Capital Economics

China's June exports surged 27% year-on-year, driven by AI demand and semiconductor price increases, with a trade surplus widening to $125.6 billion. Exports to Southeast Asia, the EU, and Latin America grew significantly, while shipments to the U.S. rose 14% amid lower prior-year tariffs under Trump. Analysts note reliance on global demand and regulatory factors for sustained growth.

Inflation remains high due to factors including a strong El Niño weather pattern, AI-driven chip shortages, lingering Trump tariffs, and global conflicts like the Ukraine war. The Federal Reserve faces pressure to raise interest rates, with investors expecting at least one hike by year-end. Agricultural commodities like coffee and cocoa are particularly vulnerable to price spikes from El Niño.

Markets reacted cautiously as the Trump administration ended a peace deal with Iran, leading to renewed conflict and rising oil prices. However, investors remained relatively calm, with major indices showing mixed weekly performance. Analysts noted growing investor focus on AI-related economic factors over Middle East volatility.

Saudi Arabia’s debt is projected to rise to 60% of GDP by 2030, according to Capital Economics, due to potential declines in oil prices. The Saudi government forecasts a lower debt level of 33% of GDP by 2028, citing investments in economic transformation projects and non-oil growth.

SK Hynix, a South Korean chipmaker and top supplier of high-bandwidth memory to Nvidia, is set to debut on the U.S. Nasdaq with a $29 billion IPO after its Korean-listed stock surged 770% in a year. The listing could signal market sentiment for AI-driven equities amid concerns about volatility and sustainability, as prior comments from SK Hynix triggered sharp declines in global stock indexes.

Bank of America warns the stock market may experience a 'snapback' due to extreme speculation, with the S&P 500 potentially dropping 5% from current levels by year-end. The bank cites declining free cash flow for S&P 500 companies, especially AI-driven firms, and predicts aggressive Federal Reserve rate hikes to combat inflation. Market volatility, seen in the S&P 500 and South Korea’s Kospi index, raises concerns about unsustainable gains.

Wall Street saw modest gains amid mixed jobs data, with the Dow Jones Industrial Average setting a new record and the S&P 500 and Nasdaq recovering from previous losses. The June jobs report showed weaker labor market growth and downward revisions to prior months, but analysts suggested the data may be misleading due to a 61,000-job drop in the leisure and hospitality sector, which could be revised upward in the coming months.

U.S. stocks rose as easing Treasury yields and a slower-than-expected June jobs report reduced pressure for Federal Reserve rate hikes. Chip stocks declined amid concerns about AI adoption barriers and potential supply gluts, while oil prices fell due to potential progress in Iran war talks.

The June U.S. jobs report showed 57,000 jobs added, below the expected 115,000, with the unemployment rate dropping to 4.2%. Previous months' job gains were revised downward, and leisure and hospitality lost 61,000 jobs, while business services and healthcare saw increases.

Asian stocks declined due to a sell-off in computer chip shares, with South Korea's Kospi index falling 5.1% and major chipmakers like SK Hynix and Samsung Electronics dropping over 6%. U.S. chip stocks also fell, with Micron Technology down 10.6% and Intel losing 9%, amid concerns about potential supply gluts from heavy industry investments.

Asian stocks declined due to a sell-off in chip shares, with South Korea's Kospi falling 5.1% and major chipmakers like SK Hynix and Samsung Electronics losing significant value. U.S. chip stocks also dropped, and oil prices fell amid hopes for improved crude supplies following Iran war negotiations. Concerns about an AI-driven supply glut and slower-than-expected adoption barriers weighed on investor sentiment.

The AI-driven stock market rally faces volatility as the Nasdaq and S&P 500 decline, with South Korea's Kospi index crashing 10% after SK Hynix announced plans to slow its AI memory business. Analysts warn of an 'equity bubble' nearing a 'blow-off phase' before a potential collapse, citing unsustainable investor expectations despite strong earnings from companies like Micron.

Asian stocks were mixed following a global tech sell-off, with South Korea's Kospi and Japan's Nikkei 225 experiencing declines. U.S. tech stocks like Micron Technology and Nvidia also fell sharply, contributing to market volatility. Oil prices dropped as progress in U.S.-Iran talks eased supply concerns.

Wall Street indices showed mixed premarket performance as oil prices declined due to optimism over U.S.-Iran negotiations. High-level talks in Switzerland concluded with encouraging progress reported by mediators Qatar and Pakistan, while the Strait of Hormuz's status remains disputed. Asian and European stock markets saw varied gains, driven by AI-related sectors and geopolitical developments.

The Strait of Hormuz is set to fully reopen under a U.S.-Iran agreement, but energy flows may take until 2027 to normalize due to disrupted supply chains, rerouted tankers, and lingering insurance and safety risks. Global oil supplies lost 2 billion barrels in three months, prompting reserve draws and rationing, with markets facing prolonged constraints despite the reopening.

Wall Street debates whether the surge in mega-IPOs and new shares from companies like SpaceX, OpenAI, Anthropic, and Alphabet signals an impending market downturn. Economists at Capital Economics warn that high equity issuance historically preceded bear markets, while Deutsche Bank analysts argue strong market returns typically follow issuance waves.

US producer prices rose 6.5% year-over-year in May 2025, driven by a 23% monthly surge in wholesale gasoline prices linked to the Iran war. Core wholesale prices increased 0.4% monthly and 4.9% annually, with inflation outpacing the Federal Reserve’s 2% target. Energy disruptions from the Strait of Hormuz shutdown threaten to extend supply issues into the third quarter.

U.S. stocks declined as strong jobs data reduced expectations of interest rate cuts, with the Nasdaq, Dow Jones, and S&P 500 all posting weekly losses. The May employment report showed 172,000 jobs added, surpassing forecasts, while inflation concerns and economic indicators like the ISM reports and Beige Book highlighted ongoing challenges.