Political instability is escalating in France. The RBA intends to continue cutting interest rates despite rising inflation

By the end of Tuesday, the Dow Jones Index (US30) was up 0.30%. The S&P 500 Index (US500) rose by 0.41%. The Nasdaq Technology Index (US100) closed up 0.43%. Investors were balancing optimism about corporate earnings with concerns over President Trump’s unprecedented dismissal of Federal Reserve representative Lisa Cook. Trump’s decision to remove Cook over alleged mortgage lending violations fueled fears about the Fed’s independence, drawing close scrutiny from investors and analysts. Cook stated she plans to legally challenge her dismissal, highlighting the potential long-term risks of a politicized Central Bank. Nvidia shares jumped 1.1% ahead of their quarterly report on Wednesday, amid high expectations for the chipmaker in the face of ongoing US-China trade tensions.

According to preliminary estimates, Canadian manufacturing sales increased by 1.8% in July 2025, following a 0.3% rise in June. The growth was led by the transportation equipment and petroleum and coal product subsectors. If the data is confirmed, it will be the strongest monthly increase since October 2024, indicating a moderate turnaround in manufacturing activity after a period of sluggish performance.

European stock markets mostly declined on Tuesday. Germany’s DAX (DE40) fell by 0.50%, France’s CAC 40 (FR 40) closed down 1.70%, Spain’s IBEX35 (ES35) dropped by 0.96%, and the UK’s FTSE 100 (UK100) was down 0.60%. The DAX and other European markets fell for a second consecutive day amid ongoing political turmoil in France. Prime Minister François Bayrou’s warning of a debt crisis came just before a confidence vote scheduled for September 8 in the National Assembly. Opposition parties have stated their intention to vote against the motion, raising the risk of government collapse and political instability across Europe.

WTI crude oil prices fell by 2.4% to $63.20 per barrel on Tuesday, retreating from a nearly three-week high in the previous session as investors weighed geopolitical risks and global demand concerns. The rally on Monday was driven by fears of further disruptions after Ukraine struck Russian energy infrastructure, raising the possibility of tougher US sanctions and deepening fuel shortages in Russia. President Trump warned of new sanctions against Moscow if peace talks stall.

Asian markets were mostly lower on Tuesday. Japan’s Nikkei 225 (JP225) fell by 0.97%, China’s FTSE China A50 (CHA50) dropped by 0.46%, Hong Kong’s Hang Seng (HK50) was down 1.18%, and Australia’s ASX 200 (AU200) had a negative result of 0.41%.

The Australian dollar hovered near the $0.650 mark on Wednesday, pausing its rise from the previous session as investors digested fresh data, including stronger-than-expected inflation figures. The data showed that consumer prices rose by 2.8% year-on-year in July, up from 1.9% in June and exceeding market expectations of 2.3%. Core inflation also increased, with the trimmed mean rising to 2.7% from 2.1% and inflation excluding volatile items and holiday travel climbing to 3.2% from 2.5%. Markets remain confident that the RBA will cut rates in November, despite the volatile CPI data.

In China, Cambricon Technologies has surged by 102% this month after the AI chip manufacturer reported record first-half profits, boosted by Beijing’s promotion of domestic technology amid the DeepSeek AI boom. This rally has pushed the company past Kweichow Moutai to become the most valuable stock on China’s A-share market. Economically, official data showed that China’s industrial profits fell by 1.7% year-on-year in the first seven months of 2025, reflecting continued weakness in domestic demand.