Global financial markets are navigating a complex landscape marked by mixed economic data from China, significant developments in the US-China tech rivalry, and escalating geopolitical tensions across multiple regions.
China's Economy Presents a Mixed Picture in June
China's economic performance in June and the second quarter of 2025 delivered a blend of stronger-than-expected industrial output alongside continued weakness in the property sector and a slowdown in retail sales. Second-quarter GDP grew by 5.2% year-on-year, surpassing the estimated 5.1% but slightly down from the previous quarter's 5.4%. On a quarter-on-quarter seasonally adjusted basis, GDP expanded by 1.1%, compared to a 1.2% increase in the prior period and an estimated 0.9%. Year-to-date GDP growth stood at 5.3%, meeting expectations.
Industrial Production (IP) showed robust growth in June, rising by 6.8% year-on-year, exceeding both the previous month's 5.8% and the estimated 5.6%. Year-to-date Industrial Production also saw an increase to 6.4% year-on-year, up from 6.3% previously and beating the 6.2% estimate. This suggests a resilient manufacturing sector.
However, consumer spending appears to be losing momentum, with Retail Sales growth slowing to 4.8% year-on-year in June, significantly lower than the 6.4% recorded previously and missing the 5.3% estimate. Year-to-date Retail Sales remained stable at 5% year-on-year, aligning with previous figures and estimates.
The real estate sector continues to be a drag on the economy. Property Investment year-to-date year-on-year worsened to -11.2% in June, a deeper contraction than the previous -10.7% and the estimated -10.9%. Both new and used home prices saw further declines month-on-month in June, with new home prices falling by -0.27% (from -0.22% previous) and used home prices by -0.61% (from -0.50% previous). This marks the 24th consecutive month of decline for new home prices in major Chinese cities, raising concerns about the effectiveness of current stimulus measures.
Despite these challenges, China's surveyed jobless rate remained stable at 5% in June, consistent with the previous month and estimates. The People's Bank of China (PBOC) injected ¥342.5 billion via 7-day repos, resulting in a net injection of ¥273.5 billion, indicating efforts to maintain liquidity.
In other Chinese economic news, local e-commerce giants are intensifying their competition for instant delivery services. Additionally, a new Chinese ChatGPT rival has launched, offering advanced coding tools and more competitive pricing, highlighting the country's push in AI development.
NVIDIA Navigates US-China Tech Landscape
NVIDIA (NVDA) is set to resume sales of its H20 chip in China, introducing a new, fully compliant GPU for the Chinese market. This development follows assurances from the U.S. government that the necessary licenses will be granted, with the company expecting deliveries to begin soon. NVIDIA CEO Jensen Huang recently met with U.S. policymakers, including President Trump, to reaffirm the company's support for the administration's job creation initiatives. This comes after previous U.S. restrictions had effectively blocked H20 sales in China.
Meanwhile, the U.S. has initiated national security probes into imports of drones and polysilicon, a key component in chips and solar panels, according to reports. These "Section 232" investigations could potentially lead to higher tariffs on these imports.
Japan's Finance Minister Engages on Global Stage
Japan's Finance Minister Kato is actively engaged in international discussions. He is aware of arrangements for Bessent's visit to Japan and has acknowledged President Trump’s comments on tariff discussions, committing to reaching a mutually beneficial agreement. Minister Kato will also attend the G20 Finance Leaders' Meeting in South Africa this week, where he has previously voiced concerns about the destabilizing effects of U.S. tariffs on global markets. Furthermore, he emphasized working closely with other countries and agencies to combat illegal drug control, including fentanyl. In the Japanese bond market, the yield on the 20-Year JGB rose to 2.64%.
Separately, officials report that Russia has intensified its disinformation campaigns targeting Japan, utilizing Japanese-language media and state-backed outlets.
Geopolitical Tensions Remain Elevated
The geopolitical landscape remains volatile. Israeli airstrikes on the Gaza Strip today reportedly resulted in 88 fatalities. Israel also conducted strikes in Syria following clashes involving the Druze minority.
Concerns about potential conflict in Asia persist, with Taiwan's military reportedly preparing civilians for a Chinese invasion. This includes large-scale war games and civil defense drills. Australia's Prime Minister is seeking to balance trade and security tensions during a meeting with Chinese President Xi.
In Europe, Germany is set to deliver two Patriot air defense systems to Ukraine, as confirmed by its Defence Minister after talks with his U.S. counterpart.
Oil Markets Assess Supply Outlook
Oil prices are holding their decline as traders assess the outlook for Russian supply. The commodity has dipped as markets weigh the potential impact of sanctions and tariffs on global supply and demand dynamics.
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.