PETER’S BUSINESS & FINANCE BRIEFING – Wednesday 16 July 2025, 06:00 Hong Kong
● China’s economy grows 5.2% as exports offset consumer slide ● US inflation picks up again in June ● Nvidia to resume H20 AI chip sales to China in US reversal
Wednesday’s Opening Call
Hang Seng (Hong Kong) Projected Open: 24,530 -60 points -0.2%
Nikkei 225 (Japan) Projected Open: 39,600 -78 points -0.2%
Quick Summary - 4 Things To Know Before Asian Markets Open
China’s economy grew faster than expected in the second quarter. GDP expanded 5.2% from a year earlier. That compares with a 5.1% median forecast of economists. Through the first half of 2025, GDP has expanded by 5.3% y/y, keeping China on track to achieve this year's "around 5%" growth target. Strong exports to markets outside the US masked deepening pressure caused by weak consumer demand at home.
Donald Trump on Tuesday said he has reached a trade deal with Indonesia, a week after he threatened to slap a 32% tariff on the southeast Asian country’s US exports. Trump said the US will charge a 19% tariff on Indonesian products, while US goods will enter Indonesia with no tariffs. “If there is any Transshipment from a higher Tariff Country, then that Tariff will be added on to the Tariff that Indonesia is paying,” the president added.
US consumer prices rose in June as Donald Trump’s tariffs began to slowly work their way through the US economy. The consumer price index increased 0.3% m/m, putting the 12-month inflation rate at 2.7%, the Bureau of Labor Statistics reported Tuesday. The numbers were in line with the Dow Jones consensus, though the annual rate is the highest since February and still above the Federal Reserve’s 2% target. Excluding volatile food and energy prices, core inflation picked up 0.2% m/m, slightly below the outlook for a 0.3% gain. The annual rate moved up to 2.9%, in line with estimates. Both the main and underlying inflation measures are now printing at their highest levels in four months.
Nvidia plans to resume sales of its H20 AI chip to China based on assurances from Washington that such shipments would be approved, a sharp reversal from the Trump administration’s earlier stance. US government officials told Nvidia they would approve export licenses for the less-advanced H20 artificial intelligence accelerator, the company said in a blog post on Monday. That China-specific variant was created to comply with earlier trade curbs, but has been blocked from sale in the country without a US permit since April. The move could add billions to Nvidia’s revenue this year, restoring its ability to fulfill orders it had written off as lost due to government restrictions.
China’s Economy Grows Faster Than Expected
China’s economy grew faster than expected in the second quarter. GDP expanded 5.2% from a year earlier. That compares with a 5.1% median forecast of economists. Through the first half of 2025, GDP has expanded by 5.3% y/y, keeping China on track to achieve this year's "around 5%" growth target. Strong exports to markets outside the US masked deepening pressure caused by weak consumer demand at home. Consumption contributed just over 52% of economic growth in the second quarter, according to the National Bureau of Statistics (NBS), accounting for a bigger share relative to the start of 2025 but down from more than 60% a year ago. The GDP deflator, a broad measure of prices across the economy, declined for the ninth consecutive quarter, extending the longest streak since the quarterly data began in 1993. Despite a 24% slump in shipments to the US in the second quarter, overall exports still rose, while fiscal stimulus propped up domestic demand and construction. On a quarterly basis, China’s GDP grew by a seasonally adjusted 1.1% in Q2, beating economists’ forecasts of 0.9% despite slowing slightly from a 1.2% increase in Q1.
“The economy maintained steady growth with good momentum, showcasing strong resilience and vitality,” the NBS said in a statement. It also warned that “there are many unstable and uncertain factors” abroad while domestic demand “is insufficient.”
Industrial output rose by a surprising 6.8% y/y in June from a year earlier, accelerating from May’s six-month low of 5.8% and faster than the 5.6% expansion forecast by economists. It marked the fastest growth since March, supported by a series of government measures to boost the economy. Manufacturing output surged 7.4% y/y in June from a year ago, the fastest growth in three months, driving the overall improvement in industrial production. Semiconductor manufacturing also continued to grow at a rapid pace of 15.8% y/y amid a push for greater tech self-sufficiency. Over the first half of the year, industrial production expanded by 6.4% y/y, faster than the 5.8% pace seen in 2024.
