September S&P 500 E-Mini futures (ESU25) are up +0.08%, and September Nasdaq 100 E-Mini futures (NQU25) are up +0.17% this morning as initial jitters over U.S. President Donald Trump’s latest tariff moves eased, giving way to cautious optimism that there’s still ample room for further negotiations.
President Trump began sending letters to global trading partners on Monday, notifying them of new tariff rates if trade agreements aren’t reached. Japan and South Korea were both subjected to 25% tariffs, South Africa faced a 30% rate, and Laos and Myanmar were hit with 40% duties. In total, 14 countries have received letters regarding new tariffs, and the White House stated that more letters will be sent out throughout the week.
Mr. Trump also signed an executive order pushing back the start date for the so-called reciprocal tariffs by three weeks to August 1st, though the president noted the deadline was not “100% firm” and he would consider extensions if countries made proposals. Investors believe that Trump escalates his trade war only to later de-escalate, betting that any final tariffs will be imposed at levels the global economy can withstand.
In yesterday’s trading session, Wall Street’s main stock indexes closed in the red. Tesla (TSLA) slumped over -6% and was the top percentage loser on the S&P 500 and Nasdaq 100 after CEO Elon Musk announced the formation of a new political party called the America Party, prompting backlash from President Trump and fueling worries about potential consequences for Musk’s businesses. Also, chip stocks lost ground, with Arm Holdings (ARM) sliding more than -5% and Marvell Technology (MRVL) dropping over -4%. In addition, CrowdStrike (CRWD) fell more than -1% after Piper Sandler downgraded the stock to Neutral from Overweight. On the bullish side, WNS (WNS) surged over +14% after Capgemini agreed to acquire the technology outsourcing company for $3.3 billion in cash.
Meanwhile, Goldman Sachs lifted its three-, six-, and 12-month return forecasts for the S&P 500 index, citing anticipated U.S. interest rate cuts and continued fundamental strength in major large-cap stocks as the main drivers of its upbeat outlook. The bank projects the benchmark index will climb to 6,400 over the next three months and 6,900 over the next 12 months, implying respective gains of 3% and 11%.
The Federal Reserve remains cautious about tariffs despite pressure from Trump to cut rates, and wants to assess how they impact output and prices over the coming months. Investors on Wednesday will parse the Fed’s minutes from the June 17-18 meeting.
U.S. rate futures have priced in a 95.3% chance of no rate change and a 4.7% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.
Today, investors will focus on U.S. Consumer Credit data, which is set to be released in a couple of hours. Economists expect this figure to be $10.40B in May, compared to the previous figure of $17.87B.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.412%, up +0.39%.
The Euro Stoxx 50 Index is down -0.04% this morning as investors remain focused on the latest trade developments following U.S. President Trump’s announcement of a three-week extension to the tariff deadline to August 1st. Real estate stocks underperformed on Tuesday, while mining stocks gained ground. Data from the federal statistics office released on Tuesday showed that Germany’s exports fell for the second consecutive month in May amid higher U.S. tariffs, as Europe’s largest economy appears headed for another year of minimal or no growth. Meanwhile, the European Union is aiming to finalize a preliminary trade agreement with the U.S. this week that would secure a 10% tariff rate beyond August 1st while both sides continue negotiating a permanent deal. Politico reported that the U.S. proposed a deal that would keep the 10% baseline tariffs, while granting exemptions for sensitive sectors like aircraft and spirits. In corporate news, Kinnevik AB (KINVB.S.DX) climbed over +5% after the Swedish investment company posted a sharp year-over-year increase in Q2 profit.
Germany’s Exports and Germany’s Imports data were released today.
The German May Exports stood at -1.4% m/m, weaker than expectations of -0.2% m/m.
The German May Imports came in at -3.8% m/m, weaker than expectations of -0.9% m/m.
Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.70%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.26%.
