Market navigator: week of 14 July 2025

Economic

Summary:

Markets edge lower amid tariff tensions as Q2 earnings season begins. US stocks consolidate near highs, Hang Seng trades sideways, Bitcoin rebounds. Key data from China, US, UK, and Japan await.

Markets in focus

US equities consolidate ahead of earnings season amid trade policy uncertainty

Investors largely shrugged off tariff announcements as the extended deadline provides three weeks for diplomatic negotiations. Major US indices retreated marginally from previous week's historical peaks, with the Nasdaq 100 declining 0.4% and the Dow Jones falling 1.0%.

Over the weekend, President Trump has threatened to impose 30% tariff European Union arrangements. The IG's weekend indices US Tech 100 declined by 0.5% while the Germany 40 declined by 1% following the news.

The Q2 US corporate earnings season commences, representing a critical performance driver for July as markets navigate elevated valuations. Analysts project 4.9% YoY growth for the S&P 500 in Q2, significantly below Q1's actual 13.3% and the 10-year average of 9.2%. Major banks, Netflix and Johnson & Johnson feature prominently in this week's reporting schedule.

Technical analysis indicates the US Tech 100 is consolidating near recently established historic highs. Traders await directional signals to assess potential for testing the next psychological resistance at 23,000. Maintenance above the 20-day simple moving average at 22,442 preserves the ascending trend from mid-May. Failure to hold this level may drive the index towards support around 21,500.

Figure 1: US Tech 100 index (daily) price chart

Hang Seng Index remains constrained within narrow trading range

Supported by risk-on sentiment, the Hang Seng Index (HSI) advanced 0.9% last week, closing at 24,140. The index has traded within a +/-500 point range from 24,000 for 15 consecutive sessions, reinforcing this level as substantial resistance from both technical and psychological perspectives.

Star Plus Legend emerged as the top performer on the Hang Seng Composite index. As a proxy for Jay Chow's entertainment business, shares surged 174% following the Asian pop star's official account launch on Douyin, the domestic version of TikTok. Materials represented the sole sector generating negative returns amid uncertainties surrounding international copper prices following recent US tariff policies.

Technical indicators have improved for the HSI as it rebounded swiftly after approaching the lower boundary of the narrow uptrend channel established from 24 April at approximately 23,700, with the year's peak at 24,874 in sight. The moving average convergence divergence (MACD) indicator approaches positive crossover territory. Material support should be found around 22,500.

Figure 2: Hang Seng Index (daily) price chart

Bitcoin establishes new record above $118,000

Beyond risk-on sentiment, anticipation of the GENIUS Act discussion in the House this week has bolstered optimism. If enacted, the legislation would represent the first US law regulating stablecoin issuers. Bitcoin appreciated 8% last week, approaching $119,000 before retracing to current levels.

Following record highs established on 23 May, Bitcoin has maintained a mildly bearish trajectory. However, last week's price action suggests the correction phase has concluded. Momentum indicators are improving as July trading volume tracks to recover or exceed May's levels following a subdued June. Institutional investor flows predominantly drive activity, with market capitalisation now exceeding $2.2 trillion.

A 61.8% Fibonacci extension of the upward movement from 7 April to 23 May indicates potential for prices to reach $121,439 before encountering material resistance. The previous high of $111,977 has established support.

As highlighted in our Market Navigator on 30 June, Ether — the second-largest cryptocurrency — has demonstrated higher market sensitivity (beta). Last week's rally confirmed this analysis as Ether outperformed Bitcoin with a 15% gain, though it remains 28% below its 52-week high.

Figure 3: Bitcoin (daily) price chart

The week ahead

The week ahead delivers crucial economic assessments across major economies, with China's Q2 gross domestic product (GDP) data taking centre stage as markets evaluate whether the world's second-largest economy can maintain momentum amid escalating trade tensions and domestic headwinds.

China's economy expanded robustly by 5.4% year-on-year (YoY) in Q1, supported by strong industrial output and export growth as manufacturers accelerated shipments ahead of looming tariffs. Government trade-in subsidies also spurred a sharp rebound in retail sales, providing a substantial boost to headline gross domestic product.

