Shock

• Bond markets experienced a sharp sell-off following the Federal Reserve's decision to hold interest rates steady, indicating a growing disconnect between the central bank and investors. • Fed Chairman Kevin Warsh continues to advocate for a "quieter" central bank and a strategy of letting markets run their course, a vision he established prior to his appointment. • Simultaneously, the Financial Times reported that the AI-focused hedge fund Situational Awareness is overextended and seeking new capital, raising concerns about broader systemic market stress.

Soldiers and emergency workers are combing through a badly damaged shopping mall and collapsed houses looking for trapped survivorsThe death toll from the major earthquake that hit Japan on Tuesday has risen to 17, as the search for trapped survivors inside a badly damaged shopping mall and collapsed houses in the country’s south-west continues.The magnitude 6.8 earthquake that struck the Kumamoto prefecture on the island of Kyushu has injured at least 62, the prefectural government said. That number has steadily grown, fanning fears it will rise. Continue reading...

Military mobilises thousands of personnel after quake on southern Kyushu island that registered a maximum 7 on the Japanese shindo intensity scale At least five people have been killed, and nine are missing after a 6.8 magnitude earthquake struck southern Japan on Tuesday, injuring hundreds and knocking out power and water to tens of thousands.The quake – which registered a maximum 7 on the Japanese shindo intensity scale – hit at 4.27pm on Tuesday, centred on Kumamoto prefecture on the southern Kyushu island. Continue reading...

• Asian semiconductor stocks suffered their worst day as Samsung Electronics and SK Hynix slumped 13% to 15%, while Japan's Kioxia dropped 18% and Tokyo Electron fell 11%. • The crash was driven by fears of reduced AI financing from Big Tech, intensifying competition from China's CXMT listing, and reports regarding DUV lithography development. • Market volatility was further exacerbated by a stronger US dollar, a weaker yen, and rising expectations of a Federal Reserve interest rate hike.

• Asian financial markets experienced a sharp decline on Tuesday, led by a selloff in semiconductor and technology stocks. • The Nikkei 225 in Japan fell 3.61% to 62,584.24, while the KOSPI in South Korea dropped 7.60% to 6,221.81, with companies like Tokyo Electron, Advantest, Samsung Electronics, and SK Hynix facing heavy selling. • A reported breakthrough in Chinese extreme ultraviolet lithography manufacturing contributed to the decline, raising fears of structural changes in the tech industry.

• Global stocks are rising following optimistic expectations for peace talks with Iran. • Recent data from Asian economies, including Taiwan and Singapore, indicates that the high-tech employment share has remained largely unchanged or even declined despite the ongoing AI boom. • This trend suggests a potential disconnect between the economic contribution of the tech sector and actual job growth in these regions.

• Political scientist Robert Pape has issued a warning regarding a potential "August energy shock" that could cause global oil prices to skyrocket. • The prediction was intensified on Monday following recent escalations involving the Houthis, a Yemeni military organization. • This development matters as it suggests a heightened risk of instability in critical energy shipping lanes, potentially triggering global economic volatility.

• Chinese AI firm Moonshot AI has launched Kimi K3, an open-source large language model (LLM) designed to compete with global leaders. • The model has surprised the industry by delivering performance comparable to high-end systems from OpenAI and Anthropic while operating at a significantly lower cost. • This development is significant as it challenges the dominance of Western AI giants by providing a high-efficiency, cost-effective alternative.

• European equity markets have maintained growth and resilience following a strong performance in 2025, according to recent analyst reports. • The market's stability persists despite significant headwinds, including acute exposure to geopolitical shocks and ongoing macroeconomic challenges. • Analysts highlight that this growth is particularly notable given the region's relative lack of high-growth AI stocks compared to other global markets.

• China has released the Kimi K3 AI model, which significantly narrows the technological gap between Chinese AI and American frontier systems. • The model's high performance, affordability, and open-weight release strategy have sparked intense debate among policymakers in Washington and tech leaders in Silicon Valley. • This development matters as it challenges the perceived U.S. lead in artificial intelligence and raises concerns about the effectiveness of current tech restrictions.

• Wall Street shares declined during the U.S. session as investors reacted negatively to massive spending increases from tech giants Alphabet and Tesla. • UniCredit CEO Andrea Orcel informed CNBC that the bank has reached an optimal outcome regarding its acquisition of Commerzbank shares, benefiting both institutions. • Crude oil prices rose on Thursday due to renewed threats from President Donald Trump to strike Iranian infrastructure and a recent tanker attack off the Saudi Arabian coast.

• Hana Securities reports that the KOSPI's recent 25% decline mirrors historical post-shock rebounds, such as those following the China and Dubai shocks, rather than the dot-com bust. • Analysts argue that AI investment and semiconductor demand have not yet peaked, citing rising net profit and capital expenditure forecasts for U.S. Big Tech companies. • The recovery of the South Korean market is heavily dependent on a return of foreign buying and improving earnings outlooks for software firms.

• The author argues that the release of new Chinese AI models, specifically Kimi K3 and Qwen3.8, should not be viewed as a surprising development for the U.S. • The piece suggests that the rapid advancement of AI capabilities in China is a predictable trend rather than a series of isolated shocks. • This perspective matters as it challenges the American tendency to be caught off guard by China's technological progress in the global AI race.

• The head of the International Fund for Agricultural Development (IFAD) warned that ongoing conflicts and energy market disruptions are threatening global progress in the fight against hunger. • These instabilities are driving up the costs of essential commodities, including fuel, fertilizer, and food, which could push millions more people into food insecurity. • A new United Nations report highlights that current gains in reducing global hunger remain fragile and susceptible to these external economic shocks.

