July 31st Financial Breakfast: The Federal Reserve maintains interest rates and downplays rate cut expectations, limiting gold price gains. Trump will impose a 50% tariff on semi-finished copper starting in August.
2025-07-31 07:26:07
On Thursday (July 31, Beijing time), spot gold was trading around $3,280 an ounce. Gold fell more than 1% on Wednesday as the Federal Reserve kept interest rates stable and gave little indication of when it might cut rates, while strong U.S. economic data further dampened gold's appeal. U.S. crude oil was trading around $70.27 a barrel. Oil prices closed up more than 1% on Wednesday as investors focused on U.S. President Trump's demand that Russia end the war in Ukraine as soon as possible and his tariff threats against countries that buy Russian oil.
The S&P 500 closed lower in choppy trading on Wednesday, retreating from earlier highs, as comments from Federal Reserve Chairman Jerome Powell dampened expectations of a possible interest rate cut at the September meeting.
The Federal Reserve held interest rates steady on Wednesday, as expected, saying "the unemployment rate remains low, labor market conditions remain strong, and inflation remains moderately elevated." Two governors dissented from the decision.
Stocks briefly rose before the Fed statement as investors assessed a stronger-than-expected preliminary estimate of second-quarter gross domestic product, but details in the report suggested the economy may be losing momentum.
Stocks retreated after Powell said it was too early to tell whether the Fed would cut interest rates at its next meeting in September, noting that current policy, while slightly restrictive, was not suppressing the economy.
“There’s not a lot of change in the statement,” said JP Powers, chief investment officer at RWA Wealth Partners. “It still shows some concerns about how these tariffs will play out, and it’s probably still data-dependent, and you can see that with the GDP report, where every data release is generating a lot of noise right now.” “I don’t know how he’s thinking about his legacy, but if I were Powell, I think he’d rather cut rates too late on the cusp of leaving office than risk any crisis on his way out.”
The Dow Jones Industrial Average fell 0.38% to 44,461.28, the S&P 500 fell 0.12% to 6,362.90, and the Nasdaq rose 0.15% to 21,129.67. The S&P 500 rose as much as 0.4% before reversing its upward trend.
LSEG data showed that market expectations for a September rate cut climbed to about 68% after the Fed's statement, but fell back below 50% after Powell's comments.
Earlier data from the ADP employment report showed private payrolls increased by 104,000 in July, topping expectations for a gain of 75,000 and the latest in a flurry of labor market data this week ahead of Friday's government jobs report.
Microsoft and Meta Platforms both rose more than 6% in extended trading after reporting quarterly results, while investors were still awaiting earnings reports from Amazon and Apple on Thursday.
A slew of recent earnings reports have initially boosted the stock market, with Teradyne surging 18.9% after its quarterly results, making it one of the best-performing stocks in the S&P 500. Solid results from a slew of consumer-facing companies also signaled shoppers’ resilience.
Starbucks reported better-than-expected third-quarter sales, but its shares fell 0.2%, while Hershey's shares rose 1.4% after the company reported better-than-expected results.
Still, the threat of tariffs remains, as U.S. President Trump said the United States will impose a 50% tariff on copper pipe and wire, although the measure is less severe than previously expected and does not include copper raw materials such as copper ore and concentrate.
The tariffs weighed heavily on the S&P 500 materials sector, which fell 2%, with Freeport-McMoRan shares plunging 9.5%.
Gold fell more than 1% on Wednesday as the Federal Reserve held interest rates steady and gave little indication of when it might cut them, while strong U.S. economic data further dented bullion's appeal.
Spot gold fell 1.5% to $3,275.92 an ounce. U.S. gold futures settled down 0.8% at $3,352.8. The Federal Reserve's decision to hold interest rates steady was divisive, offering little indication of when borrowing costs might be lowered and drawing dissent from two Fed governors.
Federal Reserve Chairman Jerome Powell said the central bank has not yet made any decisions for September, when many market participants expect the first rate cut of the year. He added that "downside risks to the labor market are certainly evident."
"Powell stuck to his guns as he focused more on controlling inflation than jobs, and the dollar jumped, putting additional pressure on gold, even though prices continued to hold the bottom of the range," said Tai Wong, a metals trader. "While a deeper correction is possible, it is likely to attract buyers as the overall thesis for the gold market - uncertainty, high U.S. debt, de-dollarization - remains strong."
