Market navigator: week of 21 July 2025
China's Q2 GDP exceeded forecasts while Bitcoin soared above $123,000 on regulatory breakthroughs. ECB rates and US tech earnings headline this week's key events.
Summary
- What happened last week: China delivered stronger-than-expected Q2 GDP growth of 5.2% despite structural challenges, while global trade tensions eased with reduced tariffs and cryptocurrency regulation achieved a historic breakthrough.
- Markets in focus: US equities surged to fresh highs driven by strong corporate earnings, while USD/JPY strengthened on Japanese electoral uncertainty and Bitcoin soared above $123,000 on regulatory optimism.
- The week ahead: Market participants will scrutinise the ECB's interest rate decision and Fed Chair Powell's policy guidance, alongside comprehensive global PMI data and critical technology sector earnings from Tesla and Alphabet.
What happened last week
- China GDP beats expectations: China's second-quarter gross domestic product (GDP) expanded 5.2% year-on-year (YoY), surpassing consensus forecasts. However, intensifying export dependence, property sector distress, and weak retail consumption highlight the urgent need for policy intervention to achieve Beijing's 5% full-year target. Senior leadership is expected to discuss additional stimulus in early August.
- Trade tensions ease: Washington reduced Indonesian tariffs from 32% to 19%. The administration made concessions to China, allowing Nvidia H20 chip exports while Treasury Secretary Bessent suggested flexibility on the 12 August deadline. Trump will issue tariff letters to 150+ nations at 10-15% rates.
- Crypto regulation breakthrough: The GENIUS Act established the first federal stablecoin framework, transforming digital asset regulation. Bank of America and Citigroup signalled plans for proprietary stablecoins. Cryptocurrency investment may soon be made available through 401(k) retirement plans.
- Global inflation patterns diverge: US core inflation fell to 2.9%, below forecasts, though tariff cost pass-through emerges. Japan's inflation moderated from 3.7% to 3.3% on lower energy price growth, but rice prices doubled YoY suggesting food inflation may not be transitory. UK inflation unexpectedly surged to 3.6%, a 17-month high.
Markets in focus
US equity market rises on positive corporate earnings
US major banks delivered extraordinary second-quarter performance, capitalising on elevated market volatility to generate exceptional trading revenues. Goldman Sachs' equity trading division achieved its strongest quarterly performance in company history, while Citigroup recorded its highest quarterly revenue in over a decade, underlining the sector's operational leverage during volatile market conditions. The S&P 500 Banking Index outperformed broader indices with a 0.9% weekly advance, demonstrating sector-specific strength amid broader market uncertainty.
Netflix exceeded all key performance metrics and upgraded full-year guidance, yet shares declined over 4% on Friday as investors crystallised profits following a spectacular 40% year-to-date rally, highlighting the challenge of sustaining momentum after exceptional gains.
The US Tech 100 index established three consecutive daily records before retreating 0.1% on Friday, successfully breaching the psychologically significant 23,000 threshold. Technical analysis suggests potential corrective movement toward 22,545 support, though maintenance above this level would preserve the bullish trend established from mid-May lows. Elliott Wave analysis indicates that if current price action follows Wave 3 characteristics from the 21 April base, a 200% Fibonacci extension could potentially drive the index toward 24,718 before Wave 4 correction materialises. February's 22,223 high provides crucial technical support for any pullback scenario.
Figure 1: US Tech 100 index (daily) price chart
USD/JPY benefits from dollar strength and Japanese political uncertainty
USD/JPY has surged 3% month-to-date, propelled by US dollar strength and mounting volatility from the Upper House election. The ruling Liberal Democratic Party-Komeito coalition faces probable loss of its chamber majority, with opposition parties advocating more expansionary fiscal policies that could undermine yen stability. Given markets have already partly accounted for ruling party electoral defeat probability, we anticipate USD/JPY momentum will encounter material resistance at the 149 threshold.
Escalating speculation surrounding US-Japan trade negotiations, particularly foreign exchange intervention discussions, could materially constrain additional yen weakness. Tokyo may face Washington pressure to strengthen the yen as part of broader trade deficit reduction efforts, creating potential policy conflict between domestic political considerations and international trade obligations.
Technical analysis reveals USD/JPY encountered critical resistance at 149.2 following its powerful rebound from 142.7 on 1 July. Sustained resistance at this level suggests probable reversion to the established 142-149 trading range, while a decisive break above 149 could target the 151 level as the next significant resistance zone.
