Investing In Space: Made In Russia

Winkelmann

Economic

Forex

Political

Summary:

Smartphone enthusiasts can pick up fresh gear nearly every year — rocket aficionados usually face a longer wait.

Overview: Made in Russia

Smartphone enthusiasts can pick up fresh gear nearly every year — rocket aficionados usually face a longer wait.For watchers of Russia-made launch vehicles, the clock's now ticking down until December, when Moscow-headquartered state space agency Roscosmos still intends to carry out its first test launch of the Soyuz-5 rocket."Yes, we have plans for December, everything remains in force," the Roscosmos Head Dmitry Bakanov said Aug. 22, according to Russian state news agency Tass.

The rocket, which is expected to become fully operational in 2028, is unlikely to shock by way of novelty. A decade in the making under the development name "Feniks" and popularly known as Irtysh, the Soyuz-5 is widely viewed as a medium-class launch vehicle that reincarnates the Ukraine-manufactured Zenit-2 rocket.

Moscow plans for the all-Russian Soyuz-5 to be the latest member of Russia's workhorse Soyuz rocket family. It will be equipped with RD-171MV engines built by NPO Energomash, which former Roscosmos chief Dmitry Rogozin praised as having "no equals in the world in terms of power" back in 2019. Powered by kerosene and liquid oxygen, the Soyuz-5 will be able to balance a roughly 17-ton payload.

If it meets the December deadline, the Soyuz-5 test launch will be no small feat for Roscosmos, which has faced funding shortages since the February 2022 start of Russia's invasion of Ukraine. The space agency had lost 180 billion rubles ($2.24 billion) by August 2024 and planned to put up non-core assets worth more than 11.4 billion rubles up for sale to shore up its activities.

The war in Ukraine marked a turning point for Russia's space sector. The European Space Agency severed ties with Roscosmos in 2022, ending the two institutions' partnership over the ExoMars rover mission and further lunar ventures. The breaking of ties also initially raised question marks over Moscow's continued cooperation to maintain the International Space Station. Critically for the Soyuz line, the dissolution of this relationship also saw Roscosmos pull out from the ESA space center in Kourou, French Guiana — the pad for 27 Soyuz launches, which carried the likes of OneWeb and Galileo satellites between 2011-2022.

Since then, Roscosmos has switched gears and is looking to launch the Soyuz-5 from Kazakhstan's Baikonur Cosmodrome, which Astana is trying to leverage to kick start its own space industry and attract foreign operators and investment. The Russian space agency, which has been using the Baikonur facility since shortly after the collapse of the Soviet Union, is paying Kazakhstan $115 million annually to lease the complex until 2050.

Getting a new rocket model to the launch pad and off the ground is no easy feat. The heavily mediatized successes and explosive failures of SpaceX's test flights of its giant Starship — which pulled off a successful 10th trial launch this week, after a series of fiery setbacks earlier in the year — show as much. Chinese firm Landspace is also targeting an orbital debut for the Zhuque-3 by the end of the year.

Russia itself test launched its first post-Soviet era rocket model, the Angara-A5, in June last year, following two aborted launch attempts. But as the space industry increasingly progresses toward more cost-effective reusable rockets, the real test for Russian innovation will come once Moscow completes development of the Soyuz-7, known as the Amur-SPG — a methane-fueled launch vehicle, intended as a more cost-effective substitute to Russia's workhorse rocket Soyuz-2. Its first stage is designed to be reused up to 50 times. As of January, Roscosmos is expected to finalize the rocket by 2030, with its launch site under construction at Russia's Vostochny Cosmodrome.