The ADP National Employment Report showed U.S. private payrolls increased more than expected in July, although signs of a weakening labor market persist. Gold tends to perform well in low-interest-rate environments and periods of uncertainty.
Spot silver fell 3.2% to $36.97 an ounce, hitting a nearly three-week low.
Platinum tumbled 6.6% to $1,303.19, its lowest since June 24, while palladium fell 4.9% to $1,196.75.
Jim Wyckoff, senior analyst at Kitco Metals, said it looked like some profit-taking among shorter-term futures traders.
Oil prices closed up more than 1 percent on Wednesday as investors focused on U.S. President Trump's demands that Russia end the war in Ukraine as soon as possible and his threat of tariffs on countries that buy Russian oil.
September Brent crude futures, expiring Thursday, settled up 1.01% at $73.24 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 1.14% to $70. Investors largely shrugged off the impact of U.S. crude and refined product inventory data. Earlier in the session, both benchmarks fell nearly 1%.
The more actively traded Brent crude futures for October settled at $72.47, up 1.1%.
Trump said on Tuesday he would begin taking measures against Russia, including 100% secondary tariffs on its trading partners, if Russia did not show any progress toward ending the war within 10-12 days, up from a previous deadline of 50 days he had set.
He also said a 25% tariff would be imposed on goods imported from India from August 1 and that the country would be fined for buying Russian weapons and oil, but did not specify what the fine would be.
India has signaled it will comply, which could impact 2.3 million barrels per day of Russian oil exports, JPMorgan analysts wrote.
“Traders seem to be more focused on the (Russia-related) tariffs, while Indian compliance is seen as bullish for crude prices,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Meanwhile, the U.S. Energy Information Administration (EIA) said U.S. crude oil inventories rose by 7.7 million barrels last week, compared with analysts' expectations in a Reuters poll for a 1.3 million barrel drop.
U.S. gasoline inventories fell by 2.7 million barrels, compared with expectations for a 600,000-barrel decrease, while distillate fuel inventories, which include diesel and heating oil, rose by 3.6 million barrels, compared with expectations for a 300,000-barrel increase.
The dollar strengthened against major currencies on Wednesday after the Federal Reserve resisted pressure from President Trump and kept U.S. interest rates unchanged, in line with market expectations.
The Federal Open Market Committee voted 9-2 to keep its benchmark overnight interest rate steady in a range of 4.25% to 4.50% for the fifth consecutive meeting.
Trump's appointed Vice Chairman of Financial Supervision, Bowman, and Governor Waller both dissented, preferring to cut interest rates by 25 basis points.
At a subsequent press conference, Federal Reserve Chairman Jerome Powell said he expected a slow process in understanding how trade tariffs affect inflation.
"The Fed's decision to hold rates steady wasn't a surprise, although the market noted the two dissenting votes in favor of a rate cut," said Uto Shinohara, senior investment strategist at Mesirow Currency Management. "The dollar remained well supported after stronger data and the Fed's statement this morning, with the market pricing the September meeting as a coin toss."
Data earlier in the session showed U.S. economic growth rebounded more than expected in the second quarter, expanding 3%, compared with a 2.4% increase expected in a Reuters poll of economists.
The euro extended its losses against the dollar following the Fed's decision and as Powell spoke. The euro was last down 1% at $1.141775, its fifth consecutive day of losses and lowest level since June 11. Following its sharp reaction to the U.S.-EU trade deal earlier this week, the euro is on track for its first monthly decline since 2025.
The US dollar index extended its gains after the Fed meeting. The index rose 0.96% to 99.82 points, the highest level since May 29 and is expected to achieve its first monthly increase this year.
U.S. Treasury yields were mostly higher. The two-year note, which typically moves in tandem with Federal Reserve interest rate expectations, rose 6.6 basis points to 3.941%.
"I think people are reading too much into the GDP data," said Steve Englander, Standard Chartered's global head of G10 FX research. "Market participants shouldn't interpret the first quarter as very weak and the second quarter as very strong, as the main drivers were inventories and net exports. I would add the two quarters together and average GDP growth of about 1.5% per quarter. That's not a recession, but it's mediocre."
Last week's trade deal with Japan and another with the European Union over the weekend showed a renewed U.S. commitment to global engagement, easing investor concerns.
Trump announced a 25% tariff on Indian goods imported into the United States starting August 1, and signed an executive order to impose an additional 40% tariff on Brazil, bringing the total tariff to 50%.
