Equities hold near records despite tariff fears

General market commentary

Global equity markets experienced a pullback last week, with US equities retreating from record highs as renewed tariff threats from the Trump administration unsettled investors. The S&P 500 and Nasdaq slipped 0.3% and 0.2% respectively on Friday, while the Dow Jones fell 0.6%, led lower by financials and industrials. A steeper yield curve and rising Treasury yields pointed to investor concerns over the inflationary impact of tariffs, while the US dollar appreciated modestly on a trade-weighted basis. Meanwhile, oil prices rebounded and precious metals rose, reflecting shifting investor sentiment amid growing geopolitical and policy-related uncertainty.

Looking ahead, attention will turn to the corporate earnings season, with major US banks set to report results this week. Analysts expect second quarter earnings growth to slow notably from earlier in the year, as businesses contend with heightened cost pressures and tariff related disruptions. Beyond company results, markets are also watching closely for further developments on trade, with August 1 emerging as a critical deadline for a raft of new tariffs. Despite near term volatility, investors are weighing longer term support from fiscal stimulus and potential monetary easing, as the Federal Reserve navigates the challenge of balancing inflation risks with a cooling economic outlook.

Latest market and economic update

Most Asian equities traded narrowly as investors digested fresh U.S. tariff threats. Chinese markets rose on strong June trade data, with the Shanghai Composite up 0.4%. Singapore gained 0.4% after upbeat GDP figures, while South Korea’s KOSPI edged higher. Japan’s Nikkei slipped 0.3% on trade concerns, and Australian shares were flat amid mixed commodity performance.

US equity futures fell this morning after President Trump announced 30% tariffs on EU and Mexican imports from 1 August, heightening trade tensions. Investors turned cautious ahead of key US inflation data and the start of earnings season, with major firms reporting this week. Uncertainty also grew following remarks about the potential dismissal of Fed Chair Powell.

European shares closed sharply lower on Friday amid concerns over reduced global trade flows and impending US tariffs. The STOXX 50 and STOXX 600 both fell 1.1%, led by major movers such as LVMH, Kering, and Stellantis, which dropped nearly 4%, while UniCredit, BBVA, and Nordea fell over 2%. Despite Friday’s losses, the STOXX 50 ended the week 1.7% higher, with the STOXX 600 up 1%.

The US dollar held firm around 97.8 on Monday, supported by escalating trade tensions following President Trump’s 30% tariff announcement on EU and Mexican imports. Caution ahead of key US inflation data also underpinned the dollar. The euro edged lower, with EUR/USD trading at 1.1677, as investors monitored the EU’s response and potential coordinated action.

Oil prices rose modestly, building on Friday’s gains, as investors watched potential new U.S. sanctions on Russia and EU moves to cap Russian oil prices. Gains were limited by increased Saudi output exceeding OPEC+ targets and tariff uncertainties. Meanwhile, China’s oil imports hit a near-yearly high, though high inventories may weigh on prices.

Bitcoin soared to a record high above $121,000 in Asian trading, driven by growing institutional adoption and anticipation of the US “Crypto Week” in Washington. Gains were supported by strong ETF inflows, potential crypto regulations, and increased holdings by major firms like Metaplanet. Crypto equities and a Chinese regulator’s policy shift also boosted sentiment.

The EU has extended its suspension of countermeasures to US tariffs until early August, seeking a negotiated resolution. This follows Trump’s threat of 30% tariffs on EU and Mexican imports from 1 August. EU leaders stressed continued dialogue while preparing to retaliate if necessary, with Germany warning the proposed tariffs could severely impact its export-driven economy.

China’s June trade surplus reached $114.77 billion, exceeding expectations as exports grew 5.8% year-on-year, supported by US tariff reductions. Imports rose modestly by 1.1%, indicating continued weak domestic demand. The data highlights strong trade activity ahead of Tuesday’s Q2 GDP report, which is expected to surpass Beijing’s 5% annual growth target.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Kraft Heinz is considering spinning off much of its grocery business, including Kraft products, into a separate entity valued around $20 billion. The move aims to boost shareholder value amid changing consumer habits and inflation. This follows Kellogg’s recent $3.1 billion buyout, highlighting wider industry challenges and strategic shifts.

Paypal and Block shares fell Friday after reports that JPMorgan plans to charge fintech firms for customer data access, with fees potentially reaching hundreds of millions. The charges depend on pending Biden administration regulations. JPMorgan emphasised its investments in secure data systems and is engaging in ongoing industry discussions.

Piper Sandler reaffirmed Meta as their top large-cap internet pick, citing strong Q2 digital ad growth of 6.6% and rising investor optimism. AI investments, new WhatsApp ad units, and lower CPMs attracting advertisers underpin their bullish view. They raised estimates, forecasting Q3 revenue of $47 billion, a 16% year-on-year increase.

Morgan Stanley raised its price target on Amazon to $300, citing a more favourable macro environment and strong AWS momentum. The bank increased 2026/2027 EPS forecasts by up to 9%, expecting AWS to grow 17-18% annually. The $300 target implies 35% upside, with a bull case of $350, driven by e-commerce and AI growth.

UBS downgraded Freeport-McMoRan to Neutral from Buy, citing that recent gains have priced in much upside from US copper tariffs and Comex-LME spreads. Despite a higher $50 target, UBS warns of softening copper demand and inventory build-up, which may limit near-term upside. However, it remains positive on operational and gold price drivers.

Citi raised Super Micro Computer’s price target to $52 from $37, citing stronger AI server demand and Nvidia’s platform ramp. Despite this, Citi kept a Neutral rating due to rising competition from Dell and HPE. The bank forecasts fiscal Q4 revenue of $6.07 billion and flagged key focus areas like tariff impacts and GPU platform transitions.

Citi remains bullish on Roblox despite its 55% rally since Q1 results, citing strong Q2 user data and a favourable US court ruling on App Store fees. They raised the price target from $100 to $123, expecting bookings and EBITDA to surpass guidance, boosted by lower platform fees from Apple and Google.

UBS has raised its conviction on European equities ahead of Q2 earnings, despite muted growth and downward 2025 forecasts. While macro challenges persist, UBS expects earnings growth to resume in 2026, driven by cyclical sectors. The focus is on company-specific surprises, with 21 firms flagged for potential outperformance amid cautious investor sentiment.

Upcoming data and events

This week, US trade policy developments are set to influence global growth and markets alongside a busy earnings season and key economic data. Major US banks, including JPMorgan and Goldman Sachs, report earnings. The US CPI is expected to rise, retail sales to stagnate, while the UK, Euro Area, and China release important inflation, trade, and growth figures.

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