China’s Shanghai Composite Index closed higher today as investors weighed the latest shift in U.S. President Donald Trump’s tariff plans and cheered Beijing’s fresh efforts to rein in price wars. Shares of solar manufacturers led the gains on Tuesday after China’s industry ministry vowed to curb disorderly low-price competition in the photovoltaic sector. Huaxi Securities analysts said in a note that stronger policy measures to curb excessive competition are likely to help restore balance between supply and demand in the industry, bolster a recovery in producer prices, and lift long-term earnings expectations for A-shares. Meanwhile, China warned the Trump administration on Tuesday against rekindling trade tensions by reinstating tariffs on its goods next month, and threatened to retaliate against countries that enter agreements with the U.S. aimed at excluding China from supply chains. Washington and Beijing reached a trade framework in June that reinstated a fragile truce through August 12th, but with numerous details still unclear, market participants are monitoring whether it will collapse or evolve into a lasting detente. U.S. Treasury Secretary Scott Bessent said in an interview with CNBC on Monday that he anticipates meeting with his Chinese counterpart in the coming weeks to discuss trade and other economic matters. In corporate news, Shandong Jinling Mining jumped about +10% after projecting its attributable net profit to increase 66% to 112% year-over-year to between 133 million yuan and 169 million yuan in the first half. Investors now await China’s June inflation data, scheduled for release on Wednesday, to assess the health of the world’s second-largest economy amid persistent deflationary pressures and trade-related risks.
Japan’s Nikkei 225 Stock Index closed higher today on cautious optimism that the country could secure a trade agreement before U.S. President Donald Trump’s newly extended tariff deadline. The benchmark index was also supported by a sharply weaker yen as Trump’s string of tariff warning letters triggered a broad rally in the dollar on Monday. Electronics stocks led the gains on Tuesday. President Trump began sending letters to global trading partners on Monday, notifying them of new tariff rates set to take effect on August 1st. Mr. Trump said the U.S. set a 25% tariff on goods from Japan, slightly above the 24% rate announced in April. Still, the rate is below the previously threatened level of up to 35%, helping to ease some investor concerns. Japanese Prime Minister Shigeru Ishiba said on Tuesday that he would keep negotiating with the U.S. to pursue a mutually beneficial trade agreement. On the economic front, a government survey showed that sentiment in Japan’s service sector improved slightly in June, as strong demand for summer apparel and leisure helped offset concerns over U.S. tariffs. Separately, Japan posted a record current account surplus for May, supported in part by a narrower trade deficit. Meanwhile, Japan’s super-long bond yields extended their advance on Tuesday as political risks continue to cast a shadow over the country’s financial markets. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -6.76% to 25.52.
The Japanese May Current Account n.s.a. came in at 3.436T yen, stronger than expectations of 2.940T yen.
The Japanese June Economy Watchers Current Index stood at 45.0, weaker than expectations of 45.1.
Pre-Market U.S. Stock Movers
Solar stocks slumped in pre-market trading after President Trump on Monday signed an executive order directing federal agencies to ramp up enforcement of provisions in the One Big Beautiful Bill Act that scale back tax credits for wind and solar energy. As a result, SolarEdge (SEDG), Sunrun (RUN), and Enphase Energy (ENPH) are down more than -3%.
Datadog (DDOG) slid more than -2% in pre-market trading after Guggenheim downgraded the stock to Sell from Neutral with a $105 price target.
KLA Corp. (KLAC) fell over -1% in pre-market trading after Wells Fargo downgraded the stock to Equal Weight from Overweight.
Merit Medical Systems (MMSI) rose more than +2% in pre-market trading after the company provided above-consensus Q2 revenue guidance and named Martha Aronson as President and CEO.
KeyCorp (KEY) gained over +1% in pre-market trading after UBS upgraded the stock to Buy from Neutral with a price target of $22.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - July 8th
Penguin Solutions (PENG), Kura Sushi (KRUS), Aehr Test Systems (AEHR), Saratoga Investment Corp (SAR).
