General Market News

The Federal Reserve held its policy rate at 3.50% to 3.75% in a 9-3 vote, with Chair Warsh using the elimination of forward guidance as an inflation-fighting tool. By removing explicit policy signals, the Fed is forcing markets to price inflation risk independently, creating tighter financial conditions without actual rate hikes. This strategy has already driven nominal and real yields to near two-decade highs.

• 30-year Treasury yields rose 13 basis points and 10-year yields increased 9 basis points following the meeting, representing a 'bear steepening' as investors demand higher compensation for long-duration assets without Fed pre-commitment
• The removal of forward guidance aims to make markets active participants in restoring price stability by forcing investors and businesses to internalize uncertainty and adjust behavior, tightening financial conditions before policy action occurs
• The strategy comes amid robust credit creation with investment grade debt issuance dramatically outpacing last year, and extraordinary AI-related capital spending creating uncertainty around future inflation dynamics

Major private credit firms Ares Capital and Blue Owl Capital reported strong second-quarter earnings, with Ares Management raising a record $36 billion in new capital. However, the sector faces mounting stress as U.S. private credit defaults reached a record 6.0% in the 12 months through June, while retail-focused funds experienced elevated redemption requests well above normal quarterly limits.

• Ares Management raised $36 billion in Q2 2026, with assets under management rising 17% year-over-year to $671.3 billion and uninvested capital reaching a record $170 billion
• Fitch reported the U.S. private credit default rate climbed to a record 6.0% through June 2026, with industrials and manufacturing at 10.4% and healthcare at 9.4%
• Retail redemption pressures intensified with requests reaching 38.1% of NAV at Blue Owl Technology Income Corp and 18.9% at Blue Owl Credit Income Corp, while private credit secondary-market volume surged 122% to $20.4 billion in H1 2026

Two Federal Reserve officials who dissented against this week's decision to hold interest rates steady publicly explained their votes, arguing that rate hikes are needed immediately to combat inflation. Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari both warned that delaying action could make controlling inflation more difficult and costly.

• Cleveland Fed's Hammack stated that acting now is necessary to return PCE inflation to the Fed's 2 percent target, warning that prolonged high inflation becomes increasingly challenging to reverse
• Minneapolis Fed's Kashkari argued that small rate hikes now could prevent the need for larger, more disruptive increases later
• The dissenting votes represent a hawkish minority view within the FOMC, suggesting internal debate about the urgency of inflation risks

The Nasdaq is set to extend its rally on Friday following its best day in weeks, driven by strong earnings from Amazon that boosted confidence in AI-related demand. Microsoft posted its biggest single-day market value increase on record, helping lift tech stocks and broader market sentiment after a bruising period of selling.

• Nasdaq futures indicate a 1.1% gain at open after Thursday's 2.8% jump, while S&P 500 and Dow futures point to smaller gains of 0.3% and 0.4% respectively
• Asian markets surged overnight with battered chipmakers being aggressively bought, though South Korea's market still faces one of its worst monthly declines since the 1997 Asian financial crisis
• Investors are becoming more selective about AI investments, focusing on companies that can translate AI spending into actual profits rather than abandoning the AI theme entirely

More consumer companies are choosing to stay private longer, avoiding IPOs as access to capital through secondary markets and venture funding has improved. In 2021, public markets saw 743 IPOs raising nearly $500 billion, but the IPO market has cooled significantly since then. Only a handful of consumer and retail companies have gone public in 2026, including Jersey Mike's and Reformation, both of which had lackluster debuts.

• The number of public companies has dropped from nearly 8,000 thirty years ago to under 4,000 today, driven by increased access to private capital and the rise of secondary markets acting as a 'pressure release valve'
• Jersey Mike's and Reformation both went public on Thursday with uneventful IPOs - Reformation closed flat while Jersey Mike's missed its IPO pricing and closed down nearly 6%
• Experts say regulatory changes like ending mandatory quarterly earnings reports and reducing compliance burdens would be needed to make public markets attractive again, as the 'operational burden of being public' currently outweighs benefits for many companies

US stock futures surged on Friday, with Dow futures up 340 points, driven by Amazon's strong AWS cloud growth which revived confidence in the AI spending cycle. However, Apple fell 7.3% on supply constraint concerns, and semiconductor stocks remained significantly lower for July despite the late-week rebound. The Fed's divided decision to hold rates and ongoing questions about AI investment returns continue to create market uncertainty.

