INSIGHT WEEKLY: August 3, 2025
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🌐 Markets Overview
📈 Markets fall sharply on Friday
📊 U.S. Stock Markets fell on Friday on economic concerns. Despite 82% of reporting S&P 500 companies beating earnings estimates, tariff concerns, like Ford’s possible $2 billion loss, clouded the outlook. Treasury yields fell in response to the weak data and trade tensions, with the 10-year yield dropping to 4.22%.
🇪🇺🇬🇧 Eurozone and UK equities fell sharply in the week, with Germany’s DAX declining 3.6%, and France’s CAC 40 down 3.5%.
UK’s FTSE 100 was down 0.8% in the week, but it has been the best performer in Europe YTD (+9.5%) after the DAX (+29.5%).
🇯🇵Japan’s Nikkei 225 fell around 2.5% this week, led by a steep 18% drop in Tokyo Electron after a downbeat profit forecast shook Japan’s tech sector. Global tariff tensions and hedge fund positioning ahead of Japan’s Upper House elections added to the pressure.
🇨🇳China’s markets declined amid renewed trade tensions and soft factory activity. The CSI 300 dropped 1.75%, and Hong Kong’s Hang Seng Index fell 3.47%. Both official and private PMIs fell below 50 in July, signaling contraction. The government cited weather disruptions, including flooding and heat, for the decline in output. While fiscal support and early-year exports helped buoy H1 growth, economists expect a slowdown in H2 as external demand weakens and earlier momentum fades. Uncertainty over U.S. tariffs also clouds the outlook.
Tech stocks
Meta continues to outperform after good Q2 results and its continuing focus on AI finds favor with investors.
Microsoft gained on good Q2 results and impressive earnings from the cloud.
Are Meta and Microsoft moving ahead of the rest of the tech sector?
Tesla declined due to ongoing concerns about margins, competition in EVs, and new tariffs.
Apple declined due to concerns over trade tensions and slowing hardware demand.
Amazon declined on disappointment over AWS growth and higher costs.
ARM which had performed well earlier, dropped nearly 16% in the week due to a mix of weak guidance, strategic uncertainty, and valuation pressure. ARM also announced that it will be designing its own chips and chipsets.
ARM designs the underlying architectures - the foundational blueprints - that other companies use to design their own chips. It does not manufacture chips or design complete chip products. Instead, it licenses its architectures to firms like Apple and Qualcomm, who design custom chips and then outsource manufacturing to foundries like TSMC. But it now says it may begin designing its own full chips or chiplets, not to manufacture or sell them, but to showcase its technology more directly. This move raises concerns that ARM could end up competing with its own customers, undermining the licensing model that has long been its strength.
Semiconductor stocks came under pressure this week, with many falling on the back of weak U.S. jobs data and renewed tariff concerns, particularly those targeting imports from Taiwan.
But it’s worth separating short-term market reactions from long-term fundamentals. The weakness in jobs numbers in the US may rattle broader investor sentiment, but it has little to do with the structural demand for AI chips. Companies like Nvidia, AMD, and others are not building for the current economic cycle - they’re building the infrastructure for a generational platform shift. AI workloads are scaling rapidly, driven by hyperscaler investment, not macro level job trends. As for tariffs, while they introduce near-term uncertainty, they’re also accelerating supply chain diversification, with major players already expanding capacity in the US. In short, while semiconductors may trade like cyclical stocks at times, the AI-driven core of this sector is operating on a different trajectory entirely.
Macro Watch: This Week’s Economic Developments
🇺🇸 U.S. Economic Sentiment worsened, and Fed Independence is under question
The U.S. economy faced multiple headwinds this week, with equity markets posting their worst losses since April. Tariff uncertainty, weak job growth, and slowing momentum weighed on sentiment. President Trump’s August 1 executive order imposed sweeping new tariffs, offset only slightly by new trade deals with the EU and South Korea. July payrolls missed expectations, with just 73,000 jobs added and earlier months revised down, pushing unemployment to 4.2%.
At its latest meeting, the Fed held rates steady. For the first time since 1993, two governors dissented - both Trump appointees. Christopher Waller and Michelle Bowman voted for a rate cut, a notable shift, especially from Waller, long known for his hawkish stance. When a hawk calls for easing, it suggests deeper concerns.
🇪🇺🇬🇧 Eurozone and UK
A new U.S.–EU trade deal imposed a 15% tariff on most EU exports, disappointing markets despite being lower than feared.