Retail sales increased 4.8% y/y last month, slowing from an over one-year high of 6.4% in May and worse than economists’ projections of a 5.6% gain. Analysts had expected retail sales growth to pull back in June after a strong gain in May, but the slump was far deeper than anticipated. In June, sales of beverages, cigarettes and alcohol as well as cosmetics all declined from a year ago, while catering services grew far slower. That dragged on overall consumption even as purchases of home appliances, communications equipment and furniture continued to soar thanks to government subsidies, financed by proceeds from ultra-long special sovereign bond sales. The main beneficiary categories of household appliances (32.4%) and communication equipment (13.9%) continue to outpace headline growth. For the first half of the year, retail sales increased by 5% compared to the same period last year, broadly on track with expectations.
Other key economic indicators showed that fixed-asset investment rose 2.8% y/y over January-June, down from 3.7% y/y ytd in May. This marked the lowest growth rate since the pandemic in 2020. Property investment shrank 11.2% during the period. Excluding the property sector, fixed-asset investment rose by 5.1% in the January–June period. The urban jobless rate was 5% in June, unchanged from the previous month as expected.
Analysts at Morgan Stanley expect GDP growth to slip below 4.5% in the second half of the year due to “payback of front-loading, weaker global trade amid renewed tariff escalation, and continued deflation loop.” Michelle Lam, Greater China economist at Societe Generale, said, “it’s a picture of strong supply but weak domestic demand, and export resilience is not going to last. Not a good set of data despite the GDP beat.”
“Deflation remains the key threat,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group. “Poor retail sales and weak real estate data suggest any one-off efforts like subsidies are not a recipe for a sustainable consumption recovery.”
China’s Property Price Slump Worsens In June
China's 70-city sample of property prices showed further signs of deterioration in June. Overall, new home prices fell by -0.27% month-on-month, while used home prices fell by -0.61% m/m. Both saw steeper declines for the third consecutive month. New home prices rose in 14 cities, the lowest count since October 2024. Shanghai and Changsha led the way with 0.4% m/m upticks, while other cities saw gains of 0.3% m/m or less. Used home prices fared even worse, with only one city (Xining) seeing a tiny price uptick of 0.1%. The 69 other cities all saw price declines on the month, with Beijing seeing the steepest decline of 1.0% m/m.
For the first half of the year, 12 cities have seen new home prices recover year-to-date. Used home prices are down across the board, with 16 cities seeing declines of over 3% year-to-date. This persistent weakness is eroding consumer confidence and depressing retail spending.
Xi Calls For ‘New Model’ Of Property Development
President Xi Jinping called for the acceleration of a “new model” for property development, advocating a more measured approach to urban planning and upgrades. However, the proposals fell short of some investors’ expectations for more aggressive policies. China will “steadily advance renovation of urban villages and dilapidated houses,” the official Xinhua News Agency reported, citing the Central Urban Work Conference held on Monday and Tuesday. The announcement follows a pledge by the government last October to renovate 1 million homes in older, rundown dwellings in large cities. Jeff Zhang, a property analyst with Morningstar, said, "investors pinned too much hope to the meeting earlier and may sell the news now" as the announcement fell short of investor expectations for more aggressive policies.
The latest high-level meeting is reminiscent of the Central Urban Work Conference held in 2015, which sought to boost urban planning and infrastructure. That event was the first of its kind in decades and was attended by President Xi Jinping, former Premier Li Keqiang and all the members of the Politburo’s standing committee. The 2015 program pumped at least 3.2 trillion yuan (US$446bnn) into the economy, by replacing older buildings with new tower blocks. At the time, it worked by using newly created central bank yuan to give occupants of old communal housing brand-new apartments, cash, or both. China's property sector is mired in a protracted slump, with officials having taken steps to try and revive the sector, but these have so far had only modest success.
US Inflation Picks Up Again In June
US consumer prices rose in June as Donald Trump’s tariffs began to slowly work their way through the US economy. The consumer price index increased 0.3% m/m, putting the 12-month inflation rate at 2.7%, the Bureau of Labor Statistics reported Tuesday. The numbers were in line with the Dow Jones consensus, though the annual rate is the highest since February and still above the Federal Reserve’s 2% target. Excluding volatile food and energy prices, core inflation picked up 0.2% m/m, slightly below the outlook for a 0.3% gain. The annual rate moved up to 2.9%, in line with estimates. Both the main and underlying inflation measures are now printing at their highest levels in four months.
