Overview of market performance
Equity markets saw a rebound on Monday after a shaky start, as investors weighed a range of global economic signals and new tariff developments. U.S. indices closed in positive territory, with gains driven by communication and financial sectors. Energy and materials, however, lagged behind. A key development came over the weekend, as President Trump announced a 30% tariff on imports from the European Union and Mexico, effective from 1st of August.
Key market trends
Markets were influenced by bond movements, currency dynamics, and mixed signals from global equities. Here’s how major regions and asset classes performed.
U.S. bond yields and dollar strength
Yields on U.S. government bonds edged higher, with the 10-year Treasury note hitting 4.43% – still below May’s 4.60% peak. The U.S. dollar held above 98, near a three-week high, and strengthened against most major currencies, supported by expectations of persistent inflation and hawkish policy tones from the Federal Reserve. The euro slipped, with EUR/USD trading at 1.1674 amid ongoing trade uncertainty. President Trump’s criticism of Fed policy also added to FX market volatility.
European and Asian market sentiment
European equities dipped slightly, impacted by the looming threat of U.S. tariffs. Auto manufacturers were particularly hit, with losses seen in VW, BMW, and Mercedes of up to 2.5%, while Volvo dropped 5% on EV-related concerns. In contrast, defence stocks like Thales rose as French President Macron unveiled a €6.5 billion military spending plan.
In Asia, markets delivered mixed results. China’s trade surplus unexpectedly rose to $115 billion in June, helping offset some tariff-related concerns. Hong Kong’s Hang Seng Index led regional gains, buoyed by tech stocks such as Nvidia, while Japan and South Korea dipped and Australia and Singapore saw modest gains.
Focus on inflation and earnings
As macroeconomic risks evolve, investor attention is turning to key U.S. data releases and the start of earnings season.
What investors are watching
Investors are gearing up for the release of the U.S. Consumer Price Index (CPI) data for June. Forecasts suggest headline inflation could reach 2.6% year-on-year, while the core CPI may rise to 3.0%. These figures are likely to influence Federal Reserve policy expectations and global market sentiment. Analysts and investors are also closely monitoring for signs of tariff-driven price pressures and potential interest rate impacts.
Q2 earnings season expectations
The second-quarter earnings season kicks off this week, with major U.S. banks such as JPMorgan, Citigroup, and Wells Fargo reporting first. Analysts have revised growth forecasts downward, with S&P 500 earnings now expected to rise 5.8% year-on-year – a notable drop from earlier projections above 10%. Communication and technology stocks are forecast to outperform, while energy and consumer discretionary companies may face earnings pressure. Despite tariff and policy uncertainty, long-term inflation expectations remain anchored, and earnings growth is expected to support equities over the coming year.
Regional economic highlights
Global data continues to reflect a mixed recovery picture, particularly in Asia, where strong headline growth contrasts with weak domestic indicators.
Asia: Mixed reactions to GDP data
Asian markets traded within a narrow range on Tuesday. Investors reacted to stronger-than-expected Q2 GDP growth from China, which came in at 5.2% year-on-year. While this surpassed expectations, it marked a slowdown from 5.4% in Q1. Industrial production was a bright spot, while retail sales and fixed asset investment missed estimates. Unemployment remained stable at 5%, with first-half GDP growth at 5.3%, exceeding government targets.
Oil prices and geopolitical risk
Oil prices moved slightly lower in Asian trade, with Brent crude down 0.2% to $69.06 and WTI down 0.3% to $66.79. Markets are balancing robust Chinese GDP data with geopolitical risks – particularly President Trump’s 50-day ultimatum to Russia over the Ukraine conflict and potential sanctions on Russian oil buyers.
Stock and analyst highlights
Several major companies made headlines due to earnings, analyst actions, or geopolitical developments. Below are key updates and notable stock movements.
Noteworthy stock movements
- Nvidia shares climbed 3.3% to $169.40 after announcing the resumption of H20 AI chip sales in China, a critical move for local AI firms. The company had previously warned export restrictions could cost $5.5 billion in revenue.
- The Trade Desk surged 14.7% on news it will join the S&P 500 on July 18, replacing ANSYS.
- McGraw Hill is targeting a $4.2 billion IPO valuation and aims to raise $537 million by selling up to 24.39 million shares at $19–$22 each. The firm plans to list on the NYSE under the ticker “MH” on July 18.
- Volvo Cars announced an impairment charge of 11.4 billion Swedish crowns ($1.2 billion) in Q2 due to tariffs and launch delays affecting its ES90 and EX90 models. The charge will reduce net income by 9 billion crowns. Results are due July 17.
- Nuclear energy stocks rallied after U.S. Energy Secretary Chris Wright voiced strong support for nuclear power. NuScale rose 10%, Oklo gained 8%, and Nano Nuclear 5%, while uranium companies Energy Fuels and Cameco added 2% amid expectations of regulatory easing and renewed focus on small modular reactors.
Analyst ratings and earnings revisions
- Morgan Stanley downgraded CrowdStrike to Equal-weight from Overweight, citing stretched valuation after a 50% rally. Despite raising the price target to $495, they recommended waiting for better entry points.
- Taiwan Semiconductor (TSMC) was upgraded by Morgan Stanley ahead of Q2 earnings on July 17. The bank expects strong AI-driven demand to trigger a full-year revenue upgrade and set a price target of NT$1,288, implying 17% upside.
- Jefferies raised price targets for Home Depot to $460 and Lowe’s to $280, citing increased home equity withdrawals driving home improvement demand.
- Needham initiated Shopify with a Buy rating and a $135 target, highlighting international and B2B growth potential, improved margins, and a path to 20% operating margins by 2027.
- Citi analyst Jason Gursky raised Rocket Lab’s price target to $50, the highest on Wall Street, citing $2.6 billion revenue potential by 2029 from satellite contracts, Neutron launches, and Geost acquisition gains.
- Hermès was downgraded to “Hold” by Jefferies due to lower 2025–2026 forecasts from FX headwinds and reliance on leather goods. Their Q2 organic growth missed expectations, and margins are expected to face pressure. The €2,460 price target implies limited upside unless China demand improves or product diversification increases.
Upcoming events to watch
Today’s U.S. Consumer Price Index (CPI) data release will be closely watched, with expectations for a 0.3% monthly increase and a 3.1% annual rise. Additionally, earnings from JPMorgan, Wells Fargo, and Citigroup are expected to shape short-term sentiment across equity and credit markets.
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