Morning Note: A Round-up of Global Financial Market News.
Market News
US core producer prices increased less than expected in July, offering further evidence that inflationary pressures are not broadly intensifying following Wednesday’s subdued CPI report. The softer price data reduces pressure on the Federal Reserve to raise interest rates in the near term, with markets now pricing in around a 35% chance of a 25 basis point rate hike in September, down from 55% a week earlier.
Diplomatic efforts to reopen the Strait of Hormuz remain deadlocked. Despite the ongoing impasse, crude continues to flow out of the Persian Gulf, with some tankers sailing with their transponders switched off, although vessels navigating Hormuz remain exposed to persistent threats. The US will announce unprecedented economic measures against Iran next week, Treasury Secretary Scott Bessent told Newsmax. Brent crude trades at $88 a barrel.
The US sold 30-year bonds at the highest yield in a quarter of a century – the $25bn auction drew yields as high as 5.22%. The country’s AA+ rating was affirmed by Fitch. Gold is trading at $4,330 an ounce, extending losses from the previous session.
Global stocks headed for a third straight weekly gain as investors returned to the AI trade. US equities rose last night – S&P 500 (+0.7%); Nasdaq (+0.8%) – with Sandisk up 15% following a positive investor day.
OpenAI is said to be on track for annualised revenue of more than $40bn based on its current performance, roughly doubling its run rate at the end of last year. The FT reports that US AI labs, such as OpenAI and Anthropic, are releasing cheaper models as they fight to retain cost-conscious customers who are switching to cut-price alternatives from China.
Asian equities followed Wall Street higher this morning: Nikkei 225 (+0.6%); Hang Seng (-0.9%); Shanghai Composite (flat); Kospi (+2.2%). The FTSE 100 is currently 0.2% higher at 10,776, while Sterling trades at $1.3505 and €1.1695.
The Trump administration is imposing 100% tariffs on imports of certain drones and components based on their size or national-security capabilities, a move that may significantly affect China.
Source: Bloomberg