Vehicle prices fell on the month, with prices on new vehicles down 0.3% and used car and trucks tumbling 0.7%. However, tariff-sensitive apparel prices rose 0.4%. Household furnishings, which also are influenced by tariffs, increased 1% for the month. Shelter prices increased just 0.2% for the month, but the BLS said the category was still the largest contributor to the overall CPI gain. The index rose 3.8% from a year ago. Food prices increased 0.3% for the month, putting the annual gain at 3%, while energy prices reversed a loss in May and rose 0.9%, though they are still down marginally from a year ago. Medical care services were up 0.6%, while transportation services edged higher by 0.2%.
Dan North, senior economist at Allianz Trade North America, said, “it’s really hard to point to this report or any details in the report and say, ‘Aha! See what’s happened to prices because of tariffs. You get these pretty massive tariff increases. It’s bound to pass through to the consumers, and I still think it will, but it’s not in this report so far.” Skyler Weinand, chief investment officer of Regan Capital, said, “while it’s a relief to see Tuesday’s CPI in-line with expectations, it still showed that inflation was hotter in June than it was in May. The big question for the inflation picture is tariffs. It’s taking some time for tariffs to show up in the data, but it’s highly likely that a tariff-driven inflation reckoning is coming.”
Following the inflation report, Donald Trump repeated his demand for the Federal Reserve to lower interest rates. “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!” Trump posted on his Truth Social site. In a separate post, Trump called for a 3 percentage point reduction. “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” he said.
The Fed has indicated it is in no rush to cut interest rates. Policymakers insist that the US economy is in a strong enough position now that the Fed can afford to wait to see the impact tariffs will have on inflation. Trump in turn has called on Powell to resign. Markets expect the Fed to stay on hold when it meets at the end of July and then cut by a quarter percentage point in September.
Bessent Says Formal Process To Pick Fed Chair Is Starting
The process to choose the next head of the Federal Reserve is getting under way, Treasury Secretary Scott Bessent said, suggesting that when current Chair Jerome Powell is replaced, he should also step down from the board. "There’s a formal process that’s already starting," Bessent said in a Bloomberg television interview Tuesday. "It’s President Trump’s decision and it’ll move at his speed," he said, saying there were good candidates both inside and outside the central bank. "Traditionally the Fed chair also steps down as a governor. There’s been a lot of talk of a shadow Fed chair causing confusion in advance of his or her nomination, and I can tell you, I think it would be very confusing for the market for a former Fed chair to stay on also," the Treasury secretary said. Asked if Trump would seek to remove Powell before his term ends next year, Bessent said, "as President Trump said, he’s not looking to fire Chair Powell."
Jamie Dimon, chief executive of JPMorgan, warned that “the independence of the Fed is absolutely critical and not just for the current Fed chair, whom I respect, Jay Powell, but for the next Fed chair”. Dimon said in a call with bank analysts on Tuesday, “playing around with the Fed can often have adverse consequences, the absolute opposite of what you might be hoping for.”
Nvidia To Resume H20 AI Chip Sales To China In US Reversal
Nvidia plans to resume sales of its H20 AI chip to China based on assurances from Washington that such shipments would be approved, a sharp reversal from the Trump administration’s earlier stance. US government officials told Nvidia they would approve export licenses for the less-advanced H20 artificial intelligence accelerator, the company said in a blog post on Monday. That China-specific variant was created to comply with earlier trade curbs but has been blocked from sale in the country without a US permit since April. The move could add billions to Nvidia’s revenue this year, restoring its ability to fulfil orders it had written off as lost due to government restrictions.
Commerce Secretary Howard Lutnick explained the Trump administration's turnabout in assuring Nvidia that it can sell its H20 artificial-intelligence chip in China, saying the US wants them dependent on American technology. Lutnick said on CNBC Tuesday that the US wants to stay one step ahead of what China can build so they will keep buying US semiconductors. "We want to keep having the Chinese using the American technology stack, because they still rely upon it," he said, adding that Nvidia is selling China an older AI chip.
