Business activity in Europe and parts of Asia picked up in July, suggesting modest global economic growth before a fresh surge in energy prices. This comes as Japan is on track for its longest economic growth streak since World War II, significantly propelled by demand for AI-related products, boosting its exports.
Simultaneously, Euro-area inflation has eased more than anticipated, with consumer prices rising 2.8% year-on-year in June, down from 3.2% the previous month. This deceleration is attributed to efforts toward peace in the Middle East, which led to lower global oil prices. Conversely, US hiring has slowed, and policymakers are cautioning that the full effects of higher oil and natural gas costs from recent conflicts in the Middle East may still be felt.
The AI boom, while driving some growth, is also a source of concern for some financial experts. Two prominent Chinese hedge fund managers, Wealspring Asset and Shanghai Banxia Investment Management Center, have issued warnings that the AI boom in global stock markets has transformed into an unsustainable "super bubble," with "the trigger for the AI bubble to burst already appeared." This sentiment contrasts with a report from Bloomberg professional services, which indicates a substantial runway remaining for the AI-driven capital expenditure boom, despite Nvidia's disappointing second-quarter earnings raising some questions.