However, the intensifying US-China tariff war in April has led to noticeably weaker purchasing managers' index (PMI) readings throughout Q2, raising questions about whether resilient retail strength alone can offset mounting external headwinds.

While consumer prices edged up slightly from -0.1% to +0.1% last month, inflation remains subdued, and producer prices continue to contract, highlighting ongoing deflationary pressures. Combined with persistent weakness in the property sector, these domestic challenges are likely to weigh on near-term growth.

Against this backdrop of mixed signals, we anticipate China's YoY GDP growth to ease to 5.2% in Q2.

Elsewhere, inflation readings across three major economies will command significant attention, as US consumer price data tests whether tariff impact will begin to manifest, whilst UK inflation figures gauge the Bank of England's policy trajectory and Japan's price pressures reveal the persistence of above-target inflation amid economic uncertainty. The University of Michigan's consumer sentiment reading for July will conclude the week, offering critical insights into American household spending intentions.

Figure 4: China's GDP growth rate

Source: ig

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Adam

Forex

The Japanese yen is trading quietly on Monday. In the North American session, USD/JPY is trading at 147.47, up 0.04%.

The US dollar posted strong gains last week, as USD/JPY jumped 2.0%, its best week since December 2024.

BoJ could revise inflation forecast

The Bank of Japan may revise upwards its inflation forecast for the 2025 fiscal year, due to sharp rises in the price of rice and other foods. Core consumer inflation, which is made up to a large extent from food prices, has trended higher as a result and rose to 3.7% in May, well above the Bank's inflation target of 2%. Underlying inflation, however, remains below the Bank of Japan's 2% inflation target. Governor Ueda has repeatedly stressed that the central bank will raise rates once it is convinced that underlying inflation will approach and remain sustainable at the 2% level.

The BoJ will release its quarterly updated growth and inflation at its meeting on July 31. The central bank is expected to maintain interest rates at 0.5% and continue its wait-and-see attitude. BoJ policymakers are concerned over the impact of US tariffs and the stalled trade talks between the US and Japan. President Trump poured some cold water on hopes of a deal last week, saying that he would impose new tariffs on Japanese products if a deal wasn't reached by August 1.

Some hawkish BOJ members expressed concern at the June meeting that inflation and wage pressures were building quickly and inflation was close to the 2% target. Still, the Bank will be hesitant to raise rates in this turbulent economic climate and the Bank could decide to hold rates until 2026.

USD/JPY Technical

There is resistance at 147.91 and 148.41

147.03 and 146.53 are the next support levels

USDJPY 1-Day Chart, July 14, 2025

Source: marketpulse

Risk Warnings and Disclaimers

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Manuel

Commodity

U.S. efforts to break China's dominance of the rare earths market and to drive investment in its own industry have moved up a gear with a Washington-backed plan to create a separate, higher pricing system.

The West has struggled to weaken China's grip on 90% of the supply of rare earths, in part because low prices set in China have removed the incentive for investment elsewhere.

Miners in the West have long called for a separate pricing system to help them compete in supplying the rare earths group of 17 metals needed to make super-strong magnets of strategic importance. They are used in military applications such as drone and fighter jets, as well as to power motors in EVs and wind turbines.

Under a deal made public last week, the U.S. Department of Defense will guarantee a minimum price for its sole domestic rare earth miner MP Materials, at nearly twice the current market level.

Las Vegas-based MP already produces mined and processed rare earths and said it expects to start commercial magnet production at its Texas facility around the end of this year.

Analysts say the pricing deal, which takes effect immediately, should have global implications - positive for producers, but may increase costs for consumers, such as automakers and in turn their customers.

"This benchmark is now a new centre of gravity in the industry that will pull prices up," said Ryan Castilloux, managing director of consultancy Adamas Intelligence.

The DoD will pay MP the difference between $110 per kilogram for the two most-popular rare earths and the market price, currently set by China, but if the price rises above $110, the DoD will get 30% of additional profits.

