China’s market engine is running hot, but the fumes are unmistakable. Leverage is the accelerant here—margin debt the gasoline sloshing in the tank—and traders on the mainland are pouring it in with abandon. Liquidity is high, volumes are roaring, and A-shares have officially crossed into bull-market territory. But when momentum feeds on borrowed chips, it’s always a feast that risks turning to famine. We’ve seen this movie before—ChiNext has been here, overheating on hot money, only to slip when the fuel ran thin.
The optimism isn’t just technical froth. Beijing’s subtle hand is at play. The PBoC’s gentle nudge higher in the yuan feels like a policy wink, a hint that stronger exports justify a firmer currency stance. Goldman’s raising their stock targets, Morgan Stanley’s sounding alarms on overheating, and right in the middle sits the Alibaba (NYSE:) watchtower, where results will serve as a litmus test for the broader e-commerce battlefield.
Yet, that field is scarred—JD (NASDAQ:) bleeding deeper than expected in food delivery, Meituan tumbling on warnings of irrational competition. Hyper-growth in China’s tech landscape is starting to feel like a zero-sum cage fight rather than a clean runway. Even Cambricon’s AI chip story, this week’s darling, is now flashing red lights, warning of trading risks after an 8% skid.
Across the Pacific, the keeps grinding higher, up 0.3% to fresh records, fueled by revisions that again show the U.S. consumer isn’t buckling. Resilience is the headline, but it comes with a twist—stronger spending risks reigniting the inflation fire, with expected to tick up to 2.9%. That’s the fastest clip in five months, and enough to keep bond desks jittery about how many the Fed can really deliver without losing face.
Oil, meanwhile, is caught between the rhythm of the calendar and the choreography of geopolitics. Post-Labor Day always marks the shift from pedal-to-the-metal driving season to a slower cruise, but the demand drop is often exaggerated. Some of this is simply the blend switch at U.S. refineries, not a collapse in gasoline appetite.
Still, the market feels heavy. The GDP print gave crude a temporary lift, snuffing out the “stag” in stagflation talk, but seasonal cooling, loose OPEC+ supply, and a lack of durable geopolitical tailwinds tilt the scales lower.
Where it gets interesting is India. As long as New Delhi soaks up Russia’s discounted barrels, Riyadh will keep chopping prices into Asia to defend its turf. But if Trump’s tariff saber-rattling finally makes India blink, that demand could pivot back toward “legal” barrels—forcing the Saudis into a rethink. That’s a possible inflection point, but until then, still looks more like a short than a buy.