What's up

● India locks in on space as future of security — New Delhi sees space as the future of economic and security growth and cannot afford to be outpaced in these ventures, India's Defense Minister Rajnath Singh said. — Times of India

● Poland sees through first ISS mission — Defence24 explores Poland's first venture to the International Space Station, after Polish scientist Sławosz Uznanski-Wisniewski took part in the Ax-4 mission over the summer. —Defence24

● Scientists urge action against space launch air pollution — Scientists are calling for global action to address air pollutants resulting from space take-offs, after discovering that the launches of mega-constellation communication satellites have caused a threefold hike in emissions of carbon dioxide and soot. —The Guardian

● Outcome of UK space agency's merger with science department unclear — The U.K. Space Agency is being absorbed by the Department for Science, Innovation and Technology (DSIT) in a bid to cut red tape — but it remains to be seen whether the process will resolve any of the chronic setbacks encumbering the U.K.'s space policy. — The Conversation

Industry maneuvers

● New rocket plans surface as China targets space expansion — China's state-owned and private rocket makers are setting sights on further launch vehicles, as Beijing continues to progress its lunar and space exploration ambitions. — Space News

● Space solar panels could supply most of Europe's renewable energy within 25 years —Solar panels set in space could provide up to 80% of Europe's renewable energy by 2050, according to a new study from researchers at King's College London. — The Independent

● The U.S.-SpaceX relationship — Now valued at $400 billion, Elon Musk's SpaceX has become a critical instrument in the U.S.' ongoing space access and broader lunar and Mars ambitions. — CNBC

● China's private space sector gains momentum – China's commercial space companies have picked up pace over the last decade as a key pillar of Beijing's hopes to beat out Washington in a new space race. — International Institute for Strategic Studies

Market movers

● SpaceX makes comeback with Starship test launch after fiery setbacks — SpaceX launched its giant Starship rocket, breaking a string of explosive failed attempts earlier this year and deploying a first batch of dummy Starlink satellites. — CNBC

● Avio and Isar Aerospace clinch ESA launch contracts — Isar Aerospace and Avio have won launch service contracts under the European Space Agency's Flight Ticket Initiative and will support the ISISPACE Cassini and Infinite Orbits Tom & Jerry missions, which are expected to take place after 2026. — European Spaceflight

● Blue Origin stands down from New Shepard launch — Blue Origin canceled a launch this week to troubleshoot an issue with the New Shepard rocket's booster avionics. The New Shepard was set to undertake the NS-35 mission out of West Texas. — Spectrum News

● Firefly says flow separation issue behind Alpha launch failure — Firefly Aerospace has closed the investigation surrounding Alpha Flight 6's failure in April, when the rocket's first-stage booster came apart within moments of separation. — Payload

Source: CNBC

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Adam

Economic

U.S. stock futures slipped slightly lower Friday ahead of the release of the Federal Reserve’s most-watched inflation gauge. There are also inflation numbers in Europe to digest, while the Trump administration has ended its "de minimis" exemption.

Key inflation release due

Investors will focus on the release of the U.S. personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, later in the session, as they seek more clarity on the path for interest rates for the rest of the year.

Expectations are for the core PCE to have stayed steady at 0.3% on a monthly basis, putting the annual rate at 2.9%.

However, there is the risk the data may reveal more evidence of U.S. President Donald Trump’s sweeping tariffs filtering into consumer prices, following a recent upside surprise in producer inflation.

The Fed lowered its policy rate by a full percentage point last year, but has held rates steady this year, citing worries that Trump’s higher tariffs could reignite inflation that is still running above the Fed’s 2% goal.

Expectations are rife this stance is set to end in September with a 25-basis-point cut, though what happens after that remains uncertain.

Fed Governor Christopher Waller said on Thursday he wants to start cutting rates next month and "fully expects" more rate cuts to follow to bring the Fed’s policy rate closer to a neutral setting.

Waller and Fed Governor Michelle Bowman both dissented from the Fed’s decision to keep short-term borrowing costs unchanged in July.

Both were appointed by Trump and are said to be under consideration as possible successors to Fed Chair Jerome Powell, amid market concerns of the politicisation of the central bank.

Trump earlier this week announced he was firing Fed Governor Lisa Cook over what he said was possible mortgage fraud, a move Cook says is illegal and is suing to stop.

U.S. futures slip lower

U.S. stock futures slipped marginally lower, but remained on course for healthy monthly gains ahead of the release of important inflation data.

At 03:20 ET (07:20 GMT), the S&P 500 futures traded 5 points, or 0.1%, lower Nasdaq 100 futures dropped 35 points, or 0.1%, and Dow futures fell 80 points, or 0.2%.

