
Pump.fun, Bitcoin, and Sui posted steep declines on Friday as crypto markets ignored upbeat comments from SEC Chair Paul Atkins.
24-Hour Moves (CoinGecko):
Pump.fun: -17.5%
Bitcoin: -2.5%
Sui: -6.9%
Total Market Cap: Down 7% to $3.84T
Atkins said the U.S. could be on the brink of a “golden age” for crypto, but traders reacted to weak macro data and Trump’s tariffs instead.
DeFi TVL continues climbing, reminiscent of the “DeFi summer” of 2020, even as meme coins lead the downturn.
Market Recap: Fed Caution, Economic Data, Earnings, and Global Tensions Stir Volatility
Macro & Fed Policy
Markets were on edge all week as a wave of economic data, including GDP and durable goods orders, fueled expectations that the Fed may hold off on rate cuts longer than previously thought.
Treasury yields rose midweek after GDP beat forecasts and consumer demand appeared strong.
The Fed’s steady stance—paired with Powell’s neutral press conference—kept rate cut hopes in limbo.
The U.S. dollar strengthened, adding pressure to commodities and multinational firms.
Wall Street strategists are now watching the tone of upcoming Fed speeches closely for clues ahead of the next meeting.
Earnings in Focus
Apple ($AAPL): Under pressure ahead of earnings as investors look for clues on iPhone sales, hardware growth, and AI strategy.
Alphabet ($GOOGL): Fell after missing revenue expectations; AI and cloud spending hurt margins.
AMD ($AMD): Rallied on strong AI chip sales and a bullish 2025 outlook.
Boeing ($BA): Rebounded as it reaffirmed production and supply chain plans.
Tesla ($TSLA): Remained volatile amid uncertainty over pricing, Cybertruck timelines, and autonomous driving.
Microsoft ($MSFT): Flat post-earnings, but AI and cloud remain strong pillars.
General Electric ($GE): Gained on strength in energy and aerospace.
Visa ($V) & Mastercard ($MA): Rose after beating estimates and highlighting strong cross-border payments.
Sector Trends
Semiconductors: Nvidia and TSMC remained in focus on AI demand and global chip expansion.
Energy: Lagged as oil prices eased on weak Chinese data.
Healthcare: Flat overall; eyes on Pfizer and UnitedHealth earnings.
Consumer Discretionary: Mixed — Amazon climbed on AWS outlook, while Home Depot and Lowe’s dragged on poor housing data.
Regulatory & Policy Watch
The SEC fast-tracked review of Ethereum spot ETFs, giving crypto-linked stocks like Coinbase ($COIN) a boost.
Antitrust probes into Amazon and Meta continue to create legal risk and sector uncertainty.
Global Tensions
China-U.S. trade concerns reemerged amid talk of tech export controls.
Europe’s slowdown and soft factory data weighed on global demand projections.
U.S. military posturing in response to Russia added another layer of geopolitical stress.
IPOs & Market Activity
IPO activity remains muted, with few biotech and fintech names debuting in a quiet summer stretch.
North America
U.S. markets sold off hard on Friday, with all major indices closing deep in the red amid a collision of risk factors:
New tariffs from the Trump administration took effect August 1.
Jobs data disappointed badly, with July NFP at just +73K and prior months revised down by a combined 258K.
Geopolitical escalation added pressure, as the U.S. positioned nuclear submarines following hostile remarks by former Russian President Medvedev.
BLS scandal hit headlines as the department’s chief was fired for alleged manipulation of jobs data.
Major Index Close:
Dow: -542.40 (-1.23%) to 43,588.58
S&P 500: -101.38 (-1.60%) to 6,238.01
NASDAQ: -472.32 (-2.24%) to 20,650.13
Russell 2000: -44.86 (-2.03%) to 2,166.78
Weekly Losses:
Dow: -2.92%
S&P: -2.36%
NASDAQ: -2.17%
Fed Signals Mixed:
Several Fed officials pushed for a rate cut this week.
Market now prices in ~70% odds of a September rate cut, up from ~30% before the jobs report.
Chair Powell called the current policy “modestly restrictive but appropriate.”
Corporate Highlights:
Corning, Western Digital, and AMD were among weekly standouts, riding earnings and AI tailwinds.
Apple and Tesla face investor scrutiny ahead of key updates.
Earnings reports next week include Berkshire Hathaway, Palantir, Pfizer, AMD, Disney, Eli Lilly, and others.
Canada:
Prime Minister Carney voiced frustration over new 35% U.S. tariffs.
Key industries—autos, steel, lumber—expected to suffer.
Canada’s rig count fell by 5 to 177, down 42 rigs YoY.
Commodities
Gold staged a strong reversal, rebounding from a monthly low below $3,270 to finish above $3,350 following the weak U.S. labor report.
Earlier in the week, gold dipped on upbeat GDP data and Fed caution.
Friday’s NFP miss triggered heavy USD selling and a near 3% drop in 10-year yields, opening the door for a gold rally.
European equity markets fell sharply, following the U.S. lead amid global slowdown fears and heightened tariff uncertainty.
Friday Index Close:
DAX: -2.66%
CAC 40: -2.91%
FTSE 100: -0.70%
Ibex 35: -1.88%
FTSE MIB (Italy): -2.55%
Weekly Performance:
DAX: -3.27% (worst since March)
CAC: -3.68%
FTSE 100: -0.57%
Ibex: -0.78%
FTSE MIB: -1.92%
Yields mostly fell across Europe, except Italy, where the 10-year rose slightly.
Switzerland:
Confirmed that pharmaceuticals are exempt from the U.S. 39% tariff, providing relief for its top export sector.
Asia
Japan’s economic signals were mixed:
Final July manufacturing PMI confirmed contraction at 48.9.
Japan’s unemployment held steady at 2.5%, while the job-to-applicant ratio dipped to 1.22.
China showed signs of stress:
Caixin Manufacturing PMI fell to 49.5, back into contraction.
Export orders declined for a fourth straight month.
Policy planners (NDRC) emphasized support for AI development, internal demand, and regulation against destructive competition.
Other regional data:
South Korea and Taiwan continue to see uncertainty around U.S. trade decisions.
Australia’s Q2 PPI slowed to +0.7% q/q, and construction spending declined for a second straight month.
Crypto
Market-wide decline in crypto despite bullish regulatory commentary:
SEC Chair Paul Atkins teased a potential “golden age” for crypto under the Trump administration.
Traders ignored the rhetoric amid macro pressure and weak U.S. data.
Key Movers (24h):
Pump.fun: -17.5%
Bitcoin: -2.5%
Sui: -6.9%
Ethereum: Fell below $3,700, down ~7% on the week
Other Highlights:
XRP briefly dipped under $3.00 but bounced back, supported by short-squeeze potential and large liquidations.
Dogecoin and Stellar (XLM) continued their multi-day declines amid shrinking open interest and funding rates.
Hyperliquid (HYPE) lost the $40 level, down 22% from its high despite DeFi TVL remaining above $2B.
Despite Friday’s selloff, DeFi tokens saw continued strength in total value locked, evoking comparisons to the “DeFi Summer” era before the FTX collapse.
Stay updated with the latest market insights, financial trends, and expert trading analysis. Explore key developments shaping the financial world today.