The change in the US stance follows a meeting between CEO Jensen Huang and Donald Trump last week. During the talks, Huang had reaffirmed Nvidia’s support for the administration’s job creation and onshoring efforts, as well as the aim for America to lead in global AI, the company said. Washington and Beijing last month agreed to a preliminary trade framework that allowed relaxing rare earth export controls by China and easing of tech export curbs by the US. However, the potential resumption of H20 chips to China comes as a surprise as Trump’s team had insisted in recent trade negotiations with China that controls on Nvidia’s H20 chips were not up for discussion. The US move comes after weeks of thawing relations between Washington and Beijing. After meeting his Chinese counterpart last week, US Secretary of State Marco Rubio said there’s a “strong desire on both sides” for a meeting between Trump and President Xi Jinping later this year.
Jensen Huang appeared on Chinese state broadcaster CCTV shortly after Nvidia announced the decision, saying the company had secured approval to begin shipping. Huang has previously branded US chip curbs a “failure” and warned that Nvidia’s loss of market share in China, from 95% to 50%, directly benefits competitors such as Huawei. The reversal could help recover a substantial portion of the US$15 billion in fiscal 2026 data centre revenue previously at risk, including US$4-5 billion originally expected in 2H, and part of the US$8 billion in unshipped 2Q orders.
Ray Wang, research director of semiconductors, supply chain and emerging technology at Futurum Group, told CNBC, “the lifting of the H20 ban marks a significant and positive development for Nvidia, which will enable the company to reinforce its leadership in China.” While China’s AI chip environment has been making progress, it remains behind the capabilities of Nvidia and chip foundries like Taiwan Semiconductor Manufacturing Co. Louise Loo, lead economist for China at Oxford Economics, said “we know from our conversations with clients and market participants, that manufacturers in China are preferring these Nvidia chips.”
EU Finalises List Of Countermeasures To Trump’s Tariffs
The European Union has finalized a list of countermeasures to target US goods worth €72 billion (US$84bn), including Boeing aircraft, automobiles and bourbon, if it decides to retaliate. The list was cut down after discussions with companies and member states. The list includes US machinery products, chemicals and plastics, medical devices, electrical equipment, wines and other agricultural goods, according to a document prepared by the European Commission. The EU trade chief Maros Sefcovic says the US tariff policy is "effectively prohibitive" to transatlantic trade, and the EU insists any settlement must be mutually beneficial to both sides.
Earlier, Donald Trump said he’s open to talks with the bloc after threatening a 30% levy on EU imports that will kick in on August 1 if the two sides fail to agree on a better deal. “We’re always open to talk,” the US president told reporters at the White House. “We are open to talk, including to Europe. In fact, they’re coming over. They’d like to talk.” Earlier Trump had insisted that his letters threatening new tariff rates are “the deals” for US trading partners. “The letters are the deals. The deals are made. There are no deals to make,” Trump told reporters at the White House on Monday.
Trump Says US Has Trade Deal With Indonesia
Donald Trump on Tuesday said he has reached a deal with Indonesia, a week after he threatened to slap a 32% tariff on the southeast Asian country’s US exports. Trump in a Truth Social post called it “a great deal, for everybody,” and said it followed direct dealings with Indonesian President Prabowo Subianto. Trump said the US will charge a 19% tariff on Indonesian products, while US goods will enter Indonesia with no tariffs. Trump claimed the US would receive “Complete and Total Access” to the Indonesian economy, and that “US Exports to Indonesia are to be Tariff and Non Tariff Barrier FREE.”
Indonesia also agreed to purchase US$15 billion in US energy, US$4.5 billion worth of agricultural products and 50 Boeing jets, “many of them 777’s,” Trump said later on social media. “If there is any Transshipment from a higher Tariff Country, then that Tariff will be added on to the Tariff that Indonesia is paying,” the president added.
Indonesia is one of the United States’ top 25 trade partners, with the two countries trading more than US$38 billion in goods in 2024, according to the Commerce Department. The US trade deficit with Indonesia totalled US$17.9 billion last year.
More trade deals could be around the corner, Trump also said, reiterating that he believed a pact was close with India that would give the US similar market access.
Trump’s Russia Threat Puts Focus On Oil Buyers India & China
Donald Trump's threat to impose financial penalties on Russia has put the spotlight on India and China, the two biggest buyers of Moscow's crude. On Monday, the US president also said he will introduce "very severe" secondary tariffs of 100% if no ceasefire deal is reached within 50 days. The tariffs would be “biting” and “very, very powerful”. This means any country that continues to do trade with Russia will face a big tax to sell their products to the US.