Data on Wednesday showed Germany's economy shrank in the second quarter, while France's economy performed better than expected.
Comments from Bank of Japan Governor Kazuo Ueda will be in focus as investors hope a trade deal between Japan and the United States will pave the way for the central bank to raise interest rates on Thursday.
The dollar rose 0.55% against the yen to 149.29 yen, hitting its highest level since April 2; the dollar rose 0.82% against the Swiss franc to 0.81265 franc, hitting its highest level since June 23.
Refined copper was exempted from the 50% tariff Trump imposed on semi-finished copper starting in August.
US President Trump imposed a 50% tariff on all semi-finished copper products entering the United States, but omitted the tariff from applying to refined copper imports, a move that will shield most domestic industries from potential cost increases. Trump issued a proclamation on Wednesday imposing a new round of tariffs on copper imports. However, the scope of the levies was less extensive than many market participants had expected. According to a White House document, the new tariffs will take effect on August 1st. Copper prices fell as much as 18%, but as of 2:11 pm New York time, they were trading at $5.1310 per pound, partially recovering those losses.
Trump signs executive order imposing 50% tariffs on Brazil
On July 30th, local time, the White House announced that US President Trump signed an executive order imposing a 40% tariff increase on Brazil, bringing the total tariff to 50%. Trump had previously announced that he would impose a 50% tariff on goods imported from Brazil starting August 1st. (CCTV News)
Trump says India will pay 25% tariff, threatens additional penalties over India-Russia energy deal
US President Donald Trump announced a 25% tariff on India starting August 1st and hinted at additional penalties for India's energy purchases from Russia. The Trump administration is set to impose new tariffs on dozens of trading partners on August 1st. The US leader's latest statement dashed India's hopes of receiving more favorable treatment than other regional countries. New Delhi was one of the first countries to hold talks with Washington following Indian Prime Minister Narendra Modi's high-profile visit to the White House in February. In response to Trump's latest statement, an Indian official, speaking on condition of anonymity, stated that New Delhi remains engaged with the US to secure a mutually beneficial trade agreement. Earlier reports indicated that Indian officials had stated they would continue negotiations with the US, aiming to reach a bilateral trade agreement by the fall.
Trump announces trade deal with South Korea: 15% tariffs + $350 billion in investment
US President Trump announced on social media that the United States has agreed to a comprehensive and complete trade agreement with South Korea. The agreement requires South Korea to pay $350 billion to the United States for US-owned and controlled investment projects, which will be personally selected by me as President. Additionally, South Korea will purchase $100 billion in liquefied natural gas (LNG) or other energy products, and South Korea has agreed to a significant investment for its own investment purposes. This payment will be announced during South Korean President Lee Jae-myung's visit to the White House in the next two weeks. Both sides also agreed that South Korea will fully open trade with the United States and accept US products, including cars and trucks, and agriculture. We have agreed to impose a 15% tariff on South Korea. No tariffs will be imposed on the United States.
Canadian Prime Minister announces conditional recognition of Palestinian state in September
On July 30, Canadian Prime Minister Jay Carney stated that Canada would recognize the State of Palestine at the United Nations General Assembly in September if the West Bank administration meets certain conditions. Carney stated that the Palestinian Authority must hold elections in 2026 and commit to other democratic reforms. Carney spoke with Palestinian President Mahmoud Abbas earlier that day before announcing the decision. After the current round of the Israeli-Palestinian conflict erupted in October 2023, Spain, Norway, Ireland, Slovenia, and several non-European countries announced their recognition of the State of Palestine. In July of this year, the United Kingdom and France also announced their recognition of the State of Palestine. (CCTV)
Lebanese Hezbollah leader: Will not succumb to external pressure to disarm
On July 30th, local time, Hezbollah leader Naim Qassem stated in a speech that the issue of Hezbollah's armed forces is an internal Lebanese issue and that Hezbollah will not succumb to external pressure to disarm. Qassem stated that Hezbollah's armed forces are part of Lebanon's national strength and that the true purpose of the US demand for disarmament is to weaken Lebanon's resistance and pave the way for Israel to expand its military presence in southern Lebanon. He emphasized that Hezbollah will not disarm, nor will it hand over a single weapon to Israel. Qassem stated that any force demanding Hezbollah's disarmament is serving Israel.