The major indices enjoyed a winning session on Thursday, with the S&P 500 closing up 0.3% at an all-time high. The NASDAQ Composite added 0.5%, while the Dow Jones Industrial Average ended the day up about 0.2%, also a new record.

They are also all on track for solid monthly gains, with the 30-stock Dow having logged a 3.4% advance so far in August. The S&P 500 is up 2.6% so far this month, and the tech-heavy Nasdaq has gained 2.8%.

Investors will focus on key inflation data later in the session, with the release of the July personal consumption expenditures index [see above].

Investors will also digest results from the likes of Ulta Beauty, Ambarella and Affirm Holdings.

Trump administration ends "de minimis" exemption

The Trump administration on Friday ended U.S. duty-free imports of packages worth less than $800, the so-called "de minimis" exemption that has fueled a surge in shipments from global sellers to U.S. consumers.

President Donald Trump announced on July 30 the repeal of duty-free treatment of parcels from every country effective a month later, saying the exemption has enabled traffickers to easily send parcels containing fentanyl into the country.

However, the de minimis exemption enabled a cross-border ecommerce surge, with 1.36 billion shipments arriving under de minimis with a declared value of $64.6 billion in fiscal 2024.

According to U.S. government data, about 73% of de minimis packages entering the U.S. originated from China in 2024.

U.S. consumers are now likely to face higher prices, with the tariffs makng shipments to the U.S. from overseas retailers more expensive, unless the sellers absorb the tariff costs.

ECB looks for inflation clues

There are also important inflation numbers due in Europe during the session, with preliminary French, Spanish and German consumer prices in the spotlight.

The European Central Bank left its key rate at 2% at its July meeting, and data since then has confirmed the eurozone economy was holding up while inflation hovered at the ECB’s 2% target.

ECB policymakers are widely expected to hold rates unchanged again in September, but the minutes from the July meeting showed that they were divided on whether inflation was more likely to come in higher or lower moving forward, a foretaste of a debate set to come to a head in the coming months.

A key element generating uncertainty is the impact of the U.S. tariffs on the European economies, after the Trump administration announced the imposition of 15% duties on EU goods imports.

The ECB policymakers acknowledged this uncertainty "would remain a key feature of the global and euro area economic outlook for some time to come", but they disagreed on how big its impact would be on the economy.

Crude set for weekly gain, monthly loss

Oil prices slipped lower, but are set for a weekly gain, as traders weigh uncertainty over Russian supply as well as the proximity to the end of the important U.S. summer driving season.

At 03:20 ET, Brent futures slipped 0.7% to $67.54 a barrel, and U.S. West Texas Intermediate crude futures fell 0.7% to $64.12 a barrel.

Both contracts are on course for weekly gains of just under 1%, with prices gaining after Ukrainian attacks on Russian oil export terminals raised doubts about Russian supply, while the lack of a meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky raised doubts about the peace process.

However, the end of the U.S. summer driving demand period with the Labor Day holiday on Monday have weighed on prices.

On a broader scale, both contracts are set for monthly losses of over 6%, dragged by steady production hikes by the Organization of the Petroleum Exporting Countries.

Source: Investing

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Glendon

Economic

Forex

U.S. consumer spending increased solidly in July while underlying inflation picked up as tariffs on imports raised prices of some goods, but that data will probably not prevent the Federal Reserve from cutting interest rates next month against the backdrop of softening labor market conditions.

Consumer spending, which accounts for more than two-thirds of economic activity, rose 0.5% last month after an upwardly revised 0.4% gain in June, the Commerce Department's Bureau of Economic Analysis said on Friday. Economists polled by Reuters had forecast spending would rise 0.5% after a previously reported 0.3% advance in June.

Consumption is being supported by low layoffs that are underpinning solid wage growth. But President Donald Trump's sweeping tariffs on imports are raising costs for businesses, adding another layer of caution that has resulted in employers being reluctant to increase headcount.

Employment gains have averaged 35,000 jobs per month over the last three months through July compared to 123,000 during the same period in 2024, the government reported this month.

