General Market News

Iran warned it would retaliate against U.S. and regional infrastructure if President Trump follows through on threats to strike Iranian power plants and bridges next week unless negotiations resume. The escalating conflict centers on the Strait of Hormuz, a critical oil shipping route, after U.S. strikes this week targeted Iranian military sites in response to attacks on commercial vessels.

• Trump threatened to target Iranian infrastructure including 'all their power plants' and bridges next week if diplomatic talks don't begin, prompting Iran to declare the Strait of Hormuz an 'invincible red line'
• U.S. Central Command conducted overnight strikes on Iranian command centers, air defense sites, and missile capabilities in multiple locations including Bandar Abbas
• Oil prices showed muted reaction with Brent crude down 0.5% to $84.42 per barrel, as markets display 'growing sense of fatigue' and desensitization to the prolonged U.S.-Iran conflict

Chinese chipmaker CXMT's $8.6 billion IPO, Asia's largest this year, will generate at least $41 million in fees for six Chinese investment banks at a rate of 0.48% of proceeds. The deal marks a significant boost for China's investment banking sector, whose fee income has declined sharply from a 2022 peak of $4.16 billion. CXMT is China's biggest DRAM chip manufacturer, and the IPO is part of the country's push for technological advancement.

• The 0.48% fee rate is well below China's A-share IPO average of 4.52% and lower than recent comparable deals like SpaceX (0.67%) and SK Hynix (0.97%), reflecting CXMT's strong bargaining power despite fierce competition among banks
• Year-to-date mainland IPO fees now total $684.62 million, recovering toward 2025's $984.75 million but far below the 2022 peak of $4.16 billion from deals including China Mobile and CNOOC
• China Securities and CICC are lead sponsors, with four other top-10 Chinese banks participating; proceeds could reach $9.8 billion if an overallotment option is exercised, pushing fees to 296 million yuan

The U.S. will impose a 25% tariff on most Brazilian imports starting July 22, following a Section 301 investigation into alleged unfair trade practices including content censorship demands on U.S. tech firms, preferential treatment for other nations, and intellectual property issues. The move comes after failed negotiations between the two countries, with U.S. officials accusing Brazil's President Lula of not negotiating in good faith.

• The tariffs exempt certain goods including beef, orange juice, aircraft parts, and energy products, but an additional 12.5% duty related to forced-labor enforcement could be added within days
• The dispute stems from Brazil allegedly directing U.S. tech companies like X, Meta, and Google to remove political content and suspend accounts of U.S. residents, plus trade barriers on ethanol and weak IP enforcement
• The trade conflict has entered Brazil's October presidential election, with accusations that Senator Flavio Bolsonaro's Washington visit contributed to triggering the tariffs

European companies are heading into their strongest earnings season in over three years, with second-quarter profits expected to grow 15.3% on average, largely driven by energy sector gains from higher crude prices. However, excluding energy, European firms face a significant growth gap compared to U.S. counterparts, with non-energy European companies forecast to grow earnings just 6% versus 19.6% for U.S. firms, highlighting Europe's lack of AI-powered growth engines.

• Energy sector profits are expected to double due to Middle East conflict-driven oil prices, accounting for most of Europe's earnings rebound while non-energy sector estimates have slightly deteriorated
• U.S. companies overall are forecast to deliver 23.7% average earnings growth compared to Europe's 15.3%, with the AI technology gap being a primary driver of the divergence
• ASML, Europe's most valuable company at 600 billion euros, raised its 2026 sales forecasts after beating Q2 expectations, offering a rare bright spot for European AI-adjacent opportunities in chip equipment manufacturing

Chinese President Xi Jinping will outline China's vision for global AI governance at Shanghai's World Artificial Intelligence Conference on July 17-20, marking his first attendance at the annual forum. The event highlights Beijing's strategy to position its open-source AI models as a public good alternative to closed U.S. systems, while Huawei debuts its Atlas 950 SuperPoD computing cluster built without advanced Nvidia chips. Xi's participation underscores AI's growing strategic importance to China as both an economic driver and a tool in U.S.-China technology competition.