India and China's imports of Russian oil have climbed since the invasion of Ukraine in early 2022, with India buying more than a third of its overall purchases from Russia this year. Russian flows to India reached 2.1 million barrels a day in June, the biggest monthly intake in nearly a year. China’s imports have also climbed over the same period and have been consistently above 1 million barrels a day since the war started. Mukesh Sahdev, head of commodity markets at Rystad Energy A/S, said that if India cannot buy crude oil from Russia, it has optionality with other OPEC members, but it will be at a higher cost.
Still, the initial reaction from the market to Trump’s remarks was muted. Global benchmark Brent fell almost 2% to close below $70 a barrel on Monday, suggesting little concern around the potential impact to crude flows.
Xi Urges ‘Turnaround’ In Australia-China Relations
Australian Prime Minister Anthony Albanese met with Xi Jinping in Beijing Tuesday, and the two leaders had lunch together. Albanese is halfway through a six-day state visit aimed at reaffirming economic ties with Australia’s most important trading partner amid global tariff turmoil and pressure from the US over security commitments to Taiwan. Albanese raised concerns about recent Chinese live fire exercises near his country. Xi replied that “China engaged in exercises just as Australia engages in exercises”.
Xi urged the two sides to build on a “turnaround” in their relationship. “With the joint efforts of both sides, China-Australia relations have come out of the trough and achieved a turnaround in recent years, bringing tangible benefits to the people of both countries,” Xi told Albanese, according to state media. “No matter how the international situation changes, we should stick to this general direction,” Xi said, adding that China and Australia still needed to “enhance strategic mutual trust”.
The meeting was the fourth between Xi and Albanese, and the first since Albanese’s Labor party was re-elected in a landslide this year on a surge of opposition to Donald Trump. “One of the things that has marked Beijing’s external relationships this year is that they’ve been trying to improve ties,” said Ian Chong, associate professor at the National University of Singapore. “They’ve been doing more outreach than they did previously.”
Albanese has been aiming to strengthen economic ties in areas including steel production and tourism on the trip, which includes stops in Shanghai and Chengdu. He has been accompanied by executives from leading miners Rio Tinto, BHP and Fortescue as well as Macquarie Group and the Australian arm of HSBC. China accounts for about a third of Australia’s exports, led by iron ore. Two-way trade in goods and services between the countries reached A$312bn (US$204bn) in 2024.
Thailand Unexpectedly Delays Naming New Central Bank Chief
Thailand has unexpectedly held off plans to name a new central bank chief. Finance Minister Pichai Chunhavajira was poised to pick Vitai Ratanakorn, president of the Government Savings Bank, to be governor of the Bank of Thailand, according to Bloomberg News. But after Tuesday’s cabinet meeting, Pichai said the cabinet needs to look at the appointment "a little more carefully" and denied there were attempts to block the nomination or issues raised over his nominee's qualifications. His submission is now set for next week instead. Vitai is widely seen as an advocate of aggressive interest rate cuts to help revive the nation’s faltering economy. His appointment could renew concerns about the independence of the Bank of Thailand.
Singapore Private Home Sales Fall To Six-Month Low Before Curbs
Singapore’s new private home sales declined to the lowest level in six months in June, with developers selling 272 units. That’s lower than the 312 homes sold in May, but higher than the sales reported in June 2024. In July, Singapore hiked a tax on sellers of private homes and extended it to those that sell them within four years from three, moves aimed at curbing a trend of people flipping properties for a quick profit. Citigroup analyst Brandon Lee said buyers are undeterred by the measures, but the average initial take-up for most launches in the second half is expected to come in at 30%-50%.
India Trade Deficit Narrows For First Time In 3 Months
India recorded a trade deficit of US$18.8 billion in June, narrowing from the US$21 billion gap from the corresponding period of the previous year to halt a streak of three consecutive months of widening trade deficits. The data undershot expectations that the deficit would widen to US$22.2 billion. Imports contracted by 4% from the previous year to US$53.9 billion, with a drop in the volume of oil imports due to lower global prices. Exports were largely unchanged at US$34.1 billion.
