Key Takeaways
- Wall Street reaches new milestones as the S&P 500 (SPY) hits a fresh record high following softer-than-expected Producer Price Index (PPI) data.
- DeepSeek V4 Pro officially launches with a controversial pricing structure, including peak-hour rates that represent an 1,100% increase for certain API services.
- Oil prices remain volatile near $81/bbl as traders balance the risk of continued tanker attacks in the Strait of Hormuz against hopes for a diplomatic reopening.
- Geopolitical risks spike in Northern Iraq following reports of multiple drone attacks and powerful explosions in Erbil, targeting opposition camps and infrastructure.
- China reflects on Zhu Rongji's legacy as the former Premier passes away at 97, sparking renewed debate over the long-term impact of his "painful" 1990s economic reforms.
Equities: Tech Strength Drives Global Gains
Asia-Pacific markets traded mostly higher on Friday, following a bullish lead from Wall Street where the S&P 500 (SPY) notched a new record. The tech-heavy Nasdaq Composite (QQQ) outperformed its peers, gaining 0.8% as investors reacted to July PPI data which remained unchanged month-on-month. This cooling inflation signal has led traders to scale back bets on a September interest rate hike by the Federal Reserve, providing a tailwind for growth-sensitive sectors.
In regional trade, South Korea’s KOSPI (KOSPI) surged 2.7%, while Japan’s Nikkei 225 (NKY) climbed 1.5%. Conversely, Australia’s ASX 200 (XJO) bucked the trend, sliding 0.7% as domestic factors weighed on sentiment. Market analysts suggest that the "absence of an upside surprise" in inflation data has allowed for a relief rally, though durable gains will depend on upcoming retail sales figures.
Energy: Hormuz Deadlock Keeps Supply Risks Elevated
WTI Crude (CL=F) traded near $81 a barrel while Brent (BZ=F) settled around $87, as the energy market remains gripped by uncertainty in the Middle East. Despite a 2.4% drop in the previous session driven by a large U.S. inventory build, prices are supported by the ongoing closure of the Strait of Hormuz. Iran has reportedly presented six conditions for reopening the waterway, including the withdrawal of U.S. forces and compensation for damages, which Washington has yet to meet.
Supply risks were further highlighted by continued attacks on energy infrastructure, including a drone strike on Saudi Arabia's Jazan refinery claimed by Houthi militants. Traders are currently maintaining a significant risk premium as the "on-again, off-again" nature of diplomatic negotiations fails to provide a clear timeline for the restoration of commercial shipping.
Technology: DeepSeek Shifts Strategy with V4 Pro Launch
Chinese AI startup DeepSeek officially released its V4 Pro model, signaling a pivot from aggressive price-cutting to a more sustainable business model. The company introduced a new tiered pricing system where "peak" rates for 1 million output tokens will jump to $3.96, up from the previous $0.87. This represents a staggering 1,100% increase for some API users, though the company noted that off-peak rates remain 50% lower to encourage balanced server loads.
The V4 Pro model reportedly features significant upgrades in agentic capabilities and production-grade workflows. Despite the sharp price hike, DeepSeek’s rates remain competitive relative to Western rivals like Anthropic and OpenAI. Industry observers view this move as a necessary step for the startup to fund its massive expansion in computing capacity and talent acquisition.
Geopolitics: Drone Strikes Reported in Erbil
Security concerns intensified in Northern Iraq as Iraqi media reported five to seven powerful explosions in Erbil. Local security sources confirmed that air defense systems intercepted at least six drones targeting various locations, including areas near the U.S. Consulate. While no immediate casualties were reported, the strikes targeted camps belonging to Iranian Kurdish opposition groups, further complicating the regional security landscape.
China: The Legacy of Zhu Rongji
The death of former Chinese Premier Zhu Rongji at age 97 has reignited a national conversation regarding his transformative economic policies. Known as "Boss Zhu," he is credited with steering China into the WTO in 2001 and dismantling inefficient state-owned enterprises (SOEs). However, the "unbalanced" nature of these reforms—which led to an estimated 40 million layoffs—continues to haunt the current administration as it grapples with modern social safety net challenges.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.