• Huawei's Atlas 950 SuperPoD AI computing system, linking thousands of Ascend processors, demonstrates China's progress in building large-scale AI infrastructure independent of U.S. technology and sanctions
• China will promote its proposed World AI Cooperation Organisation (WAICO) and frame open-source models as bridging 'global AI inequality,' contrasting with Washington's opposition to sweeping AI regulation
• The forum features limited U.S. tech company representation but includes UN Secretary-General Guterres and leaders from Kazakhstan and Thailand, as China courts developing nations on AI capacity-building

Oil prices are rallying toward $90 as the U.S. re-imposes a naval blockade on Iranian shipping, raising fears of reduced oil flows through the Strait of Hormuz. WTI crude consolidated above $80 and Brent above $85, reaching their highest levels since mid-June. The escalation follows U.S. attacks on Iran, Iranian threats to close the strait, and attacks on UAE oil tankers, creating significant supply uncertainty.

• WTI crude oil needs to break above $81 resistance to target the $90-$95 range, with an 'inside day' candle formation suggesting price compression and potential for a quick move higher if resistance is cleared
• Brent crude oil is consolidating above its 50-day and 200-day moving averages, with a break above $90 expected to open the path toward $100 and potentially $120
• Ukrainian attacks on Russian refineries have forced Moscow to cut diesel exports, compounding global energy market strain and raising concerns about increased transport costs that could dampen economic growth and future oil demand

Leading Chinese drugmakers like Jiangsu Hengrui Pharmaceuticals and CanSino Biologics are struggling to recruit internationally experienced staff needed for global expansion, as China's rapid rise in drug development outpaces workforce capacity. This talent shortage is critical as U.S. regulators increasingly demand multi-regional trials with diverse patient populations rather than China-only studies. The gap is slowing execution and forcing reliance on overseas partners, though experts say it's more likely to delay than derail expansion plans.

• Chinese sponsors conducted 88% of their trials exclusively in China in 2025 but only 5% in the U.S., highlighting the scale of the global expansion challenge
• China-headquartered clinical trial sponsors grew from 2% of global trials in 2009 to 32% in 2025, while licensing deals in greater China surged from $318 million in 2016 to significantly higher levels in 2025
• Asia-Pacific biotech professionals were nearly three times more likely than global peers to report talent shortages affecting operations, with particular scarcity in regulatory affairs, international trial management, and cross-cultural expertise

Fed Chairman Kevin Warsh faces mounting pressure to control inflation after two days of congressional testimony, despite recent positive CPI and PPI data. Both parties agree prices are rising too fast, putting his credibility at risk as he questions traditional inflation measures and launches reviews of how the Fed tracks prices. If inflation doesn't decline sustainably, Warsh risks losing support within the Fed and on Capitol Hill.

• CPI fell 0.4% and PPI fell 0.3% in June, but Warsh calls these 'imperfect measures' and has appointed task forces to rethink how the Fed measures inflation, with results not expected for months
• Fed officials are divided on whether AI infrastructure spending is driving inflation, with Governor warning of 'significant price increases for chips, high-tech equipment, and utilities' while Warsh believes supply will catch up with demand
• Markets overwhelmingly expect the Fed to raise interest rates by year-end; Warsh's credibility hinges on making the right decision amid debate over AI spending impacts and avoiding an inflation reacceleration

Kalshi prediction market traders now see a 93% chance that U.S. gas prices will exceed $4 per gallon by the end of July, up sharply from 56% just two days earlier. Current national gas prices stand at $3.89 per gallon. The speculation comes amid rising oil prices and escalating U.S. military strikes on Iran that threaten commercial shipping in the Strait of Hormuz.

• Traders see 63% odds gas prices will exceed $4.10 per gallon, but less than 5% chance of reaching $4.50 (the 2024 high of $4.56 was set on May 21)
• Oil futures have risen for three straight days, with WTI crude at $79.60 per barrel and Brent at $84.95 per barrel, both up 0.3%
• U.S. military strikes on Iran targeting capabilities used to attack commercial shipping in the Strait of Hormuz are driving energy market concerns

The 2026 FIFA World Cup provided a tourism boost to U.S. host cities with increased hotel bookings and bar sales, but the positive impact was limited by broader economic weakness, according to the Federal Reserve's beige book. While some bars and hotels benefited from tournament-related activity, the gains were offset by reduced spending from locals and fewer international visitors, particularly from Canada. Rising oil prices and consumer pullback on discretionary spending dampened the overall economic effect.

