Europe Backs Zelenskyy as Trump Weighs Ukraine Peace Pact

GLOBAL MOOD: Risk-On
Drivers: Ukraine Peace Talks, Zelenskyy Visit 

Markets are leaning cautiously risk-on, with Asian shares mixed and oil slightly lower after the Trump-Putin summit ended without new sanctions or escalation. Attention now turns to Trump’s talks with Zelenskyy and Powell’s Jackson Hole speech, keeping traders watchful yet hopeful that geopolitical calm and dovish Fed signals could support sentiment.

TODAY’S WATCHLIST
 - Trump- Zelenskiy Meet
 - Eurozone June trade balance

THE BIG STORY
Europe’s top leaders are flying into Washington to stand shoulder-to-shoulder with Ukraine’s Volodymyr Zelenskyy as he faces off with Donald Trump over the war’s endgame. Britain, France, Germany, Italy and Finland want to make sure this White House meeting doesn’t turn into a repeat of February’s tense showdown. 

The push comes right after Trump’s Alaska summit with Vladimir Putin, where the US president dropped his ceasefire demand and started talking permanent peace. Now, Putin’s hinting at a Nato-like security pact for Ukraine, something he’s long resisted.

DATA SPOTLIGHT
US factory production remained unchanged in July, following an upwardly revised 0.3% increase in June, indicating that manufacturing activity is stalling as businesses navigate higher costs from import tariffs. On a year-on-year basis, factory output rose 1.4%. Meanwhile, US retail sales increased 0.5% last month, supported by strong demand for motor vehicles and promotional activity from companies like Amazon and Walmart, marking a 3.9% gain compared with July 2024. Business inventories rose 0.2% in June, contributing to a 1.6% annual increase, after inventories decreased to a $26.0 billion annualized rate in Q2, subtracting 3.17 percentage points from GDP growth. These trends suggest solid consumer spending, while manufacturing continues to face headwinds from tariffs and higher costs. 

Takeaway: US consumer spending remains resilient, supported by strong retail sales and rising inventories, while manufacturing activity shows signs of stagnation, reflecting pressure from higher import costs and tariffs. Overall, economic momentum is mixed, with consumer demand offsetting slower industrial growth.

WHAT HAPPENED OVERNIGHT

• US stocks mixed with Dow hits record high
  
  • Dow Jones ended higher supported by UnitedHealth’s shares surging nearly 12% on Berkshire Hathaway’s increased stake.
  • Nasdaq and S&P 500 showed mixed performance as some technology stocks weakened.

• US Treasury yields up as strong retail and import data temper rate-cut bets
  
  • The 10-year US Treasury yield rose 4 bps after July headline and control-group retail sales rose sharply, while import prices surged the most in 15 months
  • Data suggests that expansionary fiscal policy and tariffs may prevent inflation from aligning with the Fed’s target.

• US dollar slips on strong retail sales and easing consumer spending 
  
  • The dollar index dropped to 97.85, reflecting easing concerns over consumer spending after July retail sales rose 0.5%, led by car sales and online promotions.

• Crude oil slip on anticipation of Trump-Putin talks on Ukraine sanctions
  
  • Brent crude prices fell on Friday as traders awaited the Trump-Putin meeting, which could influence the easing of sanctions on Russia. 

Day’s Ledger

• Economic Data
• Eurozone June trade balance

Corporate Actions

• Mangalam Organics to consider fund raising
• Nuvoco Vistas Corp to consider fund raising

TICKERS TO WATCH

• ALEMBIC PHARMA gets USFDA final nod for Tretinoin Cream, market size pegged at $94 million.
• EASEMYTRIP to acquire 50% in Three Falcons Hotel for ₹1.8 billion, buy AB Finance for ₹1.9 billion, and invest in VBIL.
• GLENMARK PHARMA profit slumps 86% to ₹0.5 billion vs ₹3.4 billion.
• GMR AIRPORTS July passenger traffic falls 3.9% YoY to 92.7 lakh; aircraft movements down 2.3% YoY.
• JK CEMENT approves greenfield expansion with total investment of ₹48.1 billion.
• KEC INTERNATIONAL wins new orders worth ₹14.0 billion; YTD order intake tops ₹84.0 billion.
• PNC INFRATECH gets NHPC LoA for 300 MW solar project with 150 MW/600 MWh storage system.
• PVR INOX opens new 18 screens in Bengaluru and Mumbai, total screens rise to 1,763 across 355 properties.
• STAR HOUSING FINANCE board clears issuance of NCDs worth up to ₹500 million.
• VEDANTA receives SEBI warning for non-compliance on Scheme of Arrangement modification.
• VODAFONE IDEA loss widens to ₹66.1 billion vs ₹64.3 billion.

MUST READ: 

• Inflation’s All Zen Unless You Buy Coconuts, Oils or Little Gold on the Side
• GST Rate Cuts Can Lift Demand, But Fiscal Balancing Will Be Key
• India Paid a Growth Price to Win a Ratings Prize
• Politics straddling borders: Bipartisan engagement key for Northeast
• IBC Amendment: More clarity, less reform, focuses on incremental fixes
• The Karnataka Bank saga: A clash of egos and cultures in old private banks
• FPI short positions in index futures at highest since March 2023
• European Leaders to Join Zelenskiy for Meeting With Trump
• China’s $11 Trillion Stock Market Is a Headache for Both Xi and Trump
• Trump says no imminent plans to penalize China for buying Russian oil

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

GST Reset Faces Revenue and State Test

A bold GST reset is on the table — two slabs by Diwali, 5% and 18%, with “sin goods” at 40%. 

Najib Shah, the former Chairman of the Central Board of Indirect Taxes and Customs, writes  relief for households and MSMEs is promised, but states worry about lost revenue as the compensation cess ends in 2026. Can the Centre secure consensus before the festival deadline?