Castilloux said other indirect beneficiaries of the pricing system may include companies, such as Belgian chemicals group Solvay, which launched an expansion in April.

"It will give Solvay and others the impetus to command a similar price level. It will give them a floor to stand on, you could say," Castilloux added.

While Solvay declined to comment, other rare earth miners, developers and their shareholders welcomed the news.

Aclara Resources is developing rare earths mines in Chile and Brazil, as well as planning a separation plant in the United States. Alvaro Castellon, the company's strategy and development manager, told Reuters the deal added "new strategic paths" for the company.

MP'S GRADUAL OUTPUT INCREASE

MP Materials, which suffered a net loss of $65.4 million last year largely because of China's low pricing, will build up magnet production at its Texas plant initially to 1,000 metric tons a year, later expanding to 3,000 tons a year.

Under last Thursday's deal, the DoD will become its largest shareholder with a 15% stake and MP will construct a second rare earth magnet manufacturing facility in the U.S., eventually adding 7,000 tons per year. In total, production would be 10,000 tons a year - equalling U.S. consumption of magnets in 2024.

That does not include, however, the 30,000 tons imported by the United States already installed in assembled products, Adamas consultancy said.

It predicts global demand for rare earth permanent magnets will more than double over the next decade to about 607,000 tons, with the U.S. seeing the strongest percentage annual growth rate in coming years at 17%.

The world's reliance upon China for much of this demand was brought into focus by China's curbs on its exports as trade negotiations continue between the United States and China.

So far Western governments have had little success in trying to help their own industries to compete.

Attempts to agree stronger pricing have been confined to piecemeal deals that set premiums for magnets.

Dominic Raab, a former deputy prime minister and former foreign secretary for the United Kingdom, said he was not surprised the Trump administration had concluded that tax breaks alone would not create the level of investment required.

"The next step is, can they scale it up?" asked Raab, now head of global affairs at Appian Capital Advisory, a private equity firm that invests in mining projects.

The $110 level for neodymium and praseodymium, or NdPr, guaranteed by the DoD is slightly above a $75-to-$105 per kg range that consultancy Project Blue reckons would be needed to support enough production to meet demand in coming years. It compares to a current level of about $63.

David Merriman of Project Blue said it was unclear how commercial industrial consumers would respond to higher prices and whether it would make them invest in rare earths as they have more diverse supply sources.

"Major non-government backed consumers are less likely to follow this same investment pattern, however, as they are not so clearly aligned to a particular regional supply route," he said.

A spokesperson for German auto giant Volkswagen declined to comment on pricing when asked about the DoD floor level but said: "We welcome all efforts to strengthen long-term stability and diversification in global supply chains for critical materials."

Source: Reuters

Risk Warnings and Disclaimers

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Owen Li

Central Bank

U.S. President Donald Trump's threatened 30% tariff on European Union imports is complicating the European Central Bank's decision-making but is unlikely to derail plans for a pause in rate cuts next week, five ECB policymakers told Reuters.

The ECB signalled after its June meeting that it was likely to keep interest rates unchanged on July 23-24.

But the 30% duty floated by Trump is steeper than the ECB had anticipated even under the most negative of three scenarios for the euro zone economy it released last month.

That means the ECB has been forced to come up with new estimates and policymakers to contemplate a more negative outcome than they thought possible in June, said the five sources, all members of the ECB's Governing Council.

They said governors remain reluctant to act on the basis of what is still a threat, however, especially given the sometimes contradictory statements made by Trump's administration since his first announcement of global tariffs in April. Any discussion about rate cuts is therefore likely to be kept for the ECB's September meeting, the sources said.

Trump said on Sunday that his tariffs would kick in on August 1, and the European Commission has also paused its countermeasures until that date.

Market economists have largely said they think it unlikely that Trump will follow through with his tariff threat because of the damage it would cause to the U.S. economy in terms of higher inflation and lower growth.

But should the 30% levy be imposed, they expect the ECB to cut interest rates in response.

