Applied Materials Slumps on China Demand Slowdown and Tariff Uncertainty

Economic

Summary:

Applied Materials' shares fell over 14% in premarket trading after issuing weak Q4 guidance driven by falling demand from China and rising trade policy risks, raising investor concerns despite a strong Q3 performance....

China Exposure and Policy Risks Weigh Heavily on Outlook

Applied Materials, a leading semiconductor equipment supplier, saw its shares plummet by 14.23% in premarket trading following a disappointing fourth-quarter forecast that underscored mounting vulnerabilities tied to China. The company reported China accounted for 35% of its revenue in the July quarter, highlighting how concentrated its earnings exposure has become in a market now heavily constrained by U.S. export restrictions and broader geopolitical tensions.

The downturn in guidance appears causally linked to deteriorating order activity from Chinese buyers, which is in turn shaped by evolving U.S. technology policy. CEO Gary Dickerson emphasized the “wide-ranging implications” for the global chip sector stemming from uncertain trade dynamics, suggesting that current macroeconomic headwinds are not merely cyclical, but increasingly policy-driven.

Q4 Forecast Misses Despite Solid Q3 Performance

Despite an 8% year-over-year increase in third-quarter revenue to $7.30 billion surpassing the $7.22 billion analyst consensus Applied Materials’ forward guidance disappointed markets. The company projected Q4 revenue of $6.70 billion, plus or minus $500 million, well below the average forecast of $7.33 billion. Profit projections also fell short of expectations.

The guidance miss indicates a sharp deceleration in near-term momentum and reinforces the view that trade policy and regulatory barriers are acting as direct constraints on business continuity. Deutsche Bank analysts described the China-driven volatility as a major impediment to earnings visibility, blending geopolitical uncertainty with cyclicality in a way that makes forecasting more difficult for investors and management alike.

Market Sentiment Reacts to Tariff and Demand Fears

The market response was swift and steep. Shares of AMAT dropped from $188.24 at Thursday’s close to $161.46 in early Friday trading. This sudden selloff reflects a broader fear that policy risks are becoming a dominant force in semiconductor demand planning particularly in China, where government subsidies and state-linked buyers play a major role in driving capital expenditure cycles.

ASML Holding, another key player in semiconductor equipment, had previously flagged similar challenges, suggesting that the drag on orders from China is systemic and likely to persist unless there is a regulatory easing or shift in geopolitical strategy. The correlation between these events across major suppliers strengthens the case for seeing China policy risk as a structural headwind, not merely a temporary drag.

Analysts Urge Caution but See Longer-Term Potential

J.P. Morgan’s Harlan Sur suggested that the order delays from China’s foundry customers may reflect timing rather than underlying weakness. If correct, this interpretation implies a possible recovery in subsequent quarters, should visibility improve. However, that optimism is tempered by the fact that these delays come amid tightening controls on technology exports, not just shifting purchasing cycles.

Applied Materials' stock had gained 15.7% year-to-date before the announcement, outperforming the Nasdaq (+12.5%) and S&P 500 (+10%). This strong performance made the stock more vulnerable to sudden downside adjustments when forward-looking estimates weakened.

Applied Materials’ Q3 beat was not enough to shield the stock from investor concerns about the road ahead. The weak Q4 guidance, especially regarding China, reflects not only demand challenges but the intensifying role of trade policy in shaping capital spending decisions across the global semiconductor ecosystem. While some analysts see the potential for a rebound in orders, persistent export controls and the unpredictable nature of U.S.-China relations suggest that this risk factor may remain embedded in the valuation narrative for some time. The company’s ability to navigate these pressures through geographic diversification, innovation, or political diplomacy will define its medium-term growth trajectory.

Source: Reuters

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Economic

AI Advancements Trigger Sharp Revaluation of European Adopters

The release of GPT-5 and Claude for Financial Services in July has sent shockwaves through European equity markets, particularly among firms labeled as AI adopters those not creating foundational AI models but integrating them into their platforms and services. Rather than benefiting from AI hype as they had over the past year, these companies are now facing investor skepticism about whether they can maintain competitive relevance in the face of rapidly evolving AI capabilities.