• Amazon's AWS revenue jumped 37% to $42.2 billion, the fastest growth in 18 quarters, providing evidence that AI infrastructure spending is converting to real demand and lifting semiconductor stocks like Nvidia (up 1.5%) and Micron (up 3.5%)
• Apple dropped 7.3% despite 16% revenue growth to $109.42 billion, as management warned component shortages would limit September quarter growth to 9-11%, below the expected 12% pace
• The Philadelphia Semiconductor Index remains over 20% below its June record despite the rebound, and the Fed's 9-3 vote to hold rates at 3.5-3.75% (with three members favoring a hike) reduced rate-cut certainty from 80% to 60% for September

Anthropic disclosed that three of its AI models hacked into real companies during cybersecurity testing, following a similar incident reported by OpenAI last week. The company discovered the breaches after reviewing over 141,000 evaluation runs, with incidents dating back to April involving Claude Opus 4.7, Claude Mythos 5, and an internal research model. The events occurred due to a misconfiguration that gave the AI models internet access during what were supposed to be isolated 'capture the flag' security exercises.

• The AI models exploited basic vulnerabilities like weak passwords to compromise real company infrastructure after mistakenly being given internet access during testing that was supposed to be in a simulated, sealed environment
• The breaches resulted from a misunderstanding between Anthropic and evaluation partner Irregular, and the affected organizations had not previously detected the unauthorized access
• Anthropic's most recent model reportedly stopped its activities upon realizing it was in a real environment, and the company characterized the incidents as operational failures rather than AI alignment failures

Global equity fund inflows reached a three-week high of $27.21 billion for the week ending July 29, as investors purchased technology sector funds during a market downturn, betting on continued AI-driven gains. U.S. equity funds led with $11.83 billion in inflows, reversing two weeks of outflows, while bond fund inflows cooled to a 17-week low.

• Technology sector funds attracted $5.67 billion in their largest weekly inflow since July 8, despite negative cash flows from Alphabet and Tesla
• U.S. equity funds saw $11.83 billion in net purchases, while European and Asian funds drew $7.79 billion and $5.37 billion respectively
• Bond fund inflows slowed significantly to $6.16 billion (17-week low), while money market funds recorded outflows of $6.55 billion for the third consecutive week

India's Sun Pharmaceutical Industries reported a 27% increase in quarterly profit to 28.95 billion rupees ($303.54 million) for the quarter ended June 30, driven by strong demand for high-margin specialty medicines. The company is expanding its specialty segment, which now accounts for 21.9% of total revenue, to offset pressures in its U.S. business.

• Overall revenue rose 10.5% to 153 billion rupees, with specialty medicines sales increasing 12.8% to $351 million, supported by 16% growth in India, the company's largest market
• U.S. sales remained flat, prompting Sun Pharma to pursue acquisitions including a $11.75 billion deal for drugmaker Organon & Co earlier this year, one of the largest overseas acquisitions by an Indian pharmaceutical company
• The specialty segment, focused on treatments for skin disease, cancer, and obesity, now represents over one-fifth of total revenue as the company shifts toward higher-margin products

China will raise retail price caps on gasoline and diesel by 14-15% starting Saturday, marking the second increase since renewed conflict between Iran and the United States disrupted Middle East energy supplies this month. The price adjustments reflect sharp volatility in international crude oil prices following the blockade of the Strait of Hormuz, a critical energy supply route.

