{"id":64193,"date":"2026-07-03T21:38:16","date_gmt":"2026-07-04T01:38:16","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/markets-rally-as-fed-rate-hike-bets-recede-china-to-phase-out-ev-tax-breaks\/64193\/"},"modified":"2026-07-03T21:38:16","modified_gmt":"2026-07-04T01:38:16","slug":"markets-rally-as-fed-rate-hike-bets-recede-china-to-phase-out-ev-tax-breaks","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/markets-rally-as-fed-rate-hike-bets-recede-china-to-phase-out-ev-tax-breaks\/64193\/","title":{"rendered":"Markets Rally as Fed Rate Hike Bets Recede; China to Phase Out EV Tax Breaks"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong><a href=\"https:\/\/stockmarketwatch.com\/metal\/gold\" data-internallinksmanager029f6b8e52c=\"4\" title=\"gold price today\">Gold prices<\/a> surged to a three-week high of $4,174 per ounce<\/strong>, marking their first weekly gain in over a month as weak U.S. labor data slashed bets for a July interest rate hike.<\/li>\n<li><strong>China announced it will scrap annual vehicle tax breaks for New-Energy Vehicles (NEVs)<\/strong> and fuel-efficient cars starting January 1, 2027, as the domestic market reaches maturity.<\/li>\n<li><strong>European markets capped their strongest week since May<\/strong>, with the STOXX 600 nearing record highs as investors rotated into defensive and cyclical sectors.<\/li>\n<li><strong>A trilateral defense venture between the U.K., Italy, and Japan secured a $6.14 billion contract<\/strong> to advance the Global Combat Air Program (GCAP) stealth fighter.<\/li>\n<li><strong>ByteDance researchers discovered a new &quot;scaling law&quot; for AI agents<\/strong>, suggesting autonomous software can double learning speeds every three months through real-world interaction.<\/li>\n<\/ul>\n<h2>Global Markets and Commodities<\/h2>\n<p>Precious metals saw a significant rebound this week as investors recalibrated expectations for <strong>Federal Reserve<\/strong> policy. <strong>Gold<\/strong> (<a href=\"\/stock\/GLD\">GLD<\/a>) and <strong><a href=\"https:\/\/stockmarketwatch.com\/metal\/silver\" data-internallinksmanager029f6b8e52c=\"5\" title=\"silver price today\">Silver<\/a><\/strong> (<a href=\"\/stock\/SLV\">SLV<\/a>) rallied after U.S. nonfarm payrolls showed only <strong>57,000 jobs added in June<\/strong>, 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.<\/p>\n<p>European equities outperformed global peers, with the <strong>STOXX 600<\/strong> rising to an all-time high. The rally was supported by a broadening of market participation beyond technology into industrials and healthcare. Meanwhile, the <strong>U.S. Dollar Index<\/strong> fell over 0.5% to 100.87, its worst weekly performance since May, further fueling the commodity surge.<\/p>\n<h2>China\u2019s Evolving Industrial Policy<\/h2>\n<p>The Chinese government is preparing to wind down a decade of support for the electric vehicle sector. The <strong>Ministry of Finance<\/strong> 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 &quot;tax fairness&quot; and replenish local government revenues as NEVs now account for over 50% of new car sales in China.<\/p>\n<p>While pure-electric passenger cars remain largely unaffected due to tax structures based on engine displacement, the change will impact manufacturers like <strong>BYD<\/strong> (<a href=\"\/stock\/BYDDY\">BYDDY<\/a>), <strong>Li Auto<\/strong> (<a href=\"\/stock\/LI\">LI<\/a>), and <strong>Aito<\/strong>. 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.<\/p>\n<h2>Geopolitics and Defense Spending<\/h2>\n<p>In a major boost for international defense cooperation, <strong>BAE Systems<\/strong> (<a href=\"\/stock\/BA.\">BA.<\/a>), <strong>Leonardo<\/strong> (<a href=\"\/stock\/LDO\">LDO<\/a>), and <strong>Mitsubishi Heavy Industries<\/strong> (<a href=\"\/stock\/7011\">7011<\/a>) were awarded a <strong>\u00a34.6 billion ($6.14 billion)<\/strong> contract for the <strong>Global Combat Air Program (GCAP)<\/strong>. The venture, named <strong>Edgewing<\/strong>, 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.<\/p>\n<p>Separately, <strong>NATO<\/strong>&#39;s top commander, <strong>Gen. Alex Grynkewich<\/strong>, stated that European allies have successfully &quot;backfilled&quot; 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&#39;s &quot;Plan A&quot; defense model as Washington pivots focus toward the Indo-Pacific.<\/p>\n<h2>Technology and Labor Disruptions<\/h2>\n<p><strong>ByteDance<\/strong>, 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 &quot;agentic AI&quot; suggest that autonomous systems can sustain rapid improvement by interacting with real-world environments rather than relying solely on static datasets.<\/p>\n<p>However, the rapid integration of AI is creating friction in labor markets. In <strong>Hong Kong<\/strong>, experts warned that AI is increasingly replacing entry-level roles, leading to a &quot;cut-off&quot; in the career ladder for fresh graduates. A recent <strong>ManpowerGroup<\/strong> survey revealed that Hong Kong\u2019s net employment outlook plunged to <strong>minus 9%<\/strong> for the third quarter, reflecting a sharp decline in hiring sentiment as firms prioritize AI-driven productivity over junior headcount.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Gold prices surged to a three-week high of $4,174 per ounce, marking their first weekly gain in over 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