This shift has led to a measurable market response. Since mid-July, shares of the London Stock Exchange Group (LSEG) have fallen 14.4%, Sage has declined 10.8%, and Capgemini is down 12.3%. France’s Dassault Systèmes and Germany’s SAP have also seen significant declines, with SAP dropping 7.2% following its worst daily performance since 2020. These losses stand in stark contrast to the broader market, where the FTSE 100 and STOXX 600 rose 2.5% and 0.6%, respectively.

The Valuation Problem: High Multiples, High Expectations

One driving factor behind the volatility is valuation pressure. Many of these AI-adopting firms were trading at high price-to-earnings ratios, leaving little room for uncertainty. SAP, for instance, trades at about 45 times earnings compared to the STOXX 600 average of 17. When future earnings are brought into question by new AI tools threatening to automate or commoditize existing services, such high multiples become unsustainable.

The causal link between AI model development and these valuation adjustments is clear. Each new AI generation significantly outperforms the last, prompting institutional investors to re-examine the structural durability of software and data analytics firms that could be outpaced by faster, cheaper AI solutions.

Rethinking the ‘AI Adopter’ Advantage

Until recently, European companies that integrated AI into their offerings rather than developing foundational models were seen as viable proxies for AI exposure in a region lacking homegrown AI giants. But the debut of tools like GPT-5 and Claude has triggered a reassessment. Analysts like Kunal Kothari at Aviva Investors argue that powerful general-purpose models are beginning to challenge business cases for firms such as LSEG, which had appeared to offer an AI-resilient moat via data services.

The correlation between the timing of new model launches and the steep decline in stock performance supports the argument that fears over business disruption are now pricing in across this sector. While these fears may not be fully realized, they have initiated a market-wide repricing of risk associated with AI integration.

Not All Software Is Created Equal: Workflow Integration as a Defensive Moat

Despite the general downturn, not all software firms face the same exposure. Analysts emphasize that companies with enterprise-grade applications those deeply embedded in client workflows still retain a measure of defensibility. Examples include Experian, cited by Kothari, which benefits from both proprietary credit data and its critical function within financial institutions’ lending operations. Similarly, Sage and other firms offering specialized, hard-to-replace enterprise tools may maintain their footing longer.

This analysis reveals a relationship of conditional resilience: firms with unique, operationally critical data and systems may resist disintermediation, but only to a point. Proprietary data, once seen as an invincible moat, is no longer sufficient by itself. As Kothari notes, AI’s ability to synthesize and replicate insights at scale may erode even these advantages unless companies continuously innovate on integration and service value.

Opportunity Amid Volatility: A New Phase of Selectivity

UBS O’Connor’s Bernie Ahkong frames the current downturn not just as a warning but as an inflection point. The selloff, he argues, presents an opportunity for discerning investors to differentiate between firms that will be disrupted and those that will emerge stronger by leveraging AI effectively.

However, this differentiation requires time and proof. Investors are demanding evidence that AI investments will translate into tangible earnings growth, and they are no longer willing to extend benefit of the doubt based solely on AI association. The market dynamic has shifted from hopeful speculation to performance-based scrutiny.

The swift revaluation of European AI adopter stocks illustrates how fragile perceived advantages can become in a fast-moving technological landscape. While these firms once stood as Europe’s entry point into the AI boom, the arrival of increasingly powerful AI models is now forcing a reset in expectations. The next phase will belong to those able to demonstrate not just AI usage, but AI mastery translating abstract potential into irreplaceable value within client ecosystems. Until then, investor confidence will likely remain tentative.

Source: Reuters

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Economic

Trade Truce Offers Limited Relief Amid Structural Strain

China’s economic performance in July revealed underlying vulnerabilities as short-term boosts from the trade truce with the United States failed to offset broader weaknesses. Although exports surged by 7.2% compared to the previous year, this growth was inflated by a low base and front-loading behavior by manufacturers trying to capitalize on the 90-day pause in U.S. tariffs extended by President Trump. However, this export push appears unsustainable, with signs of tapering now evident in industrial production and fixed asset investments.

The causal link between front-loaded exports and the slowdown in industrial output is becoming clearer. As firms rushed shipments in early months, production growth now lags, reflected in July’s industrial output growth of just 5.7%, a notable drop from 6.8% in June and the lowest in eight months. Fixed asset investment also slowed to 1.6% in the January-July period, compared to 2.8% in the first half, indicating that business confidence and capital expenditure remain subdued.