Eurozone GDP grew 0.1% in Q2, narrowly avoiding contraction, while headline inflation held at 2.0%, in line with the ECB target. Core inflation stayed slightly elevated at 2.3%.
Unemployment across the eurozone remained relatively low at 6.2%, though Germany stood out with a post-pandemic high of 6.3%.
Sentiment improved in July, especially in services.
In the UK, the FTSE 100 dipped 0.57%, cushioned by a weaker pound. The housing market showed signs of recovery, with house prices up 0.6% and stronger mortgage approvals.
Asia (Japan, China, India)
In Japan, the recovery remains uneven. June industrial output rose 1.7% and retail sales grew 2.0% year-on-year, signaling domestic strength. The Bank of Japan held rates at 0.5% but raised its inflation forecast to 2.7% for FY2025. GDP is seen at 0.6%, with Governor Ueda suggesting a possible rate hike.
The yen’s drop past JPY 150 triggered fresh concerns over currency speculation.
In China, July data showed fading momentum. Both official and Caixin PMIs slipped below 50, pointing to factory contraction. Output was disrupted by adverse weather, while domestic demand stayed weak. Early-year export front-loading has faded, and sentiment remains soft despite stimulus.
India’s growth indicators stayed strong. July’s HSBC Manufacturing PMI hit a 16-month high of 59.1 on robust orders. The broader private sector PMI remained above 60. Inflation eased to 2.1% in June, below the 4% RBI target. While confidence fell to a 3-year low due to rising costs and slower hiring, India remains a regional bright spot.
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🌐 Artificial Intelligence and Tech
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Meta CEO Mark Zuckerberg has laid out a striking vision for the future of AI - one centered not on automating jobs, but on deeply personal enhancement. His concept of personal superintelligence imagines AI as a companion that helps individuals learn, grow, create, and connect more meaningfully. Unlike industry models built for mass-scale efficiency, Meta’s approach is rooted in intimacy: AI embedded in devices like smart glasses that “see what we see” and “hear what we hear.” It’s a vision of AI that knows you, but also raises profound questions about trust, boundaries, and safety.
OpenAI appears set to return to its open-source roots. Leaks suggest the imminent release of a new family of AI models under the label “gpt-oss,” including a 120-billion-parameter model based on a Mixture of Experts architecture. This would rival Meta’s Llama and Mistral’s Mixtral, signaling OpenAI’s bid to re-engage the developer community - and to challenge the open-source leaders at their own game.
OpenAI’s blockbuster funding round: $8.3 billion raised at a $300 billion valuation. Backers include Blackstone, Dragoneer, TPG, and Sequoia, with revenue estimates now near $13 billion. With Microsoft integrations growing and developer goodwill in play, OpenAI is consolidating its lead on multiple fronts.
Apple, for its part, is taking a more measured approach to AI. CEO Tim Cook confirmed a ramp-up in AI investment and hinted at upcoming acquisitions, but Apple’s flagship “Apple Intelligence” features won’t roll out fully until 2026. While some see this as falling behind, others view it as a deliberate choice to avoid the current wave of unreliable, overhyped tools.
Apple has a long history of entering markets late, but only when the technology is mature and the user experience polished. In contrast to rivals racing ahead with half-baked products, Apple is positioning itself to deliver stability, privacy, and seamless integration when it matters most.
Get your free guide to AI
🌐 Crypto Corner
Top 10 cryptos:
The crypto market saw broad declines this week.
Bitcoin fell 3.6% to close at $113,407, while Ethereum dropped 5.7% to $3,513. The downturn was attributed in part to renewed speculation about large-scale liquidations, particularly from wallets linked to defunct platforms like Mt. Gox and German government holdings. On July 31, more than $2.7 billion in BTC was reportedly transferred, raising fears of imminent offloading and putting downward pressure on prices.
Ethereum underperformed Bitcoin again, weighed down by concerns over the slow pace of Layer 2 integration and recent outflows from major ETH staking platforms.
Cardano plunged 11.4%, Polkadot 12.2%, and Solana 12.3%, as traders rotated out of higher-volatility tokens.
XRP fell 5% despite ongoing optimism around Ripple’s cross-border payment initiatives, suggesting that broader market sentiment outweighed project-specific news.
Despite the weekly drop, Bitcoin remains up over 21% year-to-date, and Ethereum over 5%, with longer-term bullish sentiment intact, especially as institutional accumulation trends continue and ETF inflows stabilize.
See the previous spotlight on Bitcoin halving
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Stay tuned for more insights and updates each week.