Economic Watch

• The Indian government provided several parliamentary updates, including the disbursement of ₹5.26 crore by the Employees' State Insurance Corporation (ESIC) under the Atal Beemit Yojana (ABVKY). • To address labor issues, the government launched a three-month drive aimed at resolving 16,033 pending labor disputes. • Other key developments include the approval of polymer note trials and the disposal of 79 FEMA applications since FY22.

• Indian equity markets, including the Nifty and Sensex, have declined for five consecutive sessions due to rising oil prices, geopolitical tensions, and persistent foreign institutional investor (FII) outflows. • Technical indicators show continued weakness, with the Nifty currently facing a key support level near 23,600 and resistance around 24,000. • Investors are closely monitoring five critical factors this week to determine market direction: the US Federal Reserve meeting, Q1 corporate earnings, rupee fluctuations, and crude oil trends.

• The FTSE 100 is projected to open slightly lower on July 20 as investors react to global market weakness and heightened geopolitical tensions in the Middle East. • Market participants are closely analyzing oil price fluctuations and corporate earnings reports to gauge the current state of global economic growth. • Investors are prioritizing upcoming economic data from China and the United States, specifically focusing on inflation trends and their impact on interest rates.

• China is deploying AI-driven solutions across the Global South to enhance economic development and public safety, as highlighted in a Xinhua report from Shanghai on July 18. • In Cambodia's Takeo Province, AI technology is being utilized in the aquaculture sector, where drones are used to automate feeding rounds for shrimp ponds. • These initiatives demonstrate China's strategy to export technological infrastructure to developing nations to improve agricultural efficiency and industrial productivity.

• Economists identify a chain of interlocking global risks for the second half of 2026, with the fragile peace between the US and Iran serving as the primary volatility factor. • Oxford Economics predicts central banks will be more dovish than markets expect, unless supply stress occurs in AI-input prices or shipping through the Strait of Hormuz is disrupted. • The immediate focus is on the Federal Reserve's upcoming rate decision led by chair Kevin Warsh, following a soft jobs report in June.

• The FTSE 100 rose approximately 0.5% in early trading on July 2, 2026, rebounding from previous losses as investors reacted to a stronger pound and falling oil prices. • Gains were primarily driven by the defense and aerospace sectors, which are benefiting from an increase in global defense spending. • In contrast, the FTSE 250 faced pressure due to its heavy reliance on domestic demand and sensitivity to the Bank of England's interest rate outlook.

• China is demonstrating economic resilience supported by a solid foundation and the emergence of new growth drivers. • Recent data indicates a slowdown in certain economic indicators since the second quarter, reflecting domestic structural adjustment pressures. • Many Chinese enterprises are currently facing operational difficulties attributed to an increasingly complex international environment.