Figure 2: USD/JPY (daily) price chart
Bitcoin surges past $123,000 on regulatory breakthroughs
Digital assets achieved unprecedented regulatory legitimacy as President Trump signed the GENIUS Act following House approval, while the CLARITY Act and anti-central bank digital currency (CBDC) Surveillance State Act advanced through the Congressional and will then be reviewed by the Senate. The CLARITY Act proposes transferring digital asset regulatory authority from the restrictive Securities and Exchange Commission (SEC) to the more accommodating Commodity Futures Trading Commission (CFTC), fundamentally reshaping oversight frameworks. The anti-CBDC legislation prohibits Federal Reserve (Fed) digital currency issuance, preserving consumer financial privacy.
These transformative regulatory developments propelled Bitcoin above $123,000 before profit-taking drove prices below $116,000. Sustained exchange-traded fund (ETF) inflows combined with accelerating institutional adoption continue supporting long-term price appreciation. Derivatives market data from Bybit and Deribit reveal overwhelming trader optimism for July price performance, with call options expiring 1 August struck between $130,000-$132,000 exhibiting the highest open interest concentration.
Having surpassed last week's $121,439 high, Bitcoin's next technical target aligns with the 76.4% Fibonacci extension of the 7 April to 23 May rally at $126,921. Immediate technical support resides near $115,700.
Figure 3: Bitcoin (daily) price chart
The week ahead
The week ahead delivers a pivotal convergence of monetary policy, global economic sentiment, and corporate earnings that could reshape market expectations across multiple fronts. The European Central Bank (ECB)'s interest rate decision Thursday takes centre stage, with markets closely watching for signals on the future policy path to maintain inflation at current levels amid the eurozone's evolving economic landscape.
ECB President Lagarde's recent comments at the ECB Form indicated the disinflationary project has achieved its objective. Euro Area's headline year-on-year (YoY) inflation rose from 1.9% to 2.0%, matching ECB's target in June. We anticipate policy rates will remain unchanged as policymakers assess the impact of seven consecutive rate cuts while monitoring US-Europe trade relationship developments. Market pricing implies one additional 25 basis point reduction this year, most likely delivered in October.
Fed Chair Powell's speech Tuesday will provide crucial insights into US monetary policy thinking, particularly following recent benign inflation prints and robust employment data, while navigating intense political pressure from the Trump administration advocating rate cuts to stimulate economic growth.
Flash PMI readings across Australia, Japan, the UK and US on Thursday offer comprehensive insights into global business activities, with particular attention on whether the UK's manufacturing sector can emerge from contractionary territory.
On the corporate front, technology giants Tesla and Alphabet reporting earnings, providing key indicators of consumer demand trends, artificial intelligence investment impact, and the broader technology sector's resilience amid economic uncertainties.
Figure 4: ECB's deposit facility rate
Key macro events this week
Tuesday 22 July 2025
- 9.30am (HK time) – Australia RBA Meeting Minutes
- 8.30pm (HK time) – US Fed Chair Powell Speech
Wednesday 23 July 2025
- 10.00pm (HK time) – US Existing Home Sales (June): previous 4.03M, consensus 4M
Thursday 24 July 2025
- 7.00 am (HK time) – Australia S&P Global Manufacturing PMI Flash (July): previous 50.6
- 7.00 am (HK time) – Australia S&P Global Services PMI Flash (July): previous 51.8
- 8.30 am (HK time) – Japan Jibun Bank Manufacturing PMI Flash (July): previous 50.1, consensus 50.2
- 8.30 am (HK time) – Japan Jibun Bank Services PMI Flash (July): previous 51.7
- 4.30pm (HK time) – UK S&P Global Manufacturing PMI Flash (July): previous 47.7, consensus 48.1
- 4.30pm (HK time) – UK S&P Global Services PMI Flash (July): previous 52.8, consensus 53
- 8.15pm (HK time) – European Central Bank Interest Rate Decision: previous deposit rate 2%, consensus 2%
- 9.45pm (HK time) – US S&P Global Manufacturing PMI Flash (July): previous 52.9, consensus 52.4
- 9.45pm (HK time) – US S&P Global Services PMI Flash (July): previous 52.9, consensus 52.9
Friday 25 July 2025
- 2.00pm (HK time) – UK Retail Sales month-on-month (MoM) (June): previous -2.7%, consensus 1.2%
- 8.30pm (HK time) – US Durable Goods Orders MoM (June): previous 16.4%, consensus -11%
Key corporate earnings
(in local exchange time)
Monday 21 July 2025
Tuesday 22 July 2025
Wednesday 23 July 2025
Thursday 24 July 2025
Source: Trading Economics, Reuters (as of 19 July 2025)
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