US suspends de minimis duty-free treatment for low-value goods
On July 30th, local time, the White House issued a statement announcing that US President Trump had signed an executive order suspending de minimis duty exemptions for low-value goods. The statement stated that, effective August 29th, all imported goods valued at $800 or less and previously eligible for de minimis duty exemptions, sent outside the international postal network, will be subject to all applicable tariffs. For goods shipped through the international postal system, parcels will be subject to tariffs based on either ad valorem or specific tariffs.
The Federal Reserve announced that it would keep interest rates unchanged
On the 30th, local time, the U.S. Federal Reserve concluded its two-day monetary policy meeting and announced that it would maintain the target range for the federal funds rate at 4.25% to 4.50%. Facing continued pressure from the Trump administration to cut interest rates, this is the fifth consecutive time the Fed has held rates steady. Observers believe the Fed's wait-and-see approach earlier this year stemmed from uncertainty surrounding the new U.S. administration's tariff policies, and its current wait-and-see approach is primarily due to its assessment of the actual impact of the government's tariff policies on prices this year. The Federal Reserve's National Economic Conditions Survey ("Beige Book"), released mid-month, showed that prices rose in all Federal Reserve Districts from late May to early July. Some analysts point out that given the relatively robust U.S. job market, the Fed is more inclined to maintain price stability to mitigate the risk of tariffs leading to higher domestic prices and a resurgence of inflation. Wall Street generally expects the Fed to cut interest rates twice this year, totaling 50 basis points, with the first cut expected in September, with a near 65% probability. (CCTV Finance)
Key points from Powell's speech
1. The economy is on a solid footing, with inflation just above target. 2. The Fed remains focused on its dual mandate, and indicators suggest a slowdown in economic growth. This slowdown reflects a moderation in consumer spending and continued weakness in the housing sector. 3. Wage growth has moderated but remains faster than inflation. 4. Long-term inflation expectations remain contained. 5. The reasonable baseline scenario is that the impact of tariffs on inflation is transitory. 6. We have not yet made any decisions regarding September. 7. This was a good meeting, with dissenters clearly articulating their positions. 8. Services inflation is declining, while goods inflation is rising. 9. There is still a long way to go to understand the full extent of the tariff impact. 10. Inflation is more than halfway back toward our 2% target. 11. Dissenters to the July Fed statement will provide information in the next day or two. 12. When asked whether he intends to remain on the Board after his term as Chair ends, Powell said he had no information on that matter at this time.
Russian President's Press Secretary: Russian economy "has become somewhat immune" to sanctions
In response to US President Trump's threat to impose new sanctions on Russia, Russian presidential press secretary Dmitry Peskov stated on the 30th that the Russian economy has become "immune" to sanctions over the years. Peskov said: "We have been living under many sanctions for a long time, and the Russian economy has been operating under a lot of restrictions. We have developed a certain immunity to sanctions." (Xinhua News Agency)
Indian refiners ask govt for clarification on Russian oil issue
Indian refiners, a significant source of Russian crude oil demand, are seeking clarification from the New Delhi government on whether their purchases will be affected by President Trump's latest social media post. On Wednesday, US President Trump announced he would impose a 25% tariff on Indian exports to the US starting August 1st and warned of potential additional penalties for India's continued energy purchases from Russia. India has become a major buyer of Russian crude oil since the outbreak of the Russia-Ukraine conflict in 2022. Indian companies, which purchase over 1 million barrels of Russian crude oil per day, are seeking clarity on what Trump's post means for their purchases, according to three sources familiar with the matter.
National Informatization Development Report (2024) released
The "National Informatization Development Report (2024)" press conference was held in Beijing on July 30. The report shows that my country insists on improving people's well-being as the starting point and end point of informatization development, continuously improving the equality, inclusiveness, and convenience of informatization services. By 2024, digital life services will be popularized at an accelerated pace, digital culture will gain stronger momentum, e-government will reduce burdens and increase efficiency, and people's sense of gain, happiness, and security will continue to rise. (Xinhua News Agency)
HKTDC: Over 60% of Hong Kong businesses are optimistic about the potential of the mainland e-commerce market
At the launch ceremony of the second "Hong Kong Good Products Festival," HKTDC Research Director Carol Fan stated that over 60% of Hong Kong businesses surveyed view mainland China as the most promising e-commerce market. To help Hong Kong businesses better understand the mainland e-commerce market, the HKTDC conducted surveys of 2,200 consumers across various regions in mainland China, investigating their online shopping behaviors and characteristics. Fan believes that mainland China is the world's largest e-commerce market, boasting a mature e-commerce industry. Hong Kong businesses must deeply understand mainland consumers' online shopping behaviors and preferences for Hong Kong products in order to formulate appropriate business strategies and effectively capture opportunities in the mainland e-commerce retail market.