• A series of AI updates includes upgrades to Claude and ChatGPT desktop apps, alongside the release of the Kimmi K3 model featuring 3 trillion parameters. • Legal and corporate tensions are rising, highlighted by a bias lawsuit against Meta and public criticism from Microsoft's CEO regarding Anthropic. • Strategic delays are impacting the market, specifically with the postponed release of Google’s Gemini 3.5 Pro.

OMB proposal would upend entire grant-making system – and put vast sums into hands of political appointeesIt was a late Friday afternoon in Boston when Harvard School of Public Health professor Nancy Krieger, a social epidemiologist, received an email that would reshape the next year of her life.It was from the National Institutes of Health (NIH) – her nearly $1m grant to study how discrimination affects population health was canceled. Continue reading...

• Semiconductor stocks experienced a sharp decline this week despite strong financial results from Taiwan Semiconductor Manufacturing and high demand for computing infrastructure. • Major companies including Goldman Sachs, Abbott Laboratories, and UnitedHealth Group reported strong earnings, though stock reactions remained uneven. • The market volatility indicates that investors are shifting their focus away from raw growth and toward guidance, profit margins, and overall earnings quality.

• Chelsea is finalizing the signing of 18-year-old player Denner, who is scheduled to travel to west London next week. • The move involves the player undergoing a medical examination to complete the transfer process. • Denner has recently been recovering from a knee injury after turning 18 in February.

• Donald Trump has alleged "shocking vulnerabilities" in U.S. election security and accused China of meddling in the 2020 election, contradicting previous U.S. intelligence findings. • The claims coincide with a partisan divide over new legislation, which Republicans argue is necessary to prevent voter fraud while Democrats claim it disenfranchises eligible voters. • Additional tensions are highlighted by Melania Trump expressing concern over Joe Biden's performance and allegations that Biden improperly referenced classified information during interviews.

• President Trump announced on Thursday that he has declassified documents detailing "shocking" vulnerabilities within the United States election system. • The move aims to bring public attention to perceived security flaws and weaknesses that could potentially compromise the integrity of American voting processes. • This action underscores the ongoing political tension and debate regarding election security and the reliability of voting infrastructure.

• European stock markets remained stagnant as positive momentum from ASML's AI-driven success was offset by negative reactions to IBM's recent performance. • The market tension highlights a conflict between the booming artificial intelligence sector and broader corporate instability within legacy tech giants. • This volatility reflects investor uncertainty regarding whether AI growth can sustain a wider market rally amidst mixed corporate earnings.

• European stock markets remained stagnant as positive momentum from ASML was offset by negative developments surrounding IBM. • ASML's recent gains, driven by the ongoing artificial intelligence boom, were countered by "shockwaves" stemming from IBM's performance or outlook. • This tug-of-war between two major technology players highlights the volatility and sensitivity of European indices to the AI sector's stability.

• IBM reported second-quarter earnings on Tuesday that failed to meet analyst expectations for both profit and revenue. • The company attributed the financial shortfall to a shift in client behavior, specifically an increase in spending on hardware. • This performance sends a "shockwave" through the tech industry as it highlights the volatile spending patterns of corporate clients during the AI transition.

• U.S. stock markets showed mixed results as the Nasdaq rose and the Dow dipped following a "benign" June Consumer Price Index (CPI) report and strong bank earnings. • LPL Financial chief economist Jeffrey Roach noted that the annual headline CPI rate fell to 3.5%, a decline primarily driven by a sharp drop in energy prices. • The cooler inflation data is significant as it may influence future monetary policy, though Roach warned that the trend could be temporary due to rising energy costs in early July.

• The KOSPI index plummeted 8.95% to fall below the 6,800 level, triggering market circuit breakers due to a "chip shock" and leverage concerns. • Major semiconductor giants Samsung Electronics and SK hynix saw significant price drops, driving the broader market decline. • Amidst the volatility, private equity firm Hahn & Co. has secured at least 2 trillion won in uninvested capital after selling assets like Hanon Systems and SK Shipping's VLCCs.

• Republican Senator Lindsey Graham of South Carolina has died suddenly at the age of 71, leaving Congress in mourning. • His death creates a critical vacancy for Senate Republicans, who currently hold a narrow 52-47 majority amid ongoing uncertainty regarding Mitch McConnell's health. • The loss is particularly impactful for acting attorney general Todd Blanche, who relied on Graham's support for his Senate judiciary committee confirmation hearing this Wednesday.

Chancellor says PM-in-waiting needs ‘worked through plan’, in what could be one of her final interviews in No 11Rachel Reeves has urged Andy Burnham to arrive in Downing Street with a “worked through plan”, saying the incoming prime minister will be tested quickly by a range of incoming “shocks and challenges”.In what could be one of the first female chancellor’s final major interviews while in No 11, Reeves said Burnham should remain focused on the priorities that first brought him into politics. Continue reading...

• The IMF reports that top AI hardware exporters, including South Korea, Taiwan, Malaysia, and Thailand, outperformed growth forecasts by an average of 4.4 percentage points in Q1. • South Korea saw significant success, with an annualized growth rate of 7.5%—over four times the 1.8% projection—as semiconductor exports offset high energy costs. • Vietnam's 2026 growth forecast was raised by 0.4 percentage point to 7.5% due to the surge in technology exports.