• Boston bars reported higher beer sales and some ran out of beer due to Scottish fans, while hotels met forecasts only after lowering room prices below initial expectations
• Canadian visitor numbers were down significantly from historical averages across multiple regions, partly due to President Trump's tariff policy and sovereignty threats prompting Canadians to spend domestically
• In non-host cities tracked by the San Francisco Fed, locals pulled back spending on restaurants, hotels, and entertainment, while consumers across regions sought cheaper alternatives and cut discretionary spending due to rising oil prices

US stocks rose Wednesday with the Dow gaining 150 points as softer-than-expected Producer Price Index data boosted investor sentiment and reduced expectations for a July Fed rate hike. Big Tech stocks rallied while semiconductor stocks retreated, as investors rotated into large-cap technology names amid easing inflation concerns and a strong start to Q2 earnings season.

• Big Tech leaders Amazon, Microsoft, Alphabet, and Apple gained 3-4%, while semiconductor stocks declined sharply with Micron down 7%, Intel down 5%, and the SMH ETF falling 2%
• Producer Price Index fell 0.2% monthly versus expectations of no change, pushing the probability of a July Fed rate hike down from 31% to 10% according to CME FedWatch Tool
• S&P 500 companies are expected to deliver 23.7% year-over-year earnings growth for Q2, though Middle East tensions and potential energy price increases remain a risk to the inflation outlook

A U.S. sanctions bill targeting Russia has sparked concerns among Democratic lawmakers that it grants President Trump unchecked authority to impose 100% tariffs on major buyers of Russian oil and gas, potentially affecting India, Japan, and EU countries. The legislation, championed by the late Senator Lindsey Graham, aims to cut Russia's energy revenues for its war in Ukraine but lacks congressional oversight mechanisms or expiration dates.

• The bill allows 100% tariffs on the top five buyers of Russian crude (China, India, Slovakia, Hungary, Azerbaijan) and natural gas (China, France, Japan, Hungary, Belgium), down from a previous 500% proposal
• Democratic lawmakers warn the bill has no congressional disapproval mechanism, no expiry date, and vague criteria that could expand tariff scope to additional countries, including European allies
• Countries importing less than 15% of Russia's natural gas exports and taking steps to reduce imports can receive exemptions, protecting Japan, France, Hungary and Belgium under current provisions

The Port of Los Angeles processed a record 1,002,734 TEUs in June, up 12% year-over-year, as shippers accelerated imports to avoid higher fuel costs and incoming U.S. tariffs. The surge reflects broader concerns about supply chain disruptions from the U.S.-Israeli war with Iran and Trump administration trade policies. Neighboring Port of Long Beach also reported its third-busiest June on record.

• June imports at Port of Los Angeles jumped 13% to 530,558 TEUs while exports increased only 0.2%, marking the third time the port has exceeded 1 million TEUs in a month
• Overall U.S. container imports rose 8.2% in June amid concerns about marine fuel cost increases and potential scarcity of raw materials due to geopolitical conflicts
• The Trump administration plans to implement new Section 301 tariffs this month to help rebuild emergency tariffs struck down by the Supreme Court in February

President Donald Trump criticized New York Governor Kathy Hochul's executive order banning construction of large-scale data centers using 50+ megawatts of power for up to a year. New York became the first U.S. state to impose such a moratorium, citing concerns over rising utility costs and resource depletion from AI infrastructure growth. Trump called the policy a 'terrible decision' that threatens job creation and urged immediate reversal.

• The moratorium blocks construction of data centers consuming 50 or more megawatts of power for up to one year, making New York the first state to implement such a ban
• Public backlash has grown over data center fresh water and power consumption as utility prices rise amid the artificial intelligence buildout boom
• Trump stated data centers are 'Money Machines' for states and urged they must pay for their own water and power, with excess returning to communities

A severe Ebola outbreak in the Democratic Republic of Congo has disrupted U.S.-backed critical minerals partnership talks aimed at reducing China's dominance in the country's copper and cobalt resources. The outbreak, which has killed over 750 people, has forced postponement of key meetings and investor visits, with the U.S. urging Americans not to travel to Congo for any reason.

