Market Overview: Equities rise while trade concerns linger
Global equity markets posted gains on Wednesday, powered by robust performances in the technology and utilities sectors. Meanwhile, consumer staples and energy stocks lagged. The market momentum came on the heels of President Trump’s latest move to impose new tariffs on seven countries, underscoring his administration’s ongoing focus on trade.
Key US market movements
- Nasdaq: +0.7% to 22,865
- S&P 500: +0.6% to 6,263
- Dow Jones Industrial Average: +0.5% to 44,458
The Federal Reserve’s latest minutes revealed a divided stance among policymakers on interest rate cuts, yet investors remained optimistic. In the bond market, yields dipped slightly, with the 10-year Treasury yield falling to 4.34% after a successful government debt auction.
Asian and European market sentiment
Markets across Asia and Europe reacted to a mix of inflation data, central bank decisions, and global trade developments. Here’s a breakdown of key regional movements:
Mixed signals from Asia
China’s consumer price index edged up to 0.1% in June, exceeding forecasts. South Korea’s KOSPI index led gains, supported by strong performance from semiconductor stocks and the Bank of Korea’s decision to maintain interest rates. Japan underperformed, held back by slow progress in US trade discussions and new tariff pressures. Technology shares were boosted regionally by Nvidia’s rally.
European equities extend gains
European indices advanced:
- STOXX 50: +1.3%
- STOXX 600: +0.7% (approaching one-month highs)
The banking, aerospace, and defense sectors reached record levels, while corporate developments boosted stocks such as UniCredit and EssilorLuxottica. Mining stocks declined as copper prices fell, driven by ongoing trade concerns.
Currency and commodity markets
Movements in the dollar, commodities, and crypto reflected evolving rate expectations, trade policy, and risk appetite.
US Dollar weakens
The US dollar softened against major currencies. The dollar index fell to 97.3, as investors shifted toward riskier assets amid declining Treasury yields. The euro appreciated to 1.1737, buoyed by expectations of possible rate cuts.
Commodities: Oil and Copper under pressure
Oil prices hovered near two-week highs in Asia despite a surprise build-up in US crude inventories. Brent and WTI futures saw slight declines but remained supported by geopolitical tensions in the Middle East. A newly announced 50% tariff on copper weighed on industrial metals.
Bitcoin hits record high
Bitcoin surged past $112,000, driven by increasing institutional interest and expectations of easier monetary policy. The Trump administration’s supportive stance toward cryptocurrency also boosted investor confidence, pushing the digital asset to new heights.
Trade policy update: New tariffs and deal prospects
Trade remained front and center, with new US tariff measures introduced and negotiations in motion with key global partners.
Ongoing US tariff strategy
The US government introduced new tariffs affecting 21 countries, with a revised negotiation timeline extending until August 1. Early agreements with countries such as the UK and Vietnam suggest room for flexibility, which may reduce inflationary pressure and support global growth.
EU-US trade talks
EU Trade Commissioner Maros Sefcovic reported “good progress” in negotiations with the US. Talks now extend into early August, focusing on the automotive sector, including tariff cuts, export credits, and quotas. Italy’s economy minister cautioned that complex issues remain unresolved.
Brazil faces a 50% tariff
President Trump announced a 50% tariff on all Brazilian imports, effective August 1, 2025, citing alleged infringements on free speech and trade irregularities. Relief was offered to Brazilian companies with US-based manufacturing operations. He warned of further increases if Brazil retaliates.
Federal Reserve outlook
President Trump urged the Federal Reserve to slash rates by 3 percentage points, aiming to lower national debt servicing costs and attract capital inflows. The Fed minutes indicated potential rate cuts later in 2025, contingent on economic and inflation data. While sentiment remained upbeat, futures markets showed a cautious tone, particularly after-hours, despite gains in tech shares.
Equities on the move
Several major corporations saw significant share price movements due to earnings results, analyst actions, or strategic developments. Highlights by sector include:
Tech and innovation
- Samsung: Launched thinner foldables, integrated AI features, and partnered with Google to counter Chinese rivals and offset US tariffs and China’s export restrictions.
- Tesla: Plans to expand its robotaxi service in the San Francisco Bay Area within a month or two, pending regulatory approval.
- NVIDIA: Surged to a $4 trillion market cap, driven by record AI demand, eased export restrictions, enterprise AI adoption, and reshoring efforts. CEO Jensen Huang emphasized growing momentum in reasoning AI.
Consumer and retail
- Costco: June net sales climbed 8% to $26.44 billion, with e-commerce growing 11.5%. Comparable sales rose 5.8%, and international markets grew 10.9%. Excluding gas and FX effects, growth was even stronger.
- Ferrero: Nearing a $3 billion deal to acquire WK Kellogg, aiming to diversify its US presence beyond confectionery. WK Kellogg has faced weak demand and criticism over artificial dyes.
Healthcare and Pharma
- Merck: Will acquire Verona Pharma for $10 billion to gain access to Ohtuvayre, a COPD drug expected to generate up to $4 billion annually by the 2030s. The acquisition is Merck’s largest since 2023 and helps offset Keytruda patent losses.
Regulatory-driven moves
- TikTok: Developing a US-only app with its own algorithm and data system to comply with US regulations and enable a potential sale. A joint venture between American investors and ByteDance is expected to own the platform.
Analyst upgrades and downgrades
Analyst activity reflected shifting views on AI, inflation risks, and international tariffs.
Positive ratings and price targets
- Meta: TD Cowen raised its price target to $800, maintaining a Buy rating on strong ad growth, AI momentum, and WhatsApp monetization. Q2 revenue is expected at $45.4 billion and EPS at $6.08.
- Microsoft: Upgraded by Oppenheimer to Outperform with a $600 price target, citing strong AI positioning and cloud growth, including Azure’s performance.
- SAP: Morgan Stanley reaffirmed its Overweight rating and Top Pick status, noting reseller strength. However, full-year 2025 growth forecasts were lowered to 3.2%, though near-term momentum remains positive.
- Alibaba: Jefferies reaffirmed its Buy rating, highlighting strong AI-driven cloud revenue growth and record daily order volumes in instant commerce. Despite an expected 15% EBITA decline, the medium-term outlook remains upbeat.
Cautions and downgrades
- Monster Beverage: Downgraded by Redburn to Neutral due to rising US aluminum tariffs, which are expected to double to 50% in 2026, raising aluminum costs by 26%. EPS forecasts for 2025-27 were cut by 2–5%.
- Doximity: Upgraded by Evercore ISI to Outperform with a $70 price target. Full-year guidance is seen as cautious, with total revenue expected to reach $630 million in 2026.
- Indra Sistemas: Upgraded by Goldman Sachs to Buy with a price target of €45, citing upside from rising European defense spending, including 22% CAGR in defense, 10% in air traffic, and 5% in IT services. EBIT and EPS projections were also raised.
Upcoming market events
Key focus areas for today include:
- Initial jobless claims in the US, a vital indicator for labor market health that may influence investor sentiment and Fed policy.
- Earnings reports from major names, including Delta Air Lines, Levi Strauss & Co., and Conagra Brands, will provide insights into the air travel and consumer demand sectors.
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