Kapital Market Brief | September 1st 2025

Top news

·     In China, manufacturing activity contracted for the fifth consecutive month in August, keeping pressure on authorities to step up stimulus measures as tariff uncertainty continues to weigh on the economy.

·     Chinese President Xi Jinping on Monday pushed his vision for a new global security and economic order prioritizing the “Global South,” in a direct challenge to the United States, during a summit also attended by the leaders of Russia and India.

·     A federal appeals court ruled that Trump’s global tariffs under IEEPA were issued illegally. The measure involves Mexico, China, and Canada, and could result in billions of dollars in tax refunds.

·     The Office of the U.S. Trade Representative (USTR) confirmed that negotiations with various countries are ongoing following the court’s decision against the tariffs. Trump announced he will appeal to the Supreme Court and is preparing legal alternatives to sustain tariffs.

Economic outlook

In China, manufacturing activity contracted for the fifth consecutive month in August, keeping pressure on authorities to intensify stimulus as tariff uncertainty continues to weigh on the economy. The composite PMI came in at 50.5 in August 2025, up slightly from 50.2 in July. The non-manufacturing PMI stood at 50.3, showing a modest improvement from 50.1 the previous month. By contrast, the manufacturing PMI registered 49.4, barely above July’s 49.3, but marking five consecutive months in contraction. Within the index, weakness in new orders reflected that industrial activity remains constrained by fragile domestic consumption, the prolonged real estate crisis, and weakening business confidence amid the extension of the tariff agreement with the U.S., which maintains 30% tariffs on Chinese imports and 10% on U.S. goods. Additionally, industrial profits fell for a third consecutive month in July, bank lending contracted for the first time in two decades, and the urban unemployment rate rose to 5.2%. Overall, these dynamics point to a challenging environment, reinforcing expectations for stronger fiscal support in the fourth quarter to sustain the economic recovery.

Markets and stocks

U.S. equity futures traded mixed this morning, after hitting record highs at the end of August. September has historically been a weak month for markets, while investors await the Federal Reserve’s policy decision in mid-September. It is worth noting that U.S. markets will remain closed today for the Labor Day holiday. In Europe, markets began the month slightly higher, supported by the defense sector. Finally, in Asia, equities closed mixed following the release of China’s PMI.

In commodities, Brent crude traded around $68 per barrel as higher output offset supply disruptions from intensified attacks on energy infrastructure in Russia and Ukraine. Gold reached a four-month high at $3,470 per ounce, while silver rose above $40 for the first time in 14 years, both supported by expectations of Fed rate cuts.

In fixed income, the 10-year U.S. Treasury yield climbed to 4.23%, while the 2-year yield stood at 3.62%.

Corporate news

BAE Systems will benefit from a record £10 billion contract with Norway for the construction of Type 26 frigates, which will boost jobs and production in the U.K.

Novo Nordisk reported that its drug Wegovy reduces cardiovascular risk to a greater extent than competitors, strengthening its position in the weight management market.