Equity markets opened the week on a weaker note, as concerns over new US tariffs pressured investor sentiment. All three major US indices—the Dow, S&P 500, and Nasdaq—closed nearly 1% lower. While defensive sectors like utilities and consumer staples saw modest gains, consumer discretionary and materials stocks lagged.
Tariffs take center stage in market movements
Investor attention turned squarely toward global trade policy after President Donald Trump unveiled a sweeping set of new tariffs, further intensifying market unease.
Markets were rattled by President Trump’s announcement of sweeping new tariffs. A 25% levy will be imposed on goods from Japan, South Korea, Malaysia, and Kazakhstan starting August 1, unless trade agreements are finalized in July. South Africa faces 30% tariffs, while BRICS-aligned nations could be hit with an additional 10% surcharge.
The announcement, which coincides with the ongoing BRICS summit in Brazil, has stoked fears of rising global inflation and slowing economic growth. Bond markets responded with a slight uptick in US Treasury yields—pushing the 10-year yield to 4.39%—as expectations for three Fed rate cuts this year were dialed back to two following strong June jobs data.
Mixed global market performance
Equity markets around the world showed divergent trends as investors weighed the impact of tariffs against local economic conditions and central bank expectations.
In Asia, most markets posted gains on Tuesday, encouraged by President Trump’s openness to continued negotiations. South Korea’s KOSPI advanced by 0.7%, while Japan’s Nikkei held flat. Chinese and Hong Kong markets recorded minor gains. However, Australian and Malaysian equities slipped ahead of the Reserve Bank of Australia’s anticipated rate cut.
In Europe, stocks ended higher on Monday, with the STOXX 50 gaining 0.9%. Optimism about a potential US-EU trade agreement provided a boost. The EU is pursuing a preliminary pact to avoid escalating tariffs while preparing retaliatory measures if talks falter. Energy stocks lagged following news from OPEC+, while German med-tech companies declined amid China’s counter-sanctions.
Currency and commodity markets react
Currency and commodity markets reflected heightened volatility, responding sharply to trade headlines and shifting expectations on interest rate policy.
The US Dollar Index dipped below 97.5 on Tuesday, reversing earlier strength following the extension of the tariff deadline and threats of further levies on BRICS-aligned nations. Despite Monday’s gains driven by strong employment data, easing Fed expectations helped the euro rise, with EUR/USD reaching 1.1742.
Oil prices declined in Asian trade, with Brent and WTI both falling 0.7%. While Monday saw a brief rally due to Saudi Arabia’s price hikes, markets remained wary of potential oversupply and reduced demand stemming from tariff escalation and OPEC+ production increases.
Key corporate developments
A number of major corporates saw notable share price moves following analyst actions, leadership changes, or macro developments that affected their outlook.
Samsung Electronics: Forecasted a 56% drop in Q2 operating profit due to soft AI chip demand and US chip restrictions. Delays in supplying high-bandwidth memory to Nvidia also weighed on results. However, it announced a $2.85 billion share buyback and expects gradual profit recovery supported by new phone launches and broader chip demand.
Apple & Meta: Apple’s AI chief Ruoming Pang has joined Meta’s new superintelligence lab, signaling intense competition in the AI talent market. Meta recently reorganized its AI operations under Meta Superintelligence Labs, led by Alexandr Wang, former CEO of Scale AI.
Tesla: Shares tumbled nearly 7% after Elon Musk announced a new US political party, raising concerns about leadership focus amid falling sales. William Blair downgraded Tesla to Market Perform, warning that Trump’s proposed “Big, Beautiful Bill” could remove fuel economy fines, endangering Tesla’s profitability via reduced regulatory credits and lost EV tax incentives.
Nvidia: Citi raised its price target to $190, citing robust AI data center demand and a 13% upward revision in the AI semiconductor market forecast for 2028 (now $563 billion). The company’s Blackwell platform rollout is proceeding well, and margin expansion is expected—though further US export restrictions remain a risk.
Netflix: Seaport Research downgraded the stock to Neutral from Buy, citing limited near-term upside despite long-term growth potential. The firm expects global price hikes and a 40% rise in ad revenue by 2023 but currently sees less than 10% upside. Netflix aims to grow viewership through live sports and content expansion.
TSMC: Macquarie raised the price target by 14% to NT$1,282, driven by strong AI-led demand and leadership in advanced semiconductor nodes like N2 and N3. Despite FX headwinds, revenue growth is expected to exceed 20% in 2025.
GE Vernova: UBS initiated coverage with a Buy rating and a $614 price target, citing strong electricity demand, tight supply, and significant pricing power. The firm forecasts 70% earnings growth over five years, supported by margin improvement and a robust backlog, despite the high valuation.
CrowdStrike: Piper Sandler downgraded the stock to Neutral from Overweight after a 60% price surge. Concerns include stretched valuations, slowing growth momentum, federal spending uncertainty, workforce reductions, and ongoing investigations. The price target remains at $505.
Wells Fargo & U.S. Bancorp: Raymond James downgraded Wells Fargo to Market Perform due to limited near-term upside and premium valuation, though long-term fundamentals remain sound. Meanwhile, U.S. Bancorp was upgraded to Strong Buy, with a new $57 target based on improved operating leverage and investor sentiment.
Stellantis: Bank of America downgraded the automaker to Neutral and cut its price target from €16 to €10, citing weak European performance, disappointing first-half results, and a 15% revenue decline. The firm noted ongoing challenges with Stellantis’ battery-electric vehicle (BEV) strategy and high cash burn, though sees potential recovery in North America by 2026 driven by Jeep and RAM refreshes.
Semiconductor Equipment: Citi upgraded its outlook on US semiconductor equipment stocks, forecasting stronger 2025–26 wafer fab equipment (WFE) spending due to easing geopolitical risks and robust memory and AI-related cloud investments. Price targets were raised for KLA, Lam Research, and Applied Materials. KLA was favored for its exposure to leading-edge logic sales.
MP Materials: Jefferies downgraded the stock to Hold, citing China’s issuance of short-term rare earth export licenses, which eases supply concerns and reduces the scarcity premium in MP’s valuation. The firm noted high capital costs and risks tied to MP’s expansion plans.
Economic calendar remains light
The economic calendar on Tuesday is relatively quiet, with only trade data from France scheduled. Investors remain focused on trade developments and upcoming interest rate decisions from the US Federal Reserve and Reserve Bank of Australia.
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