A survey from the Conference Board on Tuesday showed the share of consumers viewing jobs as "hard to get" jumped to a 4-1/2-year high in August. Fed Chair Jerome Powell last week signaled a possible rate cut at the U.S. central bank's September 16-17 policy meeting, in a nod to increasing labor market risks, but also added that inflation remained a threat.

The Fed has kept its benchmark overnight interest rate in the 4.25%-4.50% range since December. High prices from import duties have been slow to feed through to inflation as businesses are still selling stocks accumulated before the tariffs kicked in. Businesses have also been absorbing some of the costs.

Economists expect that situation will soon change. There was an inventory drawdown in the second quarter. Companies from retailers to motor vehicle manufacturers have warned that tariffs were raising their costs, which economists expect would eventually be passed on to consumers.

The Personal Consumption Expenditures (PCE) Price Index increased 0.2% last month after an unrevised 0.3% rise in June, the BEA said. In the 12 months through July, the PCE Price Index rose 2.6%, matching the gain in June.

Excluding the volatile food and energy components, the PCE Price Index increased 0.3% last month, matching the rise in June. In the 12 months through July, the so-called core inflation figure advanced 2.9% after increasing 2.8% in June.

The Fed tracks the PCE price measures for its 2% inflation target.

Source: Yahoo Finance

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Michelle

Economic

Forex

The Canadian economy contracted for the first time in nearly two years as the trade war with the US pinched exports and business investment.

Canada’s gross domestic product shrank at a 1.6% annualized pace in the second quarter, Statistics Canada reported Friday from Ottawa. That’s the biggest decline since the Covid-19 pandemic and the first contraction in nearly two years.

While roughly in line with the Bank of Canada’s forecasts, it’s a worse print than was expected in a Bloomberg survey of economists, which had forecast a 0.7% decline.

The loonie tumbled to a session low versus the US dollar after the report, trading at C$1.3770 as of 8:35 a.m. in Ottawa. Canadian debt rallied across the curve, with the two-year yield falling to 2.66%.

Exports fell 27% on an annualized basis as US tariffs on Canadian goods shattered the country’s shipments abroad. That more than reversed a temporary first quarter boost in trade activity that was driven by shippers trying to front-run President Donald Trump’s tariff barrage. Imports declined 5.1%.

Business investment contracted 10.1% after rising just 1.1% in the first quarter, highlighting the mounting pessimism facing Canadian firms as they contend with the uncertain and constant changes to US levies and policy.

The data capture the severe damage inflicted by the trade war, which started earlier in 2025 as Trump threatened and then imposed tariffs on imports of many Canadian products, including on steel, aluminum, autos and other goods. The US is Canada’s largest trading partner.

At the same time, the report shows some evidence that the trade damage isn’t rapidly creeping through the broader economy.

On a monthly basis, preliminary industry-level data suggests Canada’s economy expanded 0.1% in July, after unexpectedly contracting 0.1% in June, the statistics agency said. There are some signs of strength in final domestic demand, which rose 3.5% in the second quarter, driven by a 4.5% increase in household consumption — an acceleration despite a major slowdown in population growth.

At the same time, the resilience of households is likely to be tested in coming months. Disposable income rose just 1.3% in the three months between April and June, the weakest growth in more than two years, likely reflecting persistent looseness in the country’s labor market.

The data also show Canadian firms are still adding to their stockpiles despite the subdued export demand from the US — inventory investment rose about C$19 billion in the second quarter, the most since 2022, when the country’s firms were putting more wares aside amid snarled supply chains.

General government expenditure rose 5.1%. Investment in residential structures rose 6.3%.

Bank of Canada officials said they’re open to further rate reductions if the economy weakens and price pressures are contained. Their next decision is on Sept. 17.

Before the release, traders in overnight swaps put the odds off a rate cut at the next meeting at about 40%. The policy rate is 2.75%.

At around 5% to 7%, the effective tariff rate that the US imposes on imports of Canadian goods remains among the lowest in the world. That’s because of a carve-out for goods that cross the border under the USMCA, the trade treaty between Canada, the US and Mexico that will be renegotiated in coming years.