Barclays analysts predicted a lowering of the ECB's deposit rate to just 1% by next March from 2% now if the U.S. imposes an average tariff rate on EU goods of 35%, which they estimated would subtract 0.7 percentage points from euro zone growth.

The ECB's latest macroeconomic projections, released in June, pointed to a gradual recovery in the euro zone economy in coming years, with inflation hovering around its 2% target.

Those projections assumed as their baseline a 10% tariff on EU good exports to the U.S., which would put euro zone economic growth at 0.9% this year, 1.1% next year and 1.3% in 2027.

But forecasts under an alternative scenario released at the same time showed that a 20% U.S. tariff would curb growth by 1 percentage point over the same period and also pull down inflation to 1.8% in 2027, from 2.0% in the baseline scenario.

Source: Yahoo Finance

Risk Warnings and Disclaimers

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Devin

Economic

White House economic advisor Kevin Hassett speculated Monday that new tariff policies are not yet sparking widespread price inflation because President Donald Trump has convinced more people to buy American.

"There's, I think, a lot of patriotism in the data," Hassett said on CNBC's "Squawk Box" when he was asked to explain why Trump's protectionist policies have not stoked higher prices, despite warnings by many economists.

The National Economic Council director pointed to a recent White House report, which found prices of imported goods fell between December and May.

"My theory, as an economist, of why that is, is that Americans, because of President Trump's leadership, have recognized that when they buy an American product, they not only get perhaps a better product, certainly a better product most of the time, but they're also making their community stronger," Hassett said.

"The bottom line is, people prefer American products," he said.

"Therefore, the demand for imports has gone way down, so much that even with what tariffs have been there, where people would say, 'Oh, they might increase prices at least a little bit,' we've seen prices going down."

Hassett also argued that countries with which the United States has trade deficits are eating the cost of the tariffs, instead of passing on higher prices to American consumers.

Trump's tariffs are still expected to lead to higher prices this year.

And critics have noted that Trump has at least temporarily pulled back on some of his biggest tariff plans, including many announced during his "liberation day" in early April.

Others note that many importers stockpiled goods in anticipation of incoming tariffs, muting the near-term effects of the duties on prices.

Ernest Tedeschi, director of economics at the Budget Lab at Yale, wrote that the methodology used in the White House's report "will understate tariff effects in their import indices."

Tedeschi, who served as the top economist at the White House Council of Economic Advisers under former President Joe Biden, also cited data from Harvard University's Pricing Lab showing that prices on imported goods have risen since early March, when U.S. tariffs on Canada, Mexico and China took effect.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Thomas

Economic

Commodity

The big Monday announcement by President Trump... just the threat of more secondary tariffs on Russia? And venting a little more frustration at no peace progress.

TRUMP: SEVERE TARIFFS ON RUSSIA IF NO DEAL IN 50 DAYS
TRUMP THREATENS TO IMPOSE 'SECONDARY' TARIFFS ON RUSSIA
TRUMP REITERATES VERY UNHAPPY WITH RUSSIA
TRUMP: MADE DEAL TODAY TO SEND WEAPONS TO UKRAINE
TRUMP: IT'S ALL TALK THEN MISSILES GO INTO KYIV AND KILL
TRUMP: UKRAINE WILL TAKE THE MILITARY EQUIPMENT FROM NATO
TRUMP SUGGESTS MORE DYING IN UKRAINE WAR THAN PUBLICLY KNOWN
TRUMP: SECONDARY TARIFFS VERY POWERFUL

If this is "it"... the "major announcement" on Russia that was planned, then we will say it could have been a lot worse in terms of escalation (such as ramping up more offensive weapons deliveries to Kiev), but amid Trump perhaps poorly managing expectations, people will be asking: that was it? Even RT is chiming in with some light mockery...

Given markets were expecting something more 'huge' - oil prices pushed lower on the news of another lengthy timeline of "if no deal in 50 days"...

And yes, there will be some more weapons sent to Ukraine, Trump stated, but they will come via NATO allies, primarily.

