Daily Summary: China Shows Its Teeth on AI; The U.K. Sees a Government Revolution 🏛️

Main factor of variability

Investor sentiment on Monday was shaped by two parallel developments: the escalation of the U.S.-Iran conflict and the political upheaval in the United Kingdom following the inauguration of new Prime Minister Andy Burnham. President Donald Trump announced that Iran would “pay dearly” for the deaths of American soldiers, sparking a wave of uncertainty in the commodities market, even as mediators work toward a ten-day ceasefire. This combination of geopolitical risk and fiscal uncertainty in the United Kingdom has led to simultaneous declines in British bonds, stocks, and the pound—a rare occurrence in the markets.

Geopolitics

In the United Kingdom, Andy Burnham was sworn in as the new prime minister, while Rachel Reeves resigned as chancellor of the exchequer after refusing to accept the position of defense minister. John Healey became the new chancellor, a development the markets greeted with some relief following a period of uncertainty regarding the filling of this key position. In the Middle East, the United States carried out its ninth night of airstrikes against Iran in retaliation for attacks on oil tankers in the Strait of Hormuz, while Yemen’s Ansar Allah announced a naval blockade against Saudi Arabia, further increasing the risk of disruptions to raw material supplies.

Macro data

The British economy remains under pressure, with GDP growth projected at just 0.8 percent in 2026, following 1.3 percent in 2025 and 1 percent in 2024, which has limited the new government’s room to maneuver on public spending. Burnham is considering a spending package of around 24 billion pounds, including, among other things, the nationalization of Thames Water and an increase in the tax-free allowance, which investors are viewing with caution due to the lack of details on funding. June data from the Polish economy bring a series of positive surprises, pointing to a stronger-than-expected recovery. The Central Statistical Office presented a series of readings in which nearly all key indicators—from industrial and construction output to wage growth—exceeded market expectations. These figures improve the assessment of the Polish economy at the end of the second quarter, despite recent doubts about its health, which further contributed to the weakness of the Polish zloty. In Canada, inflation fell faster than expected on a monthly basis.

Indices

U.S. indices are currently trading higher, with the Nasdaq Composite up 0.62 percent in the US100 contract, while the S&P 500, as tracked by the US500, gained 0.12 percent. Across the Atlantic, European markets closed on a down note: the British UK100 fell by 0.83 percent, the Spanish SPA35 lost 0.39 percent, and the German DE40 declined by 0.10 percent, while the Japanese JP225 gained 0.76 percent, and the Polish W20 rose by 0.70 percent.

Stocks

Chinese stocks, as measured by the CHN.cash contract, were the clear leaders in gains, rising 3.31 percent—a performance that sharply set this market apart from the rest of the global landscape. On Wall Street, the semiconductor sector rebounded following last week’s declines.  The Chinese artificial intelligence sector once again took center stage in global markets. This time, it was thanks to Moonshot AI and the launch of the Kimi K3 model, which, according to its creators, is designed to compete with the most advanced solutions currently available on the market. 

Currencies

The British pound was the weakest major currency of the day, with the GBP/USD exchange rate falling 0.10 percent to 1.3430 in response to personnel changes in the Burnham administration. The U.S. dollar gained against most currencies, with the USDIDX index up 0.24 percent, while EUR/USD weakened by 0.12 percent and EUR/PLN rose marginally by 0.03 percent.

Commodities

Crude oil prices rose in response to tensions with Iran, with the OIL contract up 0.93 percent and OIL.WTI up 0.42 percent. Silver rose 1.50 percent, while gold remained under pressure, falling 0.16 percent, and natural gas saw a sharp decline, losing 2.54 percent.

Cryptocurrencies

Bitcoin was one of the day’s top gainers, rising 1.52 percent and reaching its highest level in over a month, above $65,000. The rise was accompanied by a rally in companies linked to the cryptocurrency sector, including Galaxy Digital and Circle.