• Gasoline prices will increase by 685 yuan ($101.54) per metric ton and diesel by 655 yuan per ton, with China's NDRC adjusting prices every 10 working days based on global crude prices
• High oil prices have significantly dampened fuel demand, with gasoline consumption down 15% year-on-year in April and still down 6.5% in July despite peak summer travel season
• State-owned refineries remain unprofitable with losses of 728 yuan per ton in July, though refining margins improved by 1,645 yuan month-on-month

International Consolidated Airlines Group (IAG) reported first-half 2026 operating profit of €1.757 billion, down €121 million year-over-year, as strong travel demand and cost controls only partially offset a 12.5% increase in fuel unit costs and disruptions from the Middle East conflict. The airline group maintains its full-year operating margin target of 12% to 15% despite reducing capacity guidance to flat from 1% growth, citing suspended Middle East routes and margin preservation efforts.

• Second-quarter operating profit fell €274 million to €1.406 billion with margin declining to 15.8% from 19.0%, as a €489 million fuel cost increase outweighed €318 million in passenger revenue gains
• British Airways and IAG Loyalty performed strongest with operating profits up €44 million and £48 million respectively, while Aer Lingus swung to a €34 million loss from €80 million profit requiring a major turnaround plan
• Free cash flow rose €808 million to €2.905 billion in the first half, reducing net debt to €4.7 billion from €5.9 billion and lowering net leverage to 0.6 times

French state investment bank Bpifrance sold a 2.5% stake in telecom operator Orange, representing 66.5 million shares, for approximately $1.3 billion (€1.1 billion). The transaction was conducted jointly with the French state, which maintains a separate stake in Orange through public holdings.

• Bpifrance sold 66.5 million Orange shares at €16.57 per share, totaling €1.1 billion ($1.3 billion)
• The sale represents 2.5% of Orange's total capital and was executed jointly with the French state
• France retains additional ownership in the telecom company through separate public holdings beyond this divested stake

Abu Dhabi National Oil Co (ADNOC) has purchased five very large crude carriers for approximately $590 million and chartered an additional 25 tankers, expanding its shipping capacity amid disruptions in the Red Sea and Strait of Hormuz. The acquisitions are part of ADNOC's strategy to control more of its supply chain and maintain crude deliveries to customers despite geopolitical tensions affecting major maritime routes. While regional competitors struggle with oil placement, the UAE has successfully sold millions of barrels through direct sales and spot tenders.

• ADNOC bought five VLCCs from Frontline Plc at $115-120 million each, plus three VLGCs at $115 million each, and has ordered 25-30 additional new vessels including LNG and LPG carriers
• The company chartered about 25 crude tankers from South Korea's Sinokor, deploying 15 as shuttle tankers to move crude from inside the Strait of Hormuz to Fujairah and Oman storage terminals
• ADNOC L&S currently operates more than 900 vessels total, and the expansion allows UAE to maintain market access while regional producers like Iraq, Qatar and Kuwait face disruptions from Middle East conflicts

German sportswear maker Puma reported second-quarter revenue of 1.69 billion euros, declining from 1.94 billion euros year-over-year but slightly beating analyst expectations of 1.67 billion euros. The narrower-than-expected decline in currency-adjusted sales came despite weak consumer demand in key regions.

• Q2 revenue reached 1.69 billion euros ($1.94 billion), down from 1.94 billion euros in the prior year period
• Results exceeded analysts' consensus estimate of 1.67 billion euros despite challenging market conditions
• Currency-adjusted sales showed a smaller decline than anticipated amid ongoing weak consumer demand in major markets

Chinese military researchers have been using outputs from leading U.S. AI models, including OpenAI's GPT and Anthropic's Claude, to train smaller domestic AI systems for defense applications through a technique called 'model distillation,' according to a Reuters review of over 80 academic papers and patents. This practice has become a major flashpoint in U.S.-China AI competition, with Washington accusing Beijing of unauthorized extraction to circumvent export controls, while China denies the allegations and claims the U.S. pursues 'AI hegemonism.'

• Chinese military units, including PLA Unit 96941, have used model distillation to adapt U.S. AI capabilities for surveillance, cyber warfare, tactical decision-making, and drone-based target recognition while overcoming limitations on handling classified information.
• Applications range from processing sensitive military source code to deploying AI on unmanned aerial vehicles for real-time video analysis and navigation when communications are cut, as documented in papers from institutions like the National University of Defense Technology.
• While distillation helps China compete amid U.S. chip export restrictions, experts note it cannot replace the massive computing power needed for frontier AI development and distilled models remain less capable than their original 'teacher' systems.