BYD Poised To Outsell Its US Rival Tesla This Year
Chinese automaker BYD is in pole position to overtake Tesla in annual global EV sales for the first time in 2025 as it expands overseas. Having attracted investment from Warren Buffett’s Berkshire Hathaway in 2008, BYD has been on a staggering growth trajectory and sold 4.27mn vehicles last year, nearly 10 times as many as in 2020. Of that total, 1.76mn were pure EVs. Over the same four-year timeframe, Tesla’s sales went from just shy of 500,000 vehicles to 1.79mn. In China BYD now commands a 21% market share, according to Shanghai consultancy Automobility. Tesla, the company credited for sparking consumer interest in electric vehicles when it brought its first model to China in 2013, holds 8%. As Tesla’s sales decline following Musk’s forays into US politics and amid a lack of new models, BYD has overtaken it to become the world’s largest manufacturer of EVs. Its annual revenues surpassed US$100bn for the first time in 2024.
China’s Baidu To Bring Its Driverless Cars To Uber Globally
China’s Baidu has struck a partnership with Uber to deploy its autonomous cars on the ride-hailing giant’s platform outside the US and mainland China. The first deployments are expected to happen in Asia and the Middle East later this year. The two companies said the multi-year partnership will see “thousands” of Baidu’s Apollo Go autonomous vehicles on Uber globally. For Baidu, the move will help to internationalize its driverless car business outside of China. Uber will meanwhile gain a proven partner to take on autonomous driving rivals around the world. After the launch, a rider requesting a trip on Uber may be given the option to hail a driverless Apollo Go car, the two companies said.
Nissan To Shut Flagship Car Plant In Japan With 2,400 Workers
Nissan is shutting one of its oldest plants in Japan as part of its restructuring and cost-cutting process. The carmaker says it will end production at its Oppama plant south of Tokyo at the end of fiscal 2027 and transfer work to a factory in Kyushu. Nissan has been seeking to raise funds and cut costs due to its rapidly deteriorating financial and operational position.
Chief Executive Officer Ivan Espinosa said the decision is essential to overcoming the company's current situation and returning to a path of growth, and that it marks a restructure that comes with significant pain. The Oppama plant's closure will have large implications for the local economy, and it is unclear whether employees will be transferred within the company or to whom some assets will be resold, according to Espinosa.
Asia-Pacific Stocks Rise After China GDP Beats Forecasts
Asia-Pacific markets rose Tuesday after China's second-quarter economic growth surpassed analysts' forecasts. Investors were also awaiting second-quarter earnings on Wall Street and a key inflation reading after all three key benchmarks in the US ended Monday's session higher.
Japan’s Nikkei 225 added 0.6% to close at 39,678. South Korea’s Kospi index increased by 0.4%. Taiwan’s Taiex rose 1.0%. TSMC closed up 1.4% in Taipei to the highest in five months on hopes of increased Nvidia chip sales to China. Singapore’s Straits Times Index extended its winning run for a seventh consecutive session, rising 0.3% to a fresh all-time high of 4,119.82. Australia’s S&P/ASX 200 ended the day 0.7% higher at 8,630. In India, the BSE Sensex index moved up 0.4% to 82,571.
Yields on 10-year Japanese government debt hit their highest level since the 2008 financial crisis as markets begin to price in the risk of expensive campaign pledges and political uncertainty ahead of Sunday’s election. The 10-year yield rose 3 bps on Tuesday to 1.60% as an increasing number of polls suggested the ruling Liberal Democratic party would lose its majority in Sunday’s upper-house parliamentary elections. Yields settled later in the day at 1.58%. The 30-year yield rose as much as 5 bps on Tuesday to an all-time high of 3.21% before settling at 3.17%.
Traders are increasingly concerned that Sunday’s vote could force the LDP to make concessions to smaller parties whose popularity has been built on pledges that would strain the finances of a country with the developed world’s highest level of public indebtedness. The upward shift in yields raises the risk that turmoil in the debt market could spill over into higher borrowing costs for businesses and consumers, such as driving up mortgage rates.
China Stocks React Positively To Lifting Of Nvidia China Restrictions
Chinese stocks rose Tuesday as investors digested a raft of economic data that painted a mixed picture of the recovery. Stocks also reacted positively to the lifting of curbs on Nvidia’s chip sales to China. On the mainland, the CSI 300 was up marginally at 4,019, recovering from a loss of 0.6% in the morning. Data centre operators like Beijing Sinnet Technology soared 7.3% in Shenzhen.
In Hong Kong, the Hang Seng Index jumped 387 points higher, or 1.6%, to 24,590. The Hang Seng Tech Index surged 2.8%. Alibaba’s shares rose 7.0% in Hong Kong on Tuesday. Software maker Kingsoft was up 16.8%. Data centre providers GDS Holdings rose 12.2%.