Focus on the day
stock market
The S&P 500 closed lower in choppy trading on Wednesday, retreating from earlier highs, as comments from Federal Reserve Chairman Jerome Powell dampened expectations of a possible interest rate cut at the September meeting.
The Federal Reserve held interest rates steady on Wednesday, as expected, saying "the unemployment rate remains low, labor market conditions remain strong, and inflation remains moderately elevated." Two governors dissented from the decision.
Stocks briefly rose before the Fed statement as investors assessed a stronger-than-expected preliminary estimate of second-quarter gross domestic product, but details in the report suggested the economy may be losing momentum.
Stocks retreated after Powell said it was too early to tell whether the Fed would cut interest rates at its next meeting in September, noting that current policy, while slightly restrictive, was not suppressing the economy.
“There’s not a lot of change in the statement,” said JP Powers, chief investment officer at RWA Wealth Partners. “It still shows some concerns about how these tariffs will play out, and it’s probably still data-dependent, and you can see that with the GDP report, where every data release is generating a lot of noise right now.” “I don’t know how he’s thinking about his legacy, but if I were Powell, I think he’d rather cut rates too late on the cusp of leaving office than risk any crisis on his way out.”
The Dow Jones Industrial Average fell 0.38% to 44,461.28, the S&P 500 fell 0.12% to 6,362.90, and the Nasdaq rose 0.15% to 21,129.67. The S&P 500 rose as much as 0.4% before reversing its upward trend.
LSEG data showed that market expectations for a September rate cut climbed to about 68% after the Fed's statement, but fell back below 50% after Powell's comments.
Earlier data from the ADP employment report showed private payrolls increased by 104,000 in July, topping expectations for a gain of 75,000 and the latest in a flurry of labor market data this week ahead of Friday's government jobs report.
Microsoft and Meta Platforms both rose more than 6% in extended trading after reporting quarterly results, while investors were still awaiting earnings reports from Amazon and Apple on Thursday.
A slew of recent earnings reports have initially boosted the stock market, with Teradyne surging 18.9% after its quarterly results, making it one of the best-performing stocks in the S&P 500. Solid results from a slew of consumer-facing companies also signaled shoppers’ resilience.
Starbucks reported better-than-expected third-quarter sales, but its shares fell 0.2%, while Hershey's shares rose 1.4% after the company reported better-than-expected results.
Still, the threat of tariffs remains, as U.S. President Trump said the United States will impose a 50% tariff on copper pipe and wire, although the measure is less severe than previously expected and does not include copper raw materials such as copper ore and concentrate.
The tariffs weighed heavily on the S&P 500 materials sector, which fell 2%, with Freeport-McMoRan shares plunging 9.5%.
Gold Market
Gold fell more than 1% on Wednesday as the Federal Reserve held interest rates steady and gave little indication of when it might cut them, while strong U.S. economic data further dented bullion's appeal.
Spot gold fell 1.5% to $3,275.92 an ounce. U.S. gold futures settled down 0.8% at $3,352.8. The Federal Reserve's decision to hold interest rates steady was divisive, offering little indication of when borrowing costs might be lowered and drawing dissent from two Fed governors.
Federal Reserve Chairman Jerome Powell said the central bank has not yet made any decisions for September, when many market participants expect the first rate cut of the year. He added that "downside risks to the labor market are certainly evident."
"Powell stuck to his guns as he focused more on controlling inflation than jobs, and the dollar jumped, putting additional pressure on gold, even though prices continued to hold the bottom of the range," said Tai Wong, a metals trader. "While a deeper correction is possible, it is likely to attract buyers as the overall thesis for the gold market - uncertainty, high U.S. debt, de-dollarization - remains strong."
The ADP National Employment Report showed U.S. private payrolls increased more than expected in July, although signs of a weakening labor market persist. Gold tends to perform well in low-interest-rate environments and periods of uncertainty.
Spot silver fell 3.2% to $36.97 an ounce, hitting a nearly three-week low.
Platinum tumbled 6.6% to $1,303.19, its lowest since June 24, while palladium fell 4.9% to $1,196.75.
