Market Update
The September S&P 500 E-Mini Futures ticked up by 0.13% this morning, as there’s a hint of cautious optimism among investors about potential trade agreements ahead of President Trump’s August 1 deadline.
Reports suggest that the European Union and the US are nearing a trade deal that could impose a 15% tariff on most imports from Europe. Trump hinted at progress on Thursday, saying, “We’re probably in the process of doing something very good.” He also noted that trade partners collaborating with the US might see reduced tariffs next week through agreements with Japan.
In yesterday’s market session, Wall Street’s major indexes showed mixed results. Google’s parent company saw its shares rise over 1% after announcing stronger-than-expected second-quarter results, attributed to a solid demand for AI products. West Pharmaceutical Services jumped over 22%, emerging as the top percentage winner in the S&P 500 after it reported positive Q2 results and raised its full-year guidance. T-Mobile also performed well, increasing by over 5%, following its upbeat second-quarter report and improved year-round guidance on adding postpaid net customers. On the downside, Tesla’s stock fell more than 8%, becoming the biggest loser on the Nasdaq 100, as CEO Elon Musk hinted at upcoming challenges, including potential changes to US EV tax credits.
A Labor Bureau report on Thursday revealed an unexpected drop in initial unemployment claims, which fell to 217,000, a three-month low, compared to the anticipated 227,000. Additionally, the US July S&P Global Services PMI increased to 55.2, exceeding expectations of 53.0. Meanwhile, the S&P Global Manufacturing PMI decreased to 49.5, falling short of the expected 52.7, and new home sales in June were also weaker than anticipated, rising to 649,000 from the previous 627,000.
Chris Larkin from Morgan Stanley’s E*Trade remarked, “There are still few signs of a major crack in the labor market. If things stay intact, the Fed might have less reason to cut interest rates.”
US futures are signaling significant potential changes in monetary policy, showing a 97.4% likelihood with a 2.6% chance of a rate cut of 25 basis points. Expectations for interest rate cuts later this year have dipped below 2 following the unemployment claims report.
During a visit to the US Central Bank, President Trump clashed with Federal Reserve Chairman Jerome Powell, criticizing the expenses of renovating two historic buildings. He continues to advocate for lower interest rates.
Investors today are keeping an eye on upcoming releases of US durable goods orders. Analysts expect June’s durable goods orders to fall by 10.4% month-over-month, while core durable goods are projected to rise by 0.1%, both figures compared to earlier expectations.
Several notable companies, including HCA Healthcare, Charter Communications, Natwest Group, and Phillips 66, are scheduled to present quarterly earnings today. Bloomberg Intelligence indicates that S&P 500 companies might record a 3.2% increase in second-quarter revenues compared to the previous year, slightly surpassing earlier forecasts of 2.8%.
In the bond market, the benchmark 10-year US Treasury bond yield is currently at 4.421%, marking an increase of 0.29%.
In Europe, the Euro STOXX 50 index fell by 0.35% this morning. Investors are meticulously reviewing corporate earnings while awaiting updates on EU-US trade negotiations as the deadline approaches next week. Financial and mining sectors led the declines, while this benchmark index is facing possible weekly losses. A recent survey indicated that German business sentiment improved more than anticipated in July, showing strong satisfaction with current conditions. Additionally, UK retail sales have shown some recovery in June, hinting at positive trends in the economy.
New data from the European Central Bank indicated that bank lending within the eurozone grew at its highest rate in two years in June, reflecting ongoing recovery efforts linked to lower borrowing costs and stable economic conditions.
Today, UK retail sales figures were released, highlighting June’s sales rising by 1.2% month-over-month, which was below expectations. Core retail sales increased by 0.6%, which also did not meet forecasts. Meanwhile, France’s consumer trust index rose to 89, surpassing the expected 88, whereas Germany’s IFO Business Environment Index fell to 88.6, below the predicted 89.0.
In Asian markets, stocks closed in negative territory, with China’s Shanghai Composite Index declining by 0.33%, and Japan’s Nikkei Index down by 0.88%. China’s recent rally was interrupted as investors took profits ahead of important political meetings and new US trade discussions scheduled for next week.
Japan’s consumer inflation eased in July but remains on track for normalization by the Bank of Japan. The key economic indicator index was revised down from earlier predictions, indicating a lookout shift based on labor demand and consumer sentiment.
In pre-market trading in the US, some notable movements include Intel’s stocks, which dropped by over 5% after posting unexpected losses, while Deckers Outdoor surged nearly 12% following robust quarterly results. Edwards Lifesciences rose over 7% after reporting strong second-quarter numbers and adjusting guidance upward. Newmont Goldcorp saw a rise of over 1% after its quarterly earnings exceeded expectations. Paramount Global’s stock was up also by more than 1% following merger approval news.
Today’s focus remains on top earnings announcements and how they might influence market sentiments in the backdrop of ongoing economic developments.
