Global News Summary 21-25 July 2025
Global markets rallied on strong U.S. corporate earnings, easing trade tensions, and subdued volatility, even as macro risks simmered beneath the surface. The S&P 500 approached 6,400 after over 80% of companies beat forecasts, while Trump finalized a 15% tariff deal with Japan and neared a similar pact with the EU. Central banks struck a cautious tone—ECB held rates, the Fed resisted Trump’s pressure to cut, and the RBA and RBNZ signaled easing bias. Meanwhile, political instability hit Japan, UK borrowing surged to £20.7B, and AI investment exploded with multibillion-dollar data infrastructure, cloud deals, and government scrutiny. Inflation moderated in Japan and the Eurozone but remained elevated in the UK and U.S., keeping recession risks live as global policymakers juggle trade, technology, and tightening fiscal space.
United States
Trade Policy:
Finalized a 15% tariff deal with Japan and neared a similar deal with the EU, easing trade uncertainty ahead of the August 1 deadline.
Trump’s push for minimum tariffs and sector-specific duties continues to divide U.S. industry groups.
Fed & Political Tensions:
Trump clashed publicly with Fed Chair Powell over policy costs during a rare visit to Fed HQ.
Markets fear erosion of central bank independence; PIMCO warned of severe market fallout if Fed integrity is undermined.
Macro & Markets:
Median home prices rose to $435K in June, despite falling sales and high mortgage rates.
S&P 500 rallied to near 6,400, lifted by strong earnings (80%+ beat estimates) and VIX falling below 15.
Retail enthusiasm surged, meme stocks rallied, and Goldman Sachs flagged rising short interest in unprofitable tech.
United Kingdom
Labour & Sentiment:
Unemployment rising, but PM Starmer argued this reflects higher workforce participation.
GfK survey: 34% of consumers said July was a “good time to save” — highest since the 2008 GFC.
Public Finances:
Borrowing rose to £20.7B in June, with surging debt costs and weak growth threatening Chancellor Reeves’s fiscal rules.
Trade Deals:
Signed deal with India, aiming to boost exports to the country by 60% by 2040.
Starmer downplayed expectations of progress on steel tariffs during Trump’s visit to Scotland.
European Union
Trade & Diplomacy:
Closing in on 15% tariff deal with U.S., modeled after Japan pact.
France and Germany rallied EU allies for retaliation if the U.S. doesn’t compromise.
Von der Leyen headed to Scotland for last-minute talks with Trump.
Monetary Policy:
ECB held rates at 2%, adopting a "wait-and-see" stance amid ongoing trade negotiations.
Growth Indicators:
Eurozone composite PMI (July) hit 51, fastest pace since August 2023, signaling end of manufacturing downturn and rebound in services.
Geopolitics:
Macron announced France will recognize Palestinian statehood in September, amid mounting Gaza pressure.
Japan
Political Instability:
PM Shigeru Ishiba expected to resign, following election backlash over inflation and weak growth.
Trade & Market Reaction:
15% tariff deal with the U.S. sent Japanese stocks higher, particularly automakers.
Yen rallied on renewed optimism; BoJ watchers now expect a rate hike by October or January.
Inflation:
Tokyo CPI (July): 2.9% YoY, down from 3.1%, but food inflation remains sticky.
Australia
RBA Outlook:
Minutes from July meeting and Governor Bullock’s speech confirmed a “measured and gradual” easing bias as labor remains strong and core inflation cools.
Trade Gesture:
Announced lifting restrictions on U.S. beef imports, to smooth relations with Trump amid trade realignment.
New Zealand
Monetary Policy:
RBNZ ready to cut rates again if inflation softens further.
Warned that U.S. tariff pressures could undermine global demand and drag on NZ exports.
Economic Growth
US: Corporate earnings and consumer housing data show ongoing strength, but high rates and political tension loom.
Germany: Launched a €100B investment campaign to end stagnation.
Eurozone: PMI improvement hints at mild recovery.
UK & NZ: Growth risks remain due to fiscal drag and consumer retrenchment.
Jobs
UK: Unemployment up; debate over whether it's a signal of weakness or rising participation.
U.S.: Job market remains tight; Fed still cautious on cutting too soon.
Japan: Political pressure mounting from stagnant wages and inflation backlash.
Debt & Interest Rates
ECB: Held at 2%; waiting on trade outcome.
Fed: Powell–Trump tensions raised concerns; September cut more likely.
UK: Debt costs surging; £20.7B June borrowing adds pressure to budget.
Australia & NZ: Both signal easing paths ahead, conditional on inflation and labor data.
Artificial Intelligence
UK–OpenAI Partnership: Signed to modernize public services and attract AI capital.
AI Power Surge:
OpenAI–Oracle to add 4.5 GW of U.S. data center capacity.
U.S. electricity costs rising due to AI-related demand bottlenecks.
Major Deals:
Reka AI raised $110M at $1B+ valuation (Nvidia & Snowflake-backed).
Google–ServiceNow signed $1B+ cloud contract.
Amazon acquired Bee, a $50 wearable AI assistant.
FuriosaAI secured its first major chip contract after rejecting Meta's $800M offer.
SK Hynix ramped up advanced memory chip capex.
Microsoft poached 20+ DeepMind researchers to bolster internal AI capabilities.
Policy Moves:
Trump issued order banning federal contracts with “biased” AI models.
ESG & Sustainability
Amazon’s carbon footprint continues to grow due to data center expansion and delivery logistics.
Energy grid strain in the U.S. worsens as AI data center load surges.
Inflation
UK CPI (June): 3.6%, driven by fuel and transport costs.
Tokyo CPI (July): 2.9%, easing slightly but not enough to relieve consumer pressure.
Eurozone: Inflation moderating; ECB staying cautious.
Recession Risk
UK: Fiscal headwinds + weak growth + sticky inflation = stagflation risk.
Japan: Inflation fallout and political turnover raise uncertainty.
NZ: Warns of external demand slowdown from global tariffs.
U.S.: No immediate signs of contraction, but structural risks remain if Fed credibility is damaged or tariffs escalate further.