JPM International Market Intelligence Morning Briefing Aug 7

20 SECONDS: Geopol tensions resurface. Secular themes and SRI back in focus. Q2 earnings. Asia themes (China tech & yen/Japan policy). Week ahead.

• Geopol tensions resurface, with oil higher after reports that Iran seeks to bar US & Israeli ships from SoH. Equities relatively resilient, with earnings driving APAC moves and NDX futures leading. All eyes on NFPs: see Drew’s Scenario Analysis here, and Research’s July Employment Scorecard.

• Secular Themes were again at the top of the launchpad (standouts incl. Critical Minerals & Miners, Defence, Space), reflecting the global shift towards Security and Resilience Initiatives (see our thoughts on SRI here). Research makes an interesting distinction between Asia and US approaches, with US focused on reducing strategic vulnerabilities (i.e. exposure to adversaries and protecting sensitive capabilities) – but fiscal is a key constraint.

• Q2 earnings season is wrapping up: the proportion of companies with reported EPS ahead of estimates rose sharply in both the US and Europe (88% and 63% respectively). Earnings growth came in at +25% y/y and +23% y/y in the US and EU, and the gap between US and EU EPS growth narrowed meaningfully, both at an aggregate level and at a median level. • Despite a solid earnings season, the stock-price reaction has been relatively muted. Median reaction to beats was negative for SPX (-0.1%) vs 0.6% for SXXP (charts below).

• Two themes we are following in Asia: 1) China Tech; 2) yen & Japan policy 1. DeepSeek plans ‘significant’ price increase for AI services, marking ‘an inflection point as Chinese players shift focus from market share grab toward monetization’ (chart below reflects this dynamic). Key metric to watch is the cost per task, which also reflects model efficiency. All told, growing adoption of Chinese LLMs has shifted attention back to Chinese Internet stocks i.e. those who deliver AI services to consumers and businesses. 2. Yen surrendered nearly half its gains from US-Japan intervention. Research is out with a timely note looking at additional measures that could be taken to address yen weakness. Expectations are building for a Sept hike, but Econ keeps their call for Oct (and now sees 3 hikes

in 2027 vs 2 prior). FT report on dollar’s status as a reserve currency following yen intervention is gaining traction as supporting case for Gold.

• Turning to NEXT WEEK, key catalysts incl. China PPI, CPI; BOJ minutes; US CPI, PPI, Retail Sales; UK GDP; Tencent & AMAT earnings.