A gauge of Chinese developer stocks fell 0.9% on Tuesday in Hong Kong, as investors were left disappointed in Beijing’s latest proposals for stabilising the property sector. Government data showed that the slump in real estate investments deepened in June, falling 11.2% in the first half of 2025, compared to a 10.7% drop in the first five months of the year. The Hang Seng Mainland Properties Index trimmed gains from last week’s rally which was driven by speculation over potential stimulus.
UK’s FTSE 100 Rises Above 9,000 Points For First Time
European shares gave up early gains to close lower. The pan-European Stoxx 600 ended the day with losses of 0.4%, with most sectors trading in negative territory. Europe’s technology stocks outperformed, ending the session 0.8% higher. Regional shares were mostly lower on Monday and Tuesday, as investors reacted to Donald Trump’s threat to slap 30% tariffs on goods from the European Union next month.
The FTSE 100 reached 9,000 points for the first time, before retreating, as UK stocks benefited from global investors diversifying away from the US amid uncertainty over Donald Trump’s trade war. The UK blue-chip stock index has outperformed the S&P 500 and the Stoxx Europe 600 indices so far this year, having climbed 10.3%. The UK reached a partial trade agreement with the US in early May, which some analysts say has given the London market an advantage over its European peers.
UK housebuilder Barratt Redrow was the worst performer on the Stoxx 600, down 9.4% after announcing it had missed its target for annual home completions. Swedish telecoms equipment-maker Ericsson, meanwhile, dropped 7.7% after its second-quarter results revealed US tariffs had a negative impact on its margins, despite overall growth in sales and improved income.
French Prime Minister François Bayrou has proposed a broad spending freeze for next year and scrapping two national holidays, to narrow the deficit. In a press conference on Tuesday, Bayrou unveiled the outline of a 2026 fiscal package of €44bn (US$51bn) in tax rises and spending cuts, including curbs to pensions and social welfare benefits and a not yet defined “solidarity contribution” from the wealthy. “This is our moment of truth,” said Bayrou, warning that France could face a debt crisis similar to the one that hit Greece in 2008. “We have become addicted to public spending.”
US Stocks Close Mixed
US stocks were hit by global growth concerns on Tuesday after data showed US inflation rose to 2.7% from 2.4% in June. However, the tech-heavy Nasdaq outperformed, closing at a record high. The Dow lost 436 points, or 1.0%, and closed at 44,023. The S&P 500 fell 0.4% and closed at 6,244, easing from a fresh record high reached earlier in the session. The Nasdaq bucked the downward trend, adding 0.2% and posting a record close of 20,678.
Helping to lift the Nasdaq, shares of Nvidia rose 4.0% after the company announced plans to resume sales of a key AI chip in China after US officials said they would resume the approval of export licenses. The move by the Trump administration marks a reversal on measures designed to limit Beijing’s AI ambitions. Semiconductor stocks rallied in tandem with Nvidia with AMD (+6.4%), and Broadcom (+1.9%) rising.
Shares of rare earth miner MP Materials jumped 20% Tuesday on a US$500 million deal to supply Apple with magnets that are manufactured at a plant in Texas. MP will provide Apple with rare earth magnets made from recycled materials at its Independence plant in Forth Worth. The deal comes after MP announced last week that the Pentagon was purchasing a direct equity stake, sending the miner’s shares rocketing about 50% higher.
The second quarter earnings season kicked off with some of the big banks reporting. Earnings from the major banks beat expectations. But soft forecasts for the rest of the year weighed on financial stocks, with the exception of Citigroup.
JPMorgan Chase kicked off the reporting season by posting robust growth as chief executive Jamie Dimon said the US economy remains “resilient” despite the risks posed by Donald Trump’s tariffs and the country’s worsening fiscal outlook. The group’s net income in the quarter fell to US$15bn, down 17% from a year earlier. Last year it benefited from a roughly US$8bn one-off gain from its stake in Visa. Analysts had forecast profits for the latest quarter of US$12.8bn. The biggest US bank by assets said on Tuesday that trading revenues jumped 15% from the year prior to US$8.9bn, driven by activity in currency, bond, commodity and equity markets. Investment banking fees rose 7% to US$2.5bn. Shares of JPM fell 0.7%.