Source: Bloomberg Europe

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Adam

Economic

Asia Market Wrap - China Stocks Continue to Rally, Goldman Increases CSI300 forecast to 4900

Asian stocks went up a little on Friday, following a good day for tech companies on Wall Street. Markets in Asia also had a good day, with the main Asia-Pacific stock index (excluding Japan) going up by 0.26%. In China, the tech-focused STAR 50 Index dropped by 3% after a big jump of more than 7% the day before.

Shares of the Chinese chip company Cambricon Technologies fell by more than 7% because the company had warned investors on Thursday that its stock price had risen too quickly since late July. Despite this, China's CSI300 index for top companies went up by 0.5%, and Hong Kong's Hang Seng Index rose by 0.8%. However, Japan's Nikkei index went down by 0.33%.

China's stock market is expected to have a record amount of trading this month, which shows how strong the current stock market surge is. This "bull run" is attracting many new investors every day. Even with concerns about the economy from US tariffs and a major property issue, and despite banks and regulators suggesting they might try to slow things down, there is a lot of excitement in the Chinese market.

In light of this positive trend, experts at Goldman Sachs raised their prediction for where the CSI 300 Index will be in 12 months, changing their forecast from 4,500 to 4,900.

European Open - Inflation Data in Focus

European stocks dropped slightly on Friday as investors waited for new economic information from Europe and a major US inflation report. These reports could give hints about when interest rates might be lowered in both regions.

The STOXX 600 index was down 0.2% and was on track for its first weekly loss in a month. This week, worries about a possible collapse of the French government and questions about the independence of the US Federal Reserve have put pressure on the stock market.

Recent data showed that consumer prices in France went up a bit less than expected in August. Later today, investors will be focused on new figures from Germany and the U.S. personal consumption expenditures report. In other news, shares of the French spirits company,

Remy Cointreau, went up by 1% after the company said a new trade agreement between the US and the EU would reduce the negative effect of US tariffs on its products.

On the data front, Inflation in France, Spain, and Italy came in slightly below forecasts, at 0.8%, 2.7%, and 1.7% respectively.

On the FX front, the euro's value stayed the same at $1.1677, while the British pound dropped slightly to $1.3474. Despite these small changes today, both currencies are set to have a good month, gaining more than 2% against the dollar. The dollar's value against the Japanese yen remained stable at 146.975 yen.

Elsewhere, the New Zealand dollar became a little stronger after the chairman of New Zealand's central bank, Neil Quigley, resigned. His resignation was due to controversy over how the central bank's governor had suddenly quit earlier in the year.

Meanwhile, China's currency, the yuan, reached its highest value against the dollar in 10 months. This is happening because China's central bank has kept its currency fixings stable and because of a booming stock market in China.

On the other hand, the Indian rupee fell to its lowest value ever, due to concerns about how new, high tariffs from the U.S. will affect India's economy.

Currency Power Balance

Oil prices dropped on Friday, but they are still on track to end the week higher. The market is being pulled in two different directions: there's uncertainty about how much oil Russia will supply, but there are also expectations of lower demand as the summer driving season in the U.S., which uses the most fuel, is ending soon.

For the day, the price of Brent crude oil for October delivery went down by 36 cents to $68.26, and the more popular November contract slid 29 cents to $67.69. The price of West Texas Intermediate crude oil also fell by 28 cents to $64.32.

Even with today's drop, Brent crude is expected to finish the week with a 0.8% gain, and WTI is set to rise by 1%.

Gold prices went down a little bit on Friday, but they're still on track to increase for the month. This is happening as people wait for new U.S. inflation data, which will give more hints about when the Federal Reserve might cut interest rates.

The price of gold was down 0.1% at $3,414.07 per ounce. In August, gold went up by 3.6% and reached $3,423.16 on Thursday, which was its highest price since July 23rd.

German Unemployment at Highest Level in 10 Years

For the first time since 2015, the number of unemployed people in Germany has gone above three million, showing how a long period of economic struggles is finally hurting the job market. This three-million figure is seen as a key point that separates a strong job market from a weak one.