Jim Wyckoff, senior analyst at Kitco Metals, said it looked like some profit-taking among shorter-term futures traders.
Oil Market
Oil prices closed up more than 1 percent on Wednesday as investors focused on U.S. President Trump's demands that Russia end the war in Ukraine as soon as possible and his threat of tariffs on countries that buy Russian oil.
September Brent crude futures, expiring Thursday, settled up 1.01% at $73.24 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 1.14% to $70. Investors largely shrugged off the impact of U.S. crude and refined product inventory data. Earlier in the session, both benchmarks fell nearly 1%.
The more actively traded Brent crude futures for October settled at $72.47, up 1.1%.
Trump said on Tuesday he would begin taking measures against Russia, including 100% secondary tariffs on its trading partners, if Russia did not show any progress toward ending the war within 10-12 days, up from a previous deadline of 50 days he had set.
He also said a 25% tariff would be imposed on goods imported from India from August 1 and that the country would be fined for buying Russian weapons and oil, but did not specify what the fine would be.
India has signaled it will comply, which could impact 2.3 million barrels per day of Russian oil exports, JPMorgan analysts wrote.
“Traders seem to be more focused on the (Russia-related) tariffs, while Indian compliance is seen as bullish for crude prices,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Meanwhile, the U.S. Energy Information Administration (EIA) said U.S. crude oil inventories rose by 7.7 million barrels last week, compared with analysts' expectations in a Reuters poll for a 1.3 million barrel drop.
U.S. gasoline inventories fell by 2.7 million barrels, compared with expectations for a 600,000-barrel decrease, while distillate fuel inventories, which include diesel and heating oil, rose by 3.6 million barrels, compared with expectations for a 300,000-barrel increase.
foreign exchange market
The dollar strengthened against major currencies on Wednesday after the Federal Reserve resisted pressure from President Trump and kept U.S. interest rates unchanged, in line with market expectations.
The Federal Open Market Committee voted 9-2 to keep its benchmark overnight interest rate steady in a range of 4.25% to 4.50% for the fifth consecutive meeting.
Trump's appointed Vice Chairman of Financial Supervision, Bowman, and Governor Waller both dissented, preferring to cut interest rates by 25 basis points.
At a subsequent press conference, Federal Reserve Chairman Jerome Powell said he expected a slow process in understanding how trade tariffs affect inflation.
"The Fed's decision to hold rates steady wasn't a surprise, although the market noted the two dissenting votes in favor of a rate cut," said Uto Shinohara, senior investment strategist at Mesirow Currency Management. "The dollar remained well supported after stronger data and the Fed's statement this morning, with the market pricing the September meeting as a coin toss."
Data earlier in the session showed U.S. economic growth rebounded more than expected in the second quarter, expanding 3%, compared with a 2.4% increase expected in a Reuters poll of economists.
The euro extended its losses against the dollar following the Fed's decision and as Powell spoke. The euro was last down 1% at $1.141775, its fifth consecutive day of losses and lowest level since June 11. Following its sharp reaction to the U.S.-EU trade deal earlier this week, the euro is on track for its first monthly decline since 2025.
The US dollar index extended its gains after the Fed meeting. The index rose 0.96% to 99.82 points, the highest level since May 29 and is expected to achieve its first monthly increase this year.
U.S. Treasury yields were mostly higher. The two-year note, which typically moves in tandem with Federal Reserve interest rate expectations, rose 6.6 basis points to 3.941%.
"I think people are reading too much into the GDP data," said Steve Englander, Standard Chartered's global head of G10 FX research. "Market participants shouldn't interpret the first quarter as very weak and the second quarter as very strong, as the main drivers were inventories and net exports. I would add the two quarters together and average GDP growth of about 1.5% per quarter. That's not a recession, but it's mediocre."
Last week's trade deal with Japan and another with the European Union over the weekend showed a renewed U.S. commitment to global engagement, easing investor concerns.
Trump announced a 25% tariff on Indian goods imported into the United States starting August 1, and signed an executive order to impose an additional 40% tariff on Brazil, bringing the total tariff to 50%.
Data on Wednesday showed Germany's economy shrank in the second quarter, while France's economy performed better than expected.
Comments from Bank of Japan Governor Kazuo Ueda will be in focus as investors hope a trade deal between Japan and the United States will pave the way for the central bank to raise interest rates on Thursday.