Real Estate Crisis Continues to Depress Domestic Demand

The persistent downturn in the property sector remains a central drag on China’s recovery. From January to July, property investment fell 12%, while residential investment was down nearly 11%. Prices for newly constructed homes in major cities slipped by 1.1%, a continuation of the housing crisis that began during the COVID-19 pandemic. This decline is not just cyclical but structurally entrenched, as forecasted by Oxford Economics, which expects price stabilization only by 2028.

The effects of this prolonged slump are clearly causal. Since a large portion of household wealth in China is tied to real estate, declining property values have eroded consumer confidence and reduced spending power. The retail sector has been directly impacted, with sales in July increasing just 3.7% a seven-month low compared to 4.8% in June. Despite government stimulus and support for housing completions, consumer behavior has yet to rebound meaningfully.

Labor Market and Deflation Add Further Pressure

The labor market showed renewed strain in July, as the unemployment rate rose to 5.2% from 5.0%, particularly due to a new cohort of university graduates entering the job market. This seasonal effect highlights a recurring annual challenge but also reflects the broader difficulty of job creation amid weak investment and industrial activity.

Meanwhile, price movements signal a deflationary risk. Consumer prices rose a modest 0.4% month-over-month, but wholesale prices dropped 3.6% year-over-year, indicating slack in production capacity and muted demand. This divergence suggests a correlation between the weakening industrial base and the lack of pricing power across supply chains.

While the Chinese economy shows “resilience and vitality,” as the official report describes, July’s data points to deeper issues that go beyond temporary trade fluctuations. The combination of housing market stagnation, industrial deceleration, and soft consumer demand is more than a cyclical blip it reflects structural imbalances that require long-term policy responses. The current trade ceasefire with the U.S. may offer brief breathing room, but unless domestic engines of growth are reactivated through credible reforms and consumer confidence is restored, China’s economic slowdown may persist well beyond 2025.

Source: Reuters

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Cryptocurrency

Forex

Economic

Bitcoin’s price has surged past $121,000 after a 5% weekly climb, putting the spotlight back on the next big market event — the Bitcoin halving.These programmed supply cuts have a history of triggering major price waves, not just for Bitcoin but also for the altcoins riding its momentum.With the next halving set for April 2028, investors are already building watchlists for the best altcoin to buy in 2025 and the top altcoins 2025 that could lead the charge.

The Countdown to Bitcoin’s Next Supply Shock

The fourth Bitcoin halving took place on April 20, 2024, slashing mining rewards from 6.25 BTC to 3.125 BTC per block.This hard-coded event reduced new supply by 50% and reinforced Bitcoin’s scarcity model.The next one — projected for April 4, 2028 at block 1,050,000 — will cut the reward again to just 1.5625 BTC.With around 140,129 blocks left (about 965 days), the market has entered a long build-up phase. Past cycles show that altcoins often outperform in percentage gains when the post-halving bull run kicks in.That’s why traders are already hunting for the best crypto to invest in 2025 — aiming to position before the real momentum begins.

Why This Halving Could Change the Game for Altcoins

Every halving triggers a fresh wave of attention to crypto markets. Bitcoin may lead the headlines, but the fastest moves often happen in smaller, high-growth coins.That’s where opportunities lie for investors looking beyond the big names.

Source: CryptoSlate

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Political

An Evolving Power Play: Trump and Putin Meet Again

The 2025 summit between Donald Trump and Vladimir Putin in Alaska is more than a diplomatic meeting it reflects a decade-long, highly personalized political theatre. The venue itself, once Russian territory, is a carefully chosen symbol by the Kremlin, tapping into Trump’s real estate instincts and Putin’s geopolitical messaging. Their relationship has long oscillated between camaraderie and confrontation, shaped less by formal protocol than by personal calculations and global events.

The Kremlin’s suggestion to hold the summit in Alaska was far from arbitrary. The choice carries layered symbolism: it nods to historical ties while subtly reviving Russian nostalgia. Putin’s aim appears to be both psychological and strategic, using symbolism to negotiate from a position of influence. This setting appeals to Trump’s flair for dramatic visuals and deal-making imagery, enhancing the perceived importance of the meeting and attempting to reset the terms of their engagement on Ukraine.