The new data shows that the number of unemployed people in Germany increased by 45,700, bringing the total to 3.025 million. Although the number of unemployed people adjusted for seasonal changes actually went down slightly, the overall increase is part of a longer trend. Since hitting a low in May 2022, unemployment has been steadily rising because the economy has been struggling for over five years. This is a classic example of how a weak economy eventually leads to a weaker job market.

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the European session has been busy with a bevy of inflation data. We still wait on German inflation data which will be released a bit later in the day.

The US session is key today as markets brace for the Feds preferred inflation gauge, the US PCE data release. I do anticipate a 0.3% increase for the month, which is what most experts are predicting. If the increase is slightly higher, it could cause the dollar to go up a little, but it's unlikely to change the strong expectation that the Fed will cut interest rates in September. This is because of the recent reassuring comments made by Fed Chair Powell at Jackson Hole.

For now, the dollar's value (measured by the DXY index) will likely stay around its 50-day average of 98.0, even though there's still a chance it could drop further.

Chart of the Day - FTSE 100

From a technical standpoint, the FTSE 100 has finally broken below the neckline of the head and shoulder pattern which has been developing this week.

The index has fallen about 50 points already since the neckline break and is trading below the 100-day MA. A brief bounce has taken place but the possibility of another 50-60 point drop toward the 200-day MA could materialize.

Support is immediately provided by the 9180 handle before the 200-day MA at 9136 becomes the area of focus.

FTSE Four-Hour Chart, August 29. 2025

Source: marketpulse

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Warren Takunda

Stocks

London stocks had fallen further by midday on Friday, with banks under the cosh after a think tank raised the possibility of a potential windfall tax on the sector, as investors eyed the latest US PCE inflation numbers.

The FTSE 100 was down 0.3% at 9,193.59.

Russ Mould, investment director at AJ Bell, said: "The UK stock market ended the week on a sour note amid suggestions that the government could help to fill its fiscal hole with a new tax on the banking sector.

"Some of the biggest names in the FTSE 100 are lenders so if they’re out of favour on the stock market, it acts as a drag on the whole UK blue-chip index.

"NatWest, Lloyds and Barclays were the FTSE 100’s biggest fallers on Friday morning as investors wondered if the era of bumper profits, dividends and buybacks is now under threat.

"These companies have enjoyed a strong run on the stock market in recent years, and they’ve also played an important role in lending money to small and large businesses which helps to create jobs and support the UK economy.

"The timing of the tax debate, fuelled by a report from think-tank IPPR, is unfortunate given it coincides with a new poll from Lloyds suggesting a rise in business confidence, despite cost pressures. This positive sentiment could be threatened if businesses take the view that a new tax on banks might force lenders to tighten their lending criteria."

Away from banks, engineering and consulting business Wood Group was in focus after selling its transmission and distribution division in North America as it sheds non-core businesses ahead of its possible takeover by Sidara.

North America T&D, which provides power infrastructure engineering for substations, transmission, distribution and renewable generation across Canada and the US, is being sold to Qualus for $110m.

Investors were also mulling the latest Lloyds Business Barometer, which showed that business confidence rose in August despite a drop in economic optimism.

The index of business confidence ticked up two points to 54% this month, marking the fourth consecutive monthly increase.

Economic optimism edged down for the first time since April, however, with a three-point decline to 44%, but it remains above the long-term average of 19%.

Lloyds said the increase was driven by a five-point rise in businesses confidence in their trading prospects to 63 - the highest level since 2014.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: "This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy.

"Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies. Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months."

Looking ahead to the rest of the day, attention will turn to the US PCE numbers for July, due at 1330 BST.

Mould said: "Inflation data will take centre stage later today across the pond. The core PCE price index is the Federal Reserve’s preferred method of measuring inflation in the US economy. The consensus forecast is for inflation to stay level at 0.3% month-on-month for July.

"Fed chair Jerome Powell has already indicated that the central bank has had a slight shift in thinking, with the market now expecting an 85% chance of a 25-basis point interest rate cut at September’s meeting. Today’s inflation figure will play a crucial role, alongside jobs data, in determining whether the Fed cuts at this meeting, and if so, by how much."