The dollar rose 0.55% against the yen to 149.29 yen, hitting its highest level since April 2; the dollar rose 0.82% against the Swiss franc to 0.81265 franc, hitting its highest level since June 23.
International News
Refined copper was exempted from the 50% tariff Trump imposed on semi-finished copper starting in August.
US President Trump imposed a 50% tariff on all semi-finished copper products entering the United States, but omitted the tariff from applying to refined copper imports, a move that will shield most domestic industries from potential cost increases. Trump issued a proclamation on Wednesday imposing a new round of tariffs on copper imports. However, the scope of the levies was less extensive than many market participants had expected. According to a White House document, the new tariffs will take effect on August 1st. Copper prices fell as much as 18%, but as of 2:11 pm New York time, they were trading at $5.1310 per pound, partially recovering those losses.
Trump signs executive order imposing 50% tariffs on Brazil
On July 30th, local time, the White House announced that US President Trump signed an executive order imposing a 40% tariff increase on Brazil, bringing the total tariff to 50%. Trump had previously announced that he would impose a 50% tariff on goods imported from Brazil starting August 1st. (CCTV News)
Trump says India will pay 25% tariff, threatens additional penalties over India-Russia energy deal
US President Donald Trump announced a 25% tariff on India starting August 1st and hinted at additional penalties for India's energy purchases from Russia. The Trump administration is set to impose new tariffs on dozens of trading partners on August 1st. The US leader's latest statement dashed India's hopes of receiving more favorable treatment than other regional countries. New Delhi was one of the first countries to hold talks with Washington following Indian Prime Minister Narendra Modi's high-profile visit to the White House in February. In response to Trump's latest statement, an Indian official, speaking on condition of anonymity, stated that New Delhi remains engaged with the US to secure a mutually beneficial trade agreement. Earlier reports indicated that Indian officials had stated they would continue negotiations with the US, aiming to reach a bilateral trade agreement by the fall.
Trump announces trade deal with South Korea: 15% tariffs + $350 billion in investment
US President Trump announced on social media that the United States has agreed to a comprehensive and complete trade agreement with South Korea. The agreement requires South Korea to pay $350 billion to the United States for US-owned and controlled investment projects, which will be personally selected by me as President. Additionally, South Korea will purchase $100 billion in liquefied natural gas (LNG) or other energy products, and South Korea has agreed to a significant investment for its own investment purposes. This payment will be announced during South Korean President Lee Jae-myung's visit to the White House in the next two weeks. Both sides also agreed that South Korea will fully open trade with the United States and accept US products, including cars and trucks, and agriculture. We have agreed to impose a 15% tariff on South Korea. No tariffs will be imposed on the United States.
Canadian Prime Minister announces conditional recognition of Palestinian state in September
On July 30, Canadian Prime Minister Jay Carney stated that Canada would recognize the State of Palestine at the United Nations General Assembly in September if the West Bank administration meets certain conditions. Carney stated that the Palestinian Authority must hold elections in 2026 and commit to other democratic reforms. Carney spoke with Palestinian President Mahmoud Abbas earlier that day before announcing the decision. After the current round of the Israeli-Palestinian conflict erupted in October 2023, Spain, Norway, Ireland, Slovenia, and several non-European countries announced their recognition of the State of Palestine. In July of this year, the United Kingdom and France also announced their recognition of the State of Palestine. (CCTV)
Lebanese Hezbollah leader: Will not succumb to external pressure to disarm
On July 30th, local time, Hezbollah leader Naim Qassem stated in a speech that the issue of Hezbollah's armed forces is an internal Lebanese issue and that Hezbollah will not succumb to external pressure to disarm. Qassem stated that Hezbollah's armed forces are part of Lebanon's national strength and that the true purpose of the US demand for disarmament is to weaken Lebanon's resistance and pave the way for Israel to expand its military presence in southern Lebanon. He emphasized that Hezbollah will not disarm, nor will it hand over a single weapon to Israel. Qassem stated that any force demanding Hezbollah's disarmament is serving Israel.
US suspends de minimis duty-free treatment for low-value goods
On July 30th, local time, the White House issued a statement announcing that US President Trump had signed an executive order suspending de minimis duty exemptions for low-value goods. The statement stated that, effective August 29th, all imported goods valued at $800 or less and previously eligible for de minimis duty exemptions, sent outside the international postal network, will be subject to all applicable tariffs. For goods shipped through the international postal system, parcels will be subject to tariffs based on either ad valorem or specific tariffs.
