Inflation in China remained flat. Nvidia and AMD will share revenue from chip sales to China with the US government

The Dow Jones Index (US30) rose by 0.47% on Friday (weekly gain +1.03%). The S&P 500 Index (US500) increased by 0.78% (weekly gain of +1.88%), while the Nasdaq (US100) finished the day 0.95% higher (weekly gain of +2.72%). Tech stocks led the rally, with Apple rising by 4.2% after announcing a $600 billion investment plan, which boosted the Nasdaq. Investor optimism was fueled by expectations of Federal Reserve rate cuts following President Trump’s nomination of Steven Mnuchin to the Fed Board, signaling a potential shift in monetary policy despite ongoing concerns about new tariffs on imports from several countries. Tesla shares rose by 2.3% despite the dissolution of its Dojo team, and Intel was up 0.9% after its CEO received board support following calls for his resignation from Trump.

Nvidia and AMD have agreed to a deal with the US government to share 15% of the revenue from certain chip sales to China in exchange for export licenses for Nvidia’s H20 and AMD’s MI308 chips. This unprecedented agreement reflects the White House’s strategic use of trade exceptions amid ongoing tariff pressure. President Trump’s recent threat to impose a 100% tariff on semiconductor imports unless companies “build in the United States” adds urgency to such agreements.

The Canadian dollar fell below $1.37 against the US dollar as weaker domestic employment data and looming trade factors undermined previous gains. A Statistics Canada report showing the country lost 41,000 jobs in July, far worse than the 13,500 gain analysts predicted, and a static unemployment rate of 6.9% heightened concerns about domestic demand and fueled expectations for a more dovish Bank of Canada. Meanwhile, President Trump’s decision to implement 35% tariffs on Canadian aluminum and impending duties on auto parts have added to the pressure on the trade-exposed Canadian economy.

European stock markets were mixed on Friday. Germany’s DAX (DE40) fell by 0.12% (weekly gain +2.72%), France’s CAC 40 (FR40) closed up 0.44% (weekly gain +2.11%), Spain’s IBEX35 (ES35) gained 0.91% (weekly gain +4.55%), and the UK’s FTSE 100 (UK100) closed down 0.06% (weekly gain +0.30%). European stocks ended the week with a strong rally, posting a sharp rise in the first week of August as markets continued to assess the outlook for the European economy amid uncertainty over US tariff levels and the ECB’s response. Banks continued to rise sharply, with BBVA, BNP Paribas, and UniCredit all gaining more than 2%. Siemens was up 2.2% after a volatile week, and Volkswagen, Mercedes-Benz, and Stellantis each added more than 2%, setting the pace for automakers. On the other hand, Rheinmetall lost 1.5% on reports that the US and Russia might agree on a ceasefire in Ukraine.

WTI crude oil prices were flat on Friday at $63.9 per barrel, holding near a two-month low and showing a weekly drop of more than 5% amid growing fears of higher US tariffs and a possible meeting between Presidents Trump and Putin. The recently implemented US tariffs, which took effect on Thursday, have intensified concerns about slowing economic growth and a potential decline in demand for crude oil. Meanwhile, news of a possible Trump-Putin summit raised hopes for a diplomatic resolution to the conflict in Ukraine, which could ease sanctions on Russia. However, analysts remain cautious, stressing that a breakthrough is unlikely as Putin is expected to demand territorial concessions while the US pushes for a ceasefire.

Silver fell to $38 per ounce on Monday, partially reversing last week’s gains, as investors took profits ahead of key US inflation data that could determine the Federal Reserve’s policy direction. Markets are increasingly betting on a Fed rate cut in September amid signs of a weakening labor market, with a possible subsequent move in December also being priced in. Fed official Michelle Bowman stated on Saturday that the latest weak jobs report reinforces her concerns about labor market volatility and strengthens her view that three rate cuts will likely be appropriate this year.

Asian markets were mostly higher last week. Japan’s Nikkei 225 (JP225) rose by 4.24%, China’s FTSE China A50 (CHA50) climbed 1.05%, Hong Kong’s Hang Seng (HK50) gained 1.75%, and Australia’s ASX 200 (AU200) posted a positive result of 1.68%.

In July 2025, consumer prices in China were unchanged year-on-year, defying market expectations for a 0.1% decline and following a 0.1% increase in the prior month. Core inflation, which excludes volatile food and fuel prices, rose to 0.8% y/y, the highest level in 17 months, after a 0.7% increase in June. On a monthly basis, the CPI rose by 0.4% in July, slightly above the 0.3% expectations and reversing a 0.1% decrease in June. This was the highest monthly inflation figure since January, partly attributed to recent extreme weather conditions, including heavy rainfall.

On Monday, the Australian dollar paused near the $0.652 mark as investors cautiously awaited the Reserve Bank of Australia’s monetary policy decision due on Tuesday. Markets broadly expect a 25-basis-point rate cut to 3.60% at the August meeting, following lower-than-expected second-quarter inflation and a rise in unemployment to a three-and-a-half-year high. This comes after the RBA’s unexpected decision in July to leave the cash rate unchanged at 3.85%, citing a more balanced assessment of inflation risks and persistent labor market resilience.