Citigroup’s profits jumped in the second quarter as the Wall Street bank posted revenue growth across its main divisions including trading, investment banking and wealth management. The group’s net income rose by nearly 25% year-on-year to US$4bn, above analysts’ expectations of US$3.3bn. Revenue increased 8% to US$21.7bn. Citi benefited from higher market volatility linked to President Donald Trump’s protectionist tariffs and geopolitical tensions, in line with other banks. Shares of Citi closed 3.7% higher.
Wells Fargo’s second quarter net income of US$5.5bn comfortably beat expectations, as the bank reported its first set of earnings since the removal of its asset cap. Revenues inched higher from US$20.7bn to US$20.8bn, in line with expectations. Wells, however, posted a 1% year-on-year fall in revenue from its markets division, even as higher market volatility boosted other Wall Street investment banks. A reduction in net interest income guidance sent the shares lower by 5.5%.
BlackRock’s assets under management climbed to a record US$12.5tn in the second quarter, as a market rally and currency swings helped overcome lower than expected inflows. The world’s largest asset manager said on Tuesday that clients deposited US$68bn across its investment products, falling short of Wall Street expectations. Revenues jumped 13% to US$5.4bn, while net income rose 7% to US$1.6bn, both roughly matching expectations. Blackrock’s shares closed 5.9% lower.
Treasury Yields Rise After Process To Find Powell Replacement Starts
US Treasury yields recovered after initially weakening on the June inflation data. CPI accelerated last month in line with forecasts, amid signs that tariffs could be lifting some prices. Analysts saw the report as supporting the Fed’s wait-and-see approach. Meanwhile, Treasury Secretary Bessent says the process to find Fed Chair Powell’s replacement is under way.
The 10-year rose 5 bps to 4.49%, its highest settlement since early June. The two-year climbed 5 bps to 3.95%.
US Dollar Rebounds
The US dollar index initially dipped but later rebounded to trade 0.6% higher at 98.63 on Tuesday, as the CPI report did little to shift market expectations regarding the Fed’s next policy moves. In Asia, the Japanese yen fell 0.7% to a two-month low of ¥148.83 against the USD. The offshore yuan fell 0.2% to around Rmb 7.18 per dollar on Tuesday, as investors digested a batch of mixed Chinese economic data.
Gold Extends Rally
Spot gold fell Tuesday, after topping a three-week high in its previous session. The precious metal was down 0.5% at $3,328 per ounce. Mounting geopolitical tensions and uncertainties from Trump’s on-again-off-again tariffs have sent gold prices up by almost 27% since the start of the year.
Oil Falls for Second Day
Brent crude oil futures fell 0.5% to $69.79 per barrel on Tuesday, following a 1.6% loss in the previous session, as traders grew sceptical that President Trump’s new pressure campaign on Russia would significantly disrupt its oil exports. Trump boosted military aid to Ukraine and warned of 100% tariffs if no peace deal is reached in 50 days, a move seen as a threat of secondary sanctions on major Russian oil buyers like India and China. However, markets viewed the 50-day delay as reducing the risk of immediate supply disruption. A key demand gauge in China improved, where refinery activity hit 15.2 million barrels per day in June, the highest since September 2023.
Bitcoin Retreats On Profit Taking
Bitcoin traders took profits Tuesday after a record-breaking rally sent the digital token above $120,000 on Monday. The cryptocurrency declined as much 3.2%, the most in more than three weeks, ending the New York trading session at $116,550. The retreat came after Bitcoin surged on Monday, fuelled by optimism about progress in US digital asset legislation and a recent rally in other risk assets as concerns about the economic impact of Trump’s trade war eased.
Peter Lewis’ Money Talk Podcast
On Wednesday’s “Peter Lewis’ Money Talk” podcast, I’ll be joined by Richard Harris, Chief Executive Officer at Port Shelter Investment Management, and Frederick Chu, an independent ETF consultant. With a view from Japan is Tokyo based journalist and author, William Pesek.
The podcast is also available on Apple Podcasts, YouTube Studio and Spotify.
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https://www.youtube.com/playlist?list=PLnwqOJD9ie5gHH29bNfuG1Nscy8rdJo6O
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This podcast is sponsored by Surfin Group, which is headquartered in Singapore and offers online financial services to 60 million customers across 10 countries. You can find out more about them by going to their website www.surfin.sg
