Investing

• Economist McKeown warns that an AI earnings bust would most heavily impact economies that benefited from the investment boom, specifically the U.S., Taiwan, Korea, Mexico, and China. • In contrast, Europe is expected to have relatively little near-term exposure due to its limited involvement in the current AI infrastructure buildout. • The risk intensifies if demand weakens permanently due to a fundamental reassessment of AI's actual technological potential.

• Bank of America (BofA) maintains its forecast that the Federal Reserve will implement a 75-basis-point interest rate hike starting in September. • Analysts argue that the upcoming Consumer Price Index (CPI) report is a more critical indicator than recent jobs data, as the Fed remains primarily focused on curbing inflation. • The report's outcome is pivotal because lower-than-expected inflation numbers could potentially prevent further rate hikes leading up to the midterm elections.

• Stock market volatility in South Korea has begun to ease as investors unwind leveraged trading positions. • The stabilization follows a period of heightened fluctuations driven by high-leverage bets on market movements. • This shift is significant as it indicates a reduction in speculative pressure, potentially leading to more sustainable price action for Korean equities.

• European equities are seeing a surge in global investor interest driven by strengthening corporate earnings and improving economic data. • The Stoxx Europe 600 Index recently completed its longest winning streak since June, gaining 11% so far in 2026. • Major regional benchmarks, including Germany’s DAX, France’s CAC 40, and Italy’s FTSE MIB, have all reached record highs.

• Macro projections suggest a rebound for European laggards, with small caps, telecoms, and real estate expected to outperform by approximately 10% in the coming months. • German equities are projected to see a further 5% outperformance, driven by increased infrastructure spending and a recovery in domestic economic activity. • Luxury companies hold the highest potential upside, with a projected 15% outperformance by year-end, contingent on firm global growth and economic support from China.

• Saudi Arabia has issued a warning regarding imminent, coordinated attacks from Iraqi militias, Iran-backed Houthis, and the IRGC. • The anticipated strikes are expected to originate from the north, south, and east, specifically targeting civilian, economic, and energy infrastructure. • This escalation has put the Gulf region on edge and is influencing Asian trading markets on Friday, August 7, 2026.

• Australia's trade balance shifted to a surplus in June, exceeding market forecasts due to a significant rebound in exports. • The growth was driven by increased iron ore shipments to China, Japan, and South Korea, as well as stronger coal exports to India, Japan, and China. • Solid gains in liquefied natural gas (LNG) exports further contributed to the rise in overall export earnings for the month.