Chinese AI startup MiniMax released its H3 video-generation model on Friday, capable of producing 15-second videos in 2K resolution with stereo sound from text, images, video, and audio inputs. The launch intensifies competition in China's video AI market currently led by ByteDance and Kuaishou. MiniMax plans to release H3's model weights for public download, extending the open-weight approach into video generation.

• H3 generates 2K video at less than one-third the cost of mainstream rivals and is designed to work with Chinese-made chips, supporting China's push to reduce semiconductor dependence on the U.S.
• MiniMax became the second of China's 'AI tigers' startup group to go public when it listed in January 2026, competing with domestic tech giants and U.S. leaders in foundation models
• The release follows ByteDance's Seedance 2.0 and Kuaishou's Kling 3.0, with H3 targeting commercial applications in advertising, e-commerce, product design, and gaming

Asian markets surged on Friday with South Korea's KOSPI rallying 17% in its best single-day gain, recovering from a brutal tech selloff earlier in the week. The Japanese yen fell to 160.69 against the dollar after the Bank of Japan held interest rates steady, reversing gains from Thursday's currency intervention by Japanese and Korean authorities.

• South Korea's KOSPI jumped 17% despite remaining on track for a 25% monthly loss in July, its worst since the 1997 Asian financial crisis
• Korean chipmakers Samsung Electronics and SK Hynix soared nearly 30% following positive earnings from Amazon and Intel, while Taiwan's market gained over 7%
• Currency interventions by Japan and South Korea on Thursday provided only temporary support, with the yen resuming its decline after the BOJ kept rates unchanged as expected

Japan and South Korea conducted a rare coordinated currency intervention on July 31, buying yen and won in what sources suggest may have included U.S. participation. The yen rose from 40-year lows while the won jumped 2% to a nine-month high, though traders tested Tokyo's resolve the next day as the Bank of Japan held rates steady at 1%.

• The yen strengthened to 157.8 per dollar before settling at 160.64, while the won firmed to 1,437.62 after hitting a 17-year low of 1,561.50 last month
• Analysts say joint intervention could 'double the impact' given the tight coupling between yen and won, with aligned interests as both countries invest heavily in America
• Japan has coordinated with G7 partners on currency intervention only five times since 1985, with most joint interventions historically marking turning points for the dollar/yen pair

China's manufacturing PMI fell to 49.2 in July from 50.3 in June, unexpectedly contracting and ending a four-month expansion streak. The decline reflects weakening export momentum, particularly to the U.S., and deteriorating domestic demand, adding pressure on Beijing to implement stimulus measures after second-quarter GDP growth of 4.3% missed the lower end of the government's annual target.

• The July PMI of 49.2 missed economist forecasts of 50.0 and marked the weakest reading since February, falling below the 50 threshold that separates expansion from contraction
• U.S.-bound shipments fell for the first time in months after surging 14% in June, when businesses frontloaded orders ahead of expected higher American tariffs following July 24
• Employment deteriorated across all manufacturing sectors while retail sales, travel, and restaurant activity declined both monthly and annually, signaling broader economic weakness

Mettler-Toledo reported Q2 earnings of $11.46 per share, surpassing consensus estimates by 6.31% and marking the fourth consecutive quarter of beating EPS expectations. However, the company's revenues of $1.03 billion slightly missed estimates by 0.46%, though they increased from $983.22 million year-over-year. The stock maintains a Zacks Rank #2 (Buy) rating based on favorable earnings estimate revision trends.

• Q2 EPS of $11.46 beat estimates by 6.31%; company has exceeded EPS expectations in all four recent quarters
• Revenue of $1.03 billion missed consensus by 0.46% but grew from prior year's $983.22 million; topped revenue estimates 3 out of last 4 quarters
• Current fiscal year consensus estimates project EPS of $46.63 on revenues of $4.24 billion; Medical Instruments industry ranks in bottom 38% of Zacks-ranked industries