The Federal Reserve announced that it would keep interest rates unchanged
On the 30th, local time, the U.S. Federal Reserve concluded its two-day monetary policy meeting and announced that it would maintain the target range for the federal funds rate at 4.25% to 4.50%. Facing continued pressure from the Trump administration to cut interest rates, this is the fifth consecutive time the Fed has held rates steady. Observers believe the Fed's wait-and-see approach earlier this year stemmed from uncertainty surrounding the new U.S. administration's tariff policies, and its current wait-and-see approach is primarily due to its assessment of the actual impact of the government's tariff policies on prices this year. The Federal Reserve's National Economic Conditions Survey ("Beige Book"), released mid-month, showed that prices rose in all Federal Reserve Districts from late May to early July. Some analysts point out that given the relatively robust U.S. job market, the Fed is more inclined to maintain price stability to mitigate the risk of tariffs leading to higher domestic prices and a resurgence of inflation. Wall Street generally expects the Fed to cut interest rates twice this year, totaling 50 basis points, with the first cut expected in September, with a near 65% probability. (CCTV Finance)
Key points from Powell's speech
1. The economy is on a solid footing, with inflation just above target. 2. The Fed remains focused on its dual mandate, and indicators suggest a slowdown in economic growth. This slowdown reflects a moderation in consumer spending and continued weakness in the housing sector. 3. Wage growth has moderated but remains faster than inflation. 4. Long-term inflation expectations remain contained. 5. The reasonable baseline scenario is that the impact of tariffs on inflation is transitory. 6. We have not yet made any decisions regarding September. 7. This was a good meeting, with dissenters clearly articulating their positions. 8. Services inflation is declining, while goods inflation is rising. 9. There is still a long way to go to understand the full extent of the tariff impact. 10. Inflation is more than halfway back toward our 2% target. 11. Dissenters to the July Fed statement will provide information in the next day or two. 12. When asked whether he intends to remain on the Board after his term as Chair ends, Powell said he had no information on that matter at this time.
Russian President's Press Secretary: Russian economy "has become somewhat immune" to sanctions
In response to US President Trump's threat to impose new sanctions on Russia, Russian presidential press secretary Dmitry Peskov stated on the 30th that the Russian economy has become "immune" to sanctions over the years. Peskov said: "We have been living under many sanctions for a long time, and the Russian economy has been operating under a lot of restrictions. We have developed a certain immunity to sanctions." (Xinhua News Agency)
Indian refiners ask govt for clarification on Russian oil issue
Indian refiners, a significant source of Russian crude oil demand, are seeking clarification from the New Delhi government on whether their purchases will be affected by President Trump's latest social media post. On Wednesday, US President Trump announced he would impose a 25% tariff on Indian exports to the US starting August 1st and warned of potential additional penalties for India's continued energy purchases from Russia. India has become a major buyer of Russian crude oil since the outbreak of the Russia-Ukraine conflict in 2022. Indian companies, which purchase over 1 million barrels of Russian crude oil per day, are seeking clarity on what Trump's post means for their purchases, according to three sources familiar with the matter.
Domestic News
National Informatization Development Report (2024) released
The "National Informatization Development Report (2024)" press conference was held in Beijing on July 30. The report shows that my country insists on improving people's well-being as the starting point and end point of informatization development, continuously improving the equality, inclusiveness, and convenience of informatization services. By 2024, digital life services will be popularized at an accelerated pace, digital culture will gain stronger momentum, e-government will reduce burdens and increase efficiency, and people's sense of gain, happiness, and security will continue to rise. (Xinhua News Agency)
HKTDC: Over 60% of Hong Kong businesses are optimistic about the potential of the mainland e-commerce market
At the launch ceremony of the second "Hong Kong Good Products Festival," HKTDC Research Director Carol Fan stated that over 60% of Hong Kong businesses surveyed view mainland China as the most promising e-commerce market. To help Hong Kong businesses better understand the mainland e-commerce market, the HKTDC conducted surveys of 2,200 consumers across various regions in mainland China, investigating their online shopping behaviors and characteristics. Fan believes that mainland China is the world's largest e-commerce market, boasting a mature e-commerce industry. Hong Kong businesses must deeply understand mainland consumers' online shopping behaviors and preferences for Hong Kong products in order to formulate appropriate business strategies and effectively capture opportunities in the mainland e-commerce retail market.
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