Market News

The tiered structure here matters more than the headline rate: a 100% tariff on militarily sensitive drones and components targets China directly given its dominance in that segment, while the lower 15% and 10% rates carved out for the EU, Japan, South Korea, Taiwan and the UK function as a soft incentive for allied supply chains rather than a blanket trade barrier. Combined with the onshoring authorisation for Commerce and the parallel shipbuilding memorandum, this reads as part of a broader push to rebuild US defense-adjacent manufacturing capacity, a theme likely to keep showing up alongside the administration's tariff and industrial policy agenda through the rest of the year. Watch defense contractors and drone makers with US…

• Trump orders more tariffs, this time up to 100% on drone imports. Cites security.
• Follow-up: Latvia shoots down drone hours after issuing air threat alert
• EUR risk: Latvia issues air threat alert, Finland restricts Gulf of Finland traffic
• PBOC sets USD/ CNY reference rate for today at 6.7878 (vs. estimate at 6.7413)
• Franklin Templeton stays bullish on stocks, leans into AI and US
• Yen intervention could come again at any yen level, ex-official Furusawa
• UBS sees more room to run for stocks, favours broader global exposure
• OpenAI's annualized revenue run rate has surpassed $40 billion says a Bloomberg report
• ICYMI - Barkin says rate path unclear as sticky inflation meets resilient economy
• NZ manufacturing growth cools to 54.3 in July after June's surge
• <a href="https://investinglive.com/central-banks/fed-s-goolsbee-says-inflation-data-improving-hopes-tariff-effects-fade"…

The scale of this shift is the story: China's exports have gone from under 600,000 vehicles in 2019 to a forecast of up to 10 million this year, and shipping capacity simply hasn't kept pace despite a 40 percent expansion in the global car-carrier fleet. Charter rates have nearly doubled since late last year, a dynamic worth watching for margin pressure on Chinese automakers already competing fiercely at home, and for read-through to broader dry bulk and container shipping names benefiting from the overflow demand. The domestic angle matters too, with Chinese car sales down over 20 percent in the first half of the year, export capacity is functioning as a pressure valve for oversupply, reinforcing China's ongoing demand destruction story…

This confirms the escalation we flagged as a live possibility in our earlier piece, this wasn't a stray drone drifting off course, it required a NATO air defence mission to physically shoot it down over Latvian territory, a more serious outcome than the alert-and-clear pattern that has repeated through 2026. Combined with 15 drones downed near Russia's own Leningrad border region and reports that NATO's northern members are actively hardening dams, power plants and gas infrastructure against a possible false flag attack, the story has moved from routine border friction toward something closer to sustained low-level harassment. Not yet a market moving event on its own, but worth tracking closely alongside European defence names and any…

Franklin Templeton's note lands as a risk-on counterweight to the more cautious Fed and inflation narratives dominating this week, arguing that strong corporate earnings outweigh geopolitical tension and rate uncertainty. Its preference for US, Japan and emerging market equities over Europe and Australia reflects a straightforward AI exposure trade, betting that markets tied to the technology buildout will keep outperforming those more sensitive to energy and commodity swings, a call that puts it somewhat at odds with Australia's own rate and growth backdrop.

---

Earlier on the Fed:

• ICYMI - Barkin says rate path unclear as sticky inflation meets resilient economy
• Fed's Goolsbee says inflation data improving, hopes tariff effects fade
• ICYMI -…

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate. More here on this.

• PBOC injected CNY 349bn via overnight reverse repos, but ran zero 7-day reverse repo volume Friday
• Net effect: CNY 1.001tln drained today via maturities, no new reverse repos conducted
• Weekly net drain totals CNY 1.0985tln as repo and outright maturities outpaced injections

This article was written by Eamonn Sheridan at investinglive.com.

Individually, these alerts rarely move markets, Latvia and Finland have both issued similar drone related warnings repeatedly through 2026 as drones stray off course near the Russian border. The relevance here is cumulative rather than singular: another pair of alerts landing the same evening keeps NATO's eastern flank in the geopolitical risk conversation even as headlines remain dominated by the Middle East, and any escalation beyond a precautionary posture, an actual intrusion, interception, or casualty, would be the trigger that moves European risk sentiment and defence names rather than the alerts themselves.

Still the knee jerk is a bid for the USD. 

---

Two more airspace alerts on NATO's eastern flank, a now familiar pattern rather…

This lands directly on top of the yen story that had already been building through the week, with USD/JPY drifting back to around 159.50 after intervention drove it as low as roughly 155 last month. Furusawa's comments effectively confirm what the market had started pricing in on its own, that verbal and physical intervention only buys time and that the real lever is the BOJ's rate path. His framing that Tokyo could act again at any level, not just a specific trigger point like 160 or 162, removes the psychological comfort some traders had been taking from the idea of a defended line, and his read that September hike odds have jumped to 76% from 24% in two weeks gives the pair a much firmer near term catalyst. Combined with his projection…

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader…

UBS is telling clients that despite the risk of bouts of volatility as Fed policy expectations shift with each data print, the broader global equity rally remains intact and the bank still sees upside for the S&P 500. The more notable call is the push toward diversification, with UBS arguing that concentration risk in US markets makes European and Asian equities a more effective way to participate in what it frames as a broadening rally rather than a narrow one. That view aligns with a strong Q2 European earnings season and robust Asian earnings growth forecasts, giving the diversification case a fundamental underpinning rather than a purely valuation driven one.

---

UBS isn't backing away from stocks, it's just telling clients to stop…

BOTTOM LINE: Outlook for investors

The rapid growth demonstrates strong commercial demand for generative AI across both consumer and corporate sectors. However, as OpenAI and Anthropic head toward their respective public debuts, investors will closely evaluate whether these growth rates can be maintained against the massive capital expenditures required to build and run next-generation models.

---

Summary:

OpenAI’s annualized revenue run rate has crossed $40 billion, effectively doubling its financial pace from late 2025. The rapid acceleration comes as the AI company prepares for an anticipated initial public offering (IPO), bolstered by strong demand across consumer subscriptions, new advertising streams, and enterprise software.

Bloomberg…

The pullback from June's standout reading looks more like a natural correction than a genuine turn in the cycle, with every sub-index still comfortably in expansion territory and the headline figure well above the survey's long run average. The more telling signal is the shift in tone among respondents, with a majority of comments now negative, pointing to Middle East driven cost pressures, soft customer spending and election related uncertainty as headwinds. That combination points to a sector still growing but increasingly cautious about the months ahead, a pattern likely to show up first in softer new orders and employment readings before it shows up in headline output.

---

New Zealand manufacturers are still growing, but they are…