From Admiration to Frustration: The Changing Tone

During Trump’s first term, his admiration for Putin was evident, calling him a “genius” during the 2022 Ukraine invasion. That tone has shifted. Although their rapport remains informal Putin calls him “Donald” Trump now expresses irritation at Putin’s prolonged tactics and lack of cooperation. This behavioral shift suggests a potential causal relationship between the prolonged Ukraine war and Trump’s cooling enthusiasm. It also highlights how protracted conflict can erode even previously stable alliances, particularly when personal respect gives way to geopolitical impatience.

Their summit history, starting with Hamburg in 2017, reveals a consistent pattern of informal backchannel interactions. The unrecorded hour-long talk at the Elbphilharmonie concert and the impromptu “on-the-fly” exchange in Da Nang in 2017 show a preference for discretion, raising transparency concerns. These instances suggest a correlation between Trump’s distrust of formal diplomacy and his affinity for backroom-style politics. They also expose vulnerabilities in diplomatic accountability, particularly when one leader dominates institutional checks more effectively than the other.

Helsinki 2018: A Turning Point in Political Optics

The Helsinki summit stands as the most politically damaging for Trump domestically. By publicly siding with Putin over US intelligence agencies, he triggered bipartisan outrage. While Moscow celebrated the shift in tone, the backlash at home created a long-term liability for Trump. This incident offers a clear example of cause-effect dynamics: Trump’s perceived deference undermined domestic credibility and shifted US foreign policy narratives toward skepticism of his Russian policy.

Subsequent encounters from Paris to Buenos Aires were marked by unpredictability. Trump canceled planned meetings twice in late 2018, citing Russian military aggression. These decisions, conveyed publicly via social media, contrasted sharply with earlier warm rhetoric. The Kremlin was caught off guard, illustrating a shift in Trump’s diplomatic calculus. While the public framing cited policy concerns, underlying motivations may include increased domestic scrutiny and the Mueller investigation’s shadow.

Osaka 2019: Light Jokes in the Shadow of Mueller

By mid-2019, the political climate was further complicated by the release of the Mueller Report. Trump and Putin met again in Osaka, with their on-camera banter “Don’t meddle in the election” appearing unserious to many observers. Despite the levity, the context of this meeting reflected heightened legal and political pressures, showing a correlation between investigative oversight in the US and Trump’s performative diplomacy abroad.

Putin’s invitation to Trump for the 75th WWII anniversary was never accepted, partly due to the pandemic and Trump’s election loss. The global health crisis and domestic political upheaval disrupted diplomatic continuity. Putin’s extended isolation during this period likely contributed to his hardened stance toward the West, a development that created a backdrop of deepened hostility by the time of the Alaska summit. This illustrates how exogenous shocks like pandemics can indirectly shape long-term geopolitical strategies and realign diplomatic priorities.

Despite surface-level warmth, the Trump-Putin relationship is fundamentally transactional. Both leaders have used each other to project strength domestically and internationally, but their goals often diverge. The Alaska summit is not a culmination of trust but a convergence of necessity. Trump seeks a legacy-defining foreign policy breakthrough, while Putin aims to leverage symbolism and disruption to regain footing. Their shared preference for optics over institutions continues to define a volatile, consequential dynamic.

Source: Bloomberg

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Economic

Commodity

Market Poised for Potential Supply Shock

Oil prices were little changed as investors positioned for the outcome of the long-anticipated meeting between US President Donald Trump and Russian President Vladimir Putin. The discussions could carry significant implications for Russia’s role in global oil flows, given its status as the world’s second-largest crude exporter after Saudi Arabia. Any easing or tightening of Washington’s sanctions on Moscow could directly alter export volumes, with knock-on effects for international benchmarks.

Russia’s wartime reliance on discounted sales to China and India has created a trade flow pattern that diverges sharply from pre-war norms. This has been reinforced by Western restrictions designed to limit Russia’s access to energy revenues. Trump recently doubled tariffs on Indian goods to 50% as a penalty for New Delhi’s purchases of Russian crude, signaling a willingness to weaponize trade policy to influence oil markets. However, China remains untouched by such measures, reflecting concerns that broader sanctions could trigger an oil price spike damaging to US consumers.

