Key Takeaways
- Gold prices surged to a three-week high of $4,174 per ounce, marking their first weekly gain in over a month as weak U.S. labor data slashed bets for a July interest rate hike.
- China announced it will scrap annual vehicle tax breaks for New-Energy Vehicles (NEVs) and fuel-efficient cars starting January 1, 2027, as the domestic market reaches maturity.
- European markets capped their strongest week since May, with the STOXX 600 nearing record highs as investors rotated into defensive and cyclical sectors.
- A trilateral defense venture between the U.K., Italy, and Japan secured a $6.14 billion contract to advance the Global Combat Air Program (GCAP) stealth fighter.
- ByteDance researchers discovered a new "scaling law" for AI agents, suggesting autonomous software can double learning speeds every three months through real-world interaction.
Global Markets and Commodities
Precious metals saw a significant rebound this week as investors recalibrated expectations for Federal Reserve policy. Gold (GLD) and Silver (SLV) rallied after U.S. nonfarm payrolls showed only 57,000 jobs added in June, far below the 115,000 forecast. This miss caused the probability of a July rate hike to drop from 30% to approximately 22%, lowering the opportunity cost for non-yielding assets.
European equities outperformed global peers, with the STOXX 600 rising to an all-time high. The rally was supported by a broadening of market participation beyond technology into industrials and healthcare. Meanwhile, the U.S. Dollar Index fell over 0.5% to 100.87, its worst weekly performance since May, further fueling the commodity surge.
China’s Evolving Industrial Policy
The Chinese government is preparing to wind down a decade of support for the electric vehicle sector. The Ministry of Finance and other agencies confirmed that the half-rate vehicle-and-vessel tax for fuel-efficient cars and full exemptions for plug-in hybrids (PHEVs) and commercial EVs will end in 2027. The move aims to promote "tax fairness" and replenish local government revenues as NEVs now account for over 50% of new car sales in China.
While pure-electric passenger cars remain largely unaffected due to tax structures based on engine displacement, the change will impact manufacturers like BYD (BYDDY), Li Auto (LI), and Aito. Analysts suggest the annual tax increase of 300 to 600 yuan per vehicle is unlikely to deter consumers but signals a shift toward a more market-oriented automotive policy.
Geopolitics and Defense Spending
In a major boost for international defense cooperation, BAE Systems (BA.), Leonardo (LDO), and Mitsubishi Heavy Industries (7011) were awarded a £4.6 billion ($6.14 billion) contract for the Global Combat Air Program (GCAP). The venture, named Edgewing, aims to deliver a sixth-generation stealth fighter by 2035. This development follows the recent collapse of a rival Franco-German fighter project, positioning GCAP as the primary next-gen aerial platform for allied nations.
Separately, NATO's top commander, Gen. Alex Grynkewich, stated that European allies have successfully "backfilled" most of the military gaps left by recent U.S. force reductions. European nations and Canada have increased their readiness levels for aircraft carriers and fighter jets to maintain the alliance's "Plan A" defense model as Washington pivots focus toward the Indo-Pacific.
Technology and Labor Disruptions
ByteDance, the parent company of TikTok, has published research that could sustain the current AI boom despite a looming shortage of human-generated training data. Their findings on "agentic AI" suggest that autonomous systems can sustain rapid improvement by interacting with real-world environments rather than relying solely on static datasets.
However, the rapid integration of AI is creating friction in labor markets. In Hong Kong, experts warned that AI is increasingly replacing entry-level roles, leading to a "cut-off" in the career ladder for fresh graduates. A recent ManpowerGroup survey revealed that Hong Kong’s net employment outlook plunged to minus 9% for the third quarter, reflecting a sharp decline in hiring sentiment as firms prioritize AI-driven productivity over junior headcount.
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.