Source: Sharecast

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Adam

Stocks

MARKET WRAPS

Stocks in Europe fell Friday ahead of the July edition of the Federal Reserve's preferred inflation measure, the personal-consumption expenditures index.

In the U.K. reports of another tax increase to shore up the country's finances were weighing on financial stocks, putting pressure on banking shares .

"The drip feed of potential tax rises to be included in this budget have dominated the papers this month, however, so far, the FTSE 100 has been resilient," XTB said.

Yet, it now seems the Treasury Chief was going after the index's big hitters like banks, it added, which could weigh on the index ahead of the autumn budget.

In contrast, European defense stocks climbed as underlying political risks and structural shifts toward higher defense spending remained compelling for long-term investors, Deutsche Bank said.

Although hopes for a cease-fire in Ukraine dampened enthusiasm for the sector, valuations have moderated slightly from their June high and remained elevated.

"Less U.S. commitment to fund European defense needs, new NATO targets involving European re-armament and ongoing tensions in the Middle East and Eastern Europe should provide sustained demand in the longer term."

Stocks to Watch

AXA' s recent share-price fall was overdone and offers an opportunity, Berenberg said.

"With its strong solvency and broad geographic diversification, it is well-placed to face any challenges."

The risk-reward balance in Schaeffler AG shares seemed attractive going into the company's capital markets day mid-September, Citi said as it raised its recommendation on the stock to buy from neutral and increased the target price to 6.75 euros from 5.00 euros.

Swedbank's consolidation of Entercard was set to lift consensus estimates for net interest income and fees, Citi said separately.

U.S. Markets:

Stock futures edged lower ahead of the release of the PCE index.

In addition, a judge is expected to rule this morning on Fed governor Lisa Cook's bid for a temporary restraining order against Trump.

Cook sued Trump on Thursday, seeking to block him from firing her from the central bank.

Results from Chinese e-commerce giant Alibaba are due this morning.

Forex:

The dollar rose modestly after Fed Governor Christopher Waller said he didn't believe a jumbo rate cut was necessary in September.

Waller said Thursday he would support a 25 basis-point cut but felt that a 50 basis-point move was unwarranted based on current data.

The comments came after U.S. economic growth data were revised higher Thursday.

Meanwhile, U.S. core personal consumption expenditures price data, should remain too elevated to support a larger imminent rate cut, Commerzbank said.

The "downside potential for the dollar is likely to remain limited for the time being."

Bonds:

SEB expected downtrend is expected in Treasury rates, with Fed rate cuts--rather than fiscal concern--to be key for markets in the coming quarters.

"Historical patterns suggest that downside to bond yields may prevail throughout the easing cycle, which may extend until next autumn."

Barclays sees two-sided risks to its year-end target of 2.75% for 10-year Bund yields.

"We feel Bunds are primarily reliant on bullish impulses from abroad, whereas domestic factors continue to create a grind towards higher yields with the European Central Bank's wait-and-see approach."

In the short term, the tug of war between bullish and bearish factors is likely to leave Bunds in their recent range, albeit with a further upward drift, it added.

SEB said the 10-year Bund yield was expected to trade in the 2.60%-2.80% range through the autumn before rising to 3% next year.

Commerzbank recommended tactical longs if the 10-year Bund yield rises above 2.70%.

Dutch pension reform has seen their government bond yield curve steepen more than other eurozone countries year to date, Barclays said.

Energy:

Oil prices slipped but remained on track for a modest weekly gain, as traders balanced concerns over softer demand heading into the fall and risks of disruption to Russian supplies.

Both benchmarks settled higher in the previous session, supported by Ukraine's attacks on Russian energy infrastructure and German Chancellor Friedrich Merz reportedly saying direct talks between Russia's Vladimir Putin and Ukraine's Volodymyr Zelensky wouldn't happen.

"The lack of progress towards a peace deal means risks of sanctions and secondary tariffs continue to hang over the oil market," ING said.

However, growing fears of a looming supply glut later this year are clouding the market's outlook, capping price gains despite a higher geopolitical-risk premium. #

Gas

European gas prices were set for a weekly loss of more than 6%, as the region continued to replenish its inventories despite lower Norwegian flows due to maintenance works.