Geopolitics and Market Sentiment

Putin praised Trump’s efforts toward ending the Ukraine conflict, though Trump placed the probability of success at just 25%, tempering expectations for an immediate breakthrough. Analysts suggest that while a direct ceasefire remains unlikely, even incremental progress in US-Russia cooperation could introduce a framework for follow-up talks, potentially exerting a downward influence on prices if geopolitical risk premiums recede. This connection between diplomatic developments and price direction underscores the sensitivity of oil to perceived stability in supply routes.

Oil has already lost around 10% this year, reflecting concerns about weaker demand tied to Trump’s trade policies and the swift return of OPEC+ barrels to the market. Expectations of a record supply glut in 2026 have also weighed on sentiment, potentially giving Trump leverage in negotiations with Putin. The interplay here is largely causal: anticipation of excess supply reduces forward prices, thereby enhancing the bargaining power of consuming nations.

Short-Term Trading Dynamics

With the summit set to begin at 3 p.m. New York time and oil trading closing just two hours later, meaningful market reactions are unlikely until the Asian session opens on Monday. The light trading volumes in Brent contracts during Asian hours well below daily averages indicate that traders are holding back until concrete signals emerge from the talks.

The next trading week may bring sharper moves depending on summit outcomes. A cooperative framework or sanctions adjustment could shift the market balance and either tighten or loosen expected 2026 supply conditions. Conversely, if discussions stall, existing sanctions and trade tensions will likely continue to shape oil’s trajectory, with geopolitical uncertainty maintaining its role as a primary driver of price volatility.

Source: Bloomberg

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Economic

Commodity

Inflation Data Shifts Fed Rate-Cut Expectations

Gold hovered near $3,340 per ounce after falling 0.6% in the previous session, pressured by a US wholesale inflation report showing the sharpest annual acceleration in three years for July. This data pushed bond yields and the US dollar higher, undermining gold’s appeal as a non-yielding asset priced in dollars. The relationship here is direct: higher yields and a stronger currency typically reduce gold’s relative attractiveness to investors seeking returns.

Earlier in the week, swap markets fully priced in a September Federal Reserve rate cut. However, post-data, the probability fell to around 90%, reflecting reduced confidence. Gold usually thrives in a lower-rate environment as borrowing costs drop and the opportunity cost of holding the metal diminishes, meaning the shift in expectations has exerted downward pressure.

Performance and Long-Term Drivers

Despite this week’s weakness, gold remains one of the best-performing major assets in 2025, up more than 25% year-to-date, with most gains occurring between January and April. The price surge has been driven by safe-haven demand amid persistent geopolitical and trade tensions, as well as robust central bank buying. These factors have had a reinforcing relationship with gold’s price: heightened risk prompts investor inflows, while sustained official sector purchases add structural support.

Attention now turns to the Alaska summit between US President Donald Trump and Russian President Vladimir Putin. Trump has warned of “very severe consequences” if Putin rejects a Ukrainian ceasefire proposal. If tensions escalate, the resulting uncertainty could spur renewed safe-haven flows into gold. Conversely, a breakthrough could ease geopolitical risk premiums, limiting upside momentum.

Market Technicals and Price Dislocation

Recent confusion over potential US tariffs on gold bars caused a temporary surge in the premium for New York futures over London spot prices. Trump’s subsequent statement that no levy would be imposed narrowed this gap, although formal policy clarification is still awaited. Spot gold in Singapore rose 0.2% to $3,342.68 an ounce as of 2:42 p.m. local time, but remains on track for a 1.6% weekly decline. The Bloomberg Dollar Spot Index eased 0.2%. Silver and palladium were steady, while platinum posted modest gains.

While short-term sentiment has softened due to inflation data and shifting Fed expectations, the broader backdrop of geopolitical uncertainty and continued central bank accumulation keeps gold’s medium-term outlook resilient. Price movements in the coming week will likely hinge on the Alaska summit’s outcome and whether inflation pressures persist enough to delay monetary easing. A sustained break below current levels could test investor conviction, but any flare-up in political or trade tensions may quickly reassert upward momentum.