• The Ebola outbreak has infected 2,011 people and killed 754 since being declared in mid-May, prompting the U.S. Embassy to warn of mandatory 21-day quarantine for exposed travelers
• A planned Washington meeting to review U.S. companies' interest in Congolese mining projects was postponed, with some discussions shifted to London, Paris, and Brussels
• Congo is the world's top cobalt producer and second-largest copper supplier, making it critical for energy-transition minerals as the U.S. and China compete for access to its resources

Major U.S. banks reported record profits from their prime brokerage businesses in Q2 2024, driven by strong hedge fund activity and market volatility. Goldman Sachs saw financing revenue jump 62% to $4.5 billion, while JPMorgan's equity markets revenue surged 86% to $6 billion. The windfall was fueled by elevated client balances, particularly from multi-strategy hedge funds, and robust growth in Asian markets linked to AI investments.

• Goldman Sachs achieved record prime balances with equity financing revenue up 91% year-over-year, representing 37% of total FICC and equity revenues, with particular strength in Asia driven by AI-related capital formation
• JPMorgan's equity markets unit generated $6 billion (up 86%), benefiting from higher client activity and balances, while Citigroup saw prime balances rise nearly 60% from new and existing customer demand
• Banks are strategically expanding prime brokerage capacity despite strong demand, balancing client service with capital allocation as hedge funds capitalize on market volatility and equity issuance activity

PJM Interconnection, the largest U.S. electric grid operator serving 67 million people, issued multiple warnings on Wednesday as high temperatures drove up electricity demand and transmission congestion caused spot prices to surge. The grid faces reliability concerns as data center load growth outpaces new electricity supply, with a recent capacity auction falling 7 GW short of reserve targets.

• Spot electricity prices surged from around $30 per MWH early Wednesday to over $300 per MWH by noon due to transmission congestion, particularly around northern Virginia's data center hub
• PJM's latest capacity auction would cost more than $16 billion with price caps, but would have reached nearly $30 billion without caps, highlighting stressed grid conditions
• Wednesday's forecast demand of 164.1 GW approached the all-time record of 168.2 GW set on July 2, with temperatures hovering around 90°F in major cities

India has increased windfall taxes on exports of diesel and aviation turbine fuel effective July 16, responding to surging global oil prices amid escalating U.S.-Iran conflict. The tax hikes nearly double previous rates, with diesel export duties rising from 8.5 to 15.5 rupees per liter and aviation fuel duties increasing from 7.5 to 14.5 rupees per liter.

• Diesel export tax raised 82% to 15.5 rupees ($0.16) per liter from 8.5 rupees per liter
• Aviation turbine fuel export duty increased 93% to 14.5 rupees per liter from 7.5 rupees per liter
• Tax adjustment responds to rising global oil prices driven by escalating U.S.-Iran geopolitical tensions

AI startup Thinking Machines, founded by former OpenAI CTO Mira Murati, launched Inkling, an open-weight AI model with 975 billion parameters. The release provides a Western alternative to Chinese open-source models, which have dominated after Meta shifted away from open-source development following its Llama 4 release.

• Inkling has 975 billion parameters, making it one of the largest open-weight models available for users to download, run, and customize
• The model performs competitively against closed models from Anthropic, Google, and OpenAI, particularly excelling at agent-related tasks
• The release addresses a gap in Western open-source offerings, as businesses have increasingly turned to Chinese models like Alibaba's Qwen as alternatives to expensive proprietary systems

Federal Reserve Chairman Kevin Warsh confirmed he communicates regularly with the Trump administration, including frequent contact with Treasury Secretary Scott Bessent beyond their weekly meetings, but declined to say whether he has spoken directly with President Trump. Warsh defended the Fed's independence amid concerns about political influence, as he navigates a divided Federal Open Market Committee on interest rate policy. The situation is sensitive because Trump appointed Warsh after saying lower rates were a litmus test for his Fed chair selection.

• Warsh meets weekly with Treasury Secretary Bessent per tradition but also talks to him 'often' between scheduled meetings, going beyond the limited contact his predecessor Powell had with the previous Treasury Secretary
• The FOMC appears divided on rate policy, with some governors suggesting rate increases may be necessary this year, while Trump continues calling for cuts and inflation has remained above the Fed's 2% target for 63 months
• Warsh has created task forces to review inflation measurement and the Fed's balance sheet policy, and previously advocated for a new Treasury-Fed Accord that would hand some Fed balance sheet powers to the Treasury Secretary