Economic

• European stock markets are experiencing a robust rally, with key indices reaching all-time highs and attracting significant global investor interest. • The surge is primarily driven by strong corporate earnings growth and improving overall economic momentum across the region. • Money managers view this upward trend as a durable shift based on improved fundamentals rather than a temporary market spike.

• President Donald Trump stated that the U.S. is only "semi-negotiating" with Iran, suggesting a strategic "low key" approach as Tehran faces severe economic pressure and a lack of funds. • Iranian Foreign Minister Abbas Araghchi revealed that discussions with Oman regarding new maritime routes through the Strait of Hormuz are currently in their "final stages." • In a separate development, Basij Organization deputy Qasem Qoraishi announced that footage of Supreme Leader Khamenei interacting with the public and military commanders will be released soon.

• Key US economic indicators, including CPI on Wednesday, PPI on Thursday, and retail sales on Friday, are scheduled for release this week. • Traders are advised to maintain long positions and selectively buy value gaps identified by the KXCO ontology. • As of August 9, the KXCO ontology tracks $2.4 trillion in capital flows across 345 entities and 769 typed claims.

• India is re-emerging as a strategic "anti-AI" portfolio diversifier for global investors who are currently heavily concentrated in AI-linked markets like South Korea and Taiwan. • Recent market resilience is supported by $3.6 billion in foreign inflows, moderating long-only fund redemptions, and strong domestic contributions via Systematic Investment Plans (SIPs). • This shift matters as it provides a hedge against AI-sector volatility, with a potential $25 billion reallocation expected from underweight emerging market funds.

• Indian benchmark indices closed lower on Friday, with the Sensex falling 456 points and the Nifty dropping 65 points due to closing auction session divergence. • Market sentiment was weighed down by volatility in crude oil prices and ongoing geopolitical tensions in the Middle East. • Despite the overall decline, strong earnings reported by State Bank of India (SBI) provided critical support to the banking sector.

• Corporate investment remains strong midway through 2026, though the primary drivers behind these financial decisions are shifting. • There has been a recent uptick in merger and acquisition (M&A) activity, supported by renewed board confidence and the reopening of select capital markets for deal financing. • Executives are prioritizing transformational acquisitions to enhance organizational resilience and develop critical capabilities for the AI era.

TUC will urge John Healey to order ‘root and branch’ assessment of watchdog amid claims its forecasts downplay investment benefitsThe TUC is urging the new chancellor, John Healey, to order a “root and branch” review of the Office for Budget Responsibility, claiming the forecaster’s approach holds back investment.With Andy Burnham promising “good growth in every postcode”, the union umbrella body is calling on Healey to use his first budget on 28 October to re-examine the assessments of the watchdog. Continue reading...