Monthly US imports from Russia

As if the Big Beautiful Bill's spending increases, the bombing of Iran, mixed signals on immigration and the suppression of the Epstein files weren't enough to infuriate Trump voters, now comes news that President Trump is going to announce what a top DC warmonger calls an "aggressive" transfer of offensive weapons to Ukraine. Under the novel arrangement, European countries are supposedly going to foot the bill.

Last week, the administration announced that weapons shipments that had just been halted by Defense Secretary Pete Hegseth over concerns about the depletion of America's own arsenal were being given a hasty green light after all. Trump broke the news on Monday after last week's "disappointing" phone call with President Putin, telling reporters he would send “more weapons” to Ukraine. Critically, Trump had emphasized that these would be "defensive weapons primarily."

Now, two sources tell Axios that it's likely a new weapons package will include long-range missiles capable of attacking deep inside Russia to include Moscow. They noted that a final decision hadn't been made. "Trump is really pissed at Putin. His announcement tomorrow is going to be very aggressive," warmongering South Carolina Sen. Lindsey told Axios.

While MAGA nation and libertarian-minded Trump voters will be disgusted, it's like a second Christmas in a month for Graham. First delighted by Trump's decision to engage the US military in Israel's war on Iran, long-time Ukraine-meddler Graham is now enthusing over Trump's new escalation. "The game...is about to change," said Graham in a Sunday appearance on Face the Nation. "I expect in the coming days you will see weapons flowing at a record level...[and] there will be tariffs and sanction available to President Trump he's never had before."

The transaction is expected to be announced Monday when Trump meets with NATO Secretary General Mark Rutte. This time around, European countries are expected to pay for American weapons bound for Ukraine. "Basically, we are going to send them various pieces of very sophisticated military [equipment]. They're going to pay us 100% for them," Trump told reporters on Sunday. "As we send equipment, they're going to reimburse us."

The new arrangement sprang from a suggestion made by Ukrainian President Volodymyr Zelensky at a NATO summit in late June. Striking an exceedingly Trump-like tone, an unnamed US official told Axios, "Zelensky came like a normal human being, not crazy, and was dressed like a somebody that should be at NATO. He had a group of people with him that also seemed not crazy. So they had a good conversation."

Trump was reportedly angered by his July 3 phone call with Putin, in which the Russian president made clear his intention to escalate the war. Sure enough, that very night Russia launched an apparently record-setting overnight drone attack on Ukraine - said to be among the largest since the war began.

According to the new report, Western and Ukrainian officials are hoping an infusion of weapons will alter Putin's calculus about his war aims and terms for a ceasefire if not an end to it.

Russia had been gradually but relentlessly taking over more territory (via Institute for the Study of War)

During his 2024 campaign, Trump repeatedly vowed to bring a quick end to the war, variously claiming that he would get it "settled before I even become president" or, at worst, "within 24 hours" of doing so. Now, nearly 6 months into his term, Trump is about to pour more weapons into the 3 1/2-year old war.

In doing so, Trump gives us yet another illustration of Tom Woods' Law #3: "No matter whom you vote for, you always wind up getting John McCain."

Source: Zero Hedge

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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James Whitman

Political

Palestinian-Israeli conflict

President Donald Trump announced Monday that the United States will impose "very severe tariffs" on Russia in 50 days if no deal is reached to end the war in Ukraine.

During a meeting with NATO Secretary General Mark Rutte in the Oval Office, Trump revealed that an agreement had been made to send weapons to Ukraine. "Made deal today to send weapons to Ukraine," Trump stated.

The president added that the U.S. would be "sending the best to NATO" and that the effort "will be coordinated by NATO."

Trump expressed disappointment with Russian President Vladimir Putin during the Oval Office meeting, where he sat side-by-side with Rutte.

The NATO Secretary General emphasized European participation in the initiative, stating, "This is Europeans stepping up" and "European countries want to be part of it." Rutte described the current support as "the first wave," indicating that "there will be more."

Rutte also confirmed that participating countries would "move equipment quickly into Ukraine" as part of this coordinated effort.