"Europe is heading into the winter better prepared than predicted a few months ago," ANZ said.

"Fuel storage sites are more than 76%, putting them on track to reach 80% within a month, a level they are legally required to meet by November 1."

Prices were also supported by increased availability of LNG cargoes as China scales back its imports amid ample domestic supplies.

Metals:

Gold futures inched lower but were on track to end the week significantly higher on mounting expectations of a September U.S. rate cut.

The medium-term outlook for gold is cautiously positive, though short-term gold prices may fluctuate sharply on economic data,

Aluminum

Aluminum prices rose as producers warn of supply constraints in the base metal.

Beijing has capped aluminum smelting capacity to rein in power consumption and emissions, ANZ said.

EMEA HEADLINES

Inflation Shows No Sign of Accelerating in France, Spain as ECB Mulls Next Steps

Annual inflation showed no signs of picking up pace in two of the eurozone's largest economies, maintaining a slim possibility of a fresh cut to interest rates at next month's European Central Bank policy meeting.

French consumer-price inflation, harmonized to European Union standards, was 0.8% in August, slowing from a 0.9% annual rate in July, figures from France's statistics agency showed Friday. The continued easing in price rises in the eurozone's second-largest economy takes annual inflation further below the 2% level ECB policymakers consider optimal. That represents "a glimmer of hope for ECB doves," Pantheon Macroeconomics' Claus Vistesen wrote.

E.U. to Scrap Duties on U.S. Industrial Goods as It Scrambles to Soften Auto Tariff Blow

The European Union will move to eliminate all tariffs on U.S. industrial imports and expand access for American farm products, part of an effort to shield European automakers from steeper duties on their exports to the U.S.

The proposals follow a joint statement last week in which Brussels and Washington agreed to cut levies on European autos to 15% from a provisional rate of 27.5%. In return, the EU committed to lowering tariffs on a range of U.S. goods.

Europe Moves to Reimpose Sanctions on Iran for Nuclear Work

BERLIN-The U.K., France and Germany moved to reimpose all the international sanctions on Iran that had been lifted under the 2015 nuclear deal, a decision that European governments hope will compel Tehran to resume nuclear negotiations with the Trump administration.

The European countries said they had triggered the so-called sanctions snapback because of Iran's broad breaches of the terms of the 2015 deal. The U.S. left the agreement in 2018 but the three European countries, Iran, Russia and China remained part of it.

GLOBAL NEWS

Trump Leans on National Security to Justify Next Wave of Tariffs

The Trump administration plans to expand national-security tariffs on steel, aluminum and a variety of other industries in coming months in hopes of redirecting production in these sectors to the U.S. and thwarting potential legal threats in the trade war.

Tariffs on steel and aluminum were expanded this month, covering more than 400 new product lines with 50% levies and increasing compliance costs for companies. Those charges will likely be broadened further, along with expansions of existing tariffs on copper and automotive parts.

New Trial Ordered for Three Former Police Officers in Death of Tyre Nichols

A Tennessee judge has ordered a new trial for three former Memphis police officers previously convicted of federal charges in the beating death of Tyre Nichols, after their lawyers argued the judge who handled their trial was biased against them.

U.S. District Judge Sheryl Lipman on Thursday ordered the new trial for Tadarrius Bean, Demetrius Haley and Justin Smith. The former police officers had been found guilty in October 2024 on federal charges connected to the death of Nichols. Two other officers also charged had pleaded guilty before the federal trial.

ICE Eyes Naval Base Outside Chicago as Operations Center

The Trump administration is weighing the use of a naval base north of Chicago as an ICE operations center, border czar Tom Homan said Thursday.

"The planning is still being discussed," Homan told reporters.

Chinese Money Launderers Are Moving Billions Through U.S. Banks

Chinese money launderers appear to have moved some $312 billion in illicit transactions through U.S. banks and other financial institutions in recent years to aid Mexican drug cartels and other criminals, the Treasury Department said.

This growing marketplace connecting dirty cash from Mexico's drug cartels to Chinese expats looking to get their savings out of China is drawing scrutiny from the Trump administration, which wants banks to help crack down.