US hits Canada with 35% tariffs

General market commentary

Shares on Wall Street climbed to new record highs, with the S&P 500 and Nasdaq Composite both posting fresh closing peaks as investors brushed aside growing concerns over US tariffs. The broader market remained resilient despite a backdrop of trade uncertainty, with small-cap shares outperforming. The Russell 2000 rose 0.5% on the day and has now gained 1.7% over the past five sessions, though it still sits around 7% below its record from last November. An early sell-off in US government bonds reversed course after a well-received auction of 30-year Treasuries, while the US dollar remained steady against a basket of international currencies. Oil prices extended recent losses, falling more than 2%, following stronger-than-expected US supply data and subdued demand forecasts from OPEC. Reports suggest OPEC+ members may pause planned production increases from October.

On the corporate front, investors digested a flurry of earnings and deal activity. WK Kellogg shares surged over 30% after agreeing to a multibillion-pound acquisition by Ferrero Group. Delta Air Lines and United Airlines both posted strong gains following upbeat earnings, while rare earths firm MP Materials jumped more than 50% after unveiling plans to build a magnet manufacturing facility in partnership with the US Department of Defense. Meanwhile, economic data showed new unemployment claims remain low, suggesting limited job losses, though the steady rise in continuing claims points to some softness in hiring. The Federal Reserve appears to be taking a cautious stance, awaiting further clarity on inflation and trade policy impacts. While a July rate cut looks unlikely, a September move remains on the table depending on how economic data evolves.

Latest market and economic update

Asian shares were mixed on Friday, with broader markets drifting lower amid renewed trade worries after President Trump imposed steep tariffs on Canada. Chinese and Hong Kong markets outperformed on hopes of further stimulus, while Japan and Australia declined. Tech-led gains lifted South Korea’s KOSPI for the week, though it dipped slightly on the day.

US equity futures held steady early morning after record closes for the S&P 500 and Nasdaq, despite renewed tariff threats from President Trump against Canada and Europe. Futures showed little movement, with muted after-hours trading and no major earnings releases, as investors remained cautious ahead of potential new tariff announcements.

European markets closed mixed Thursday as the STOXX 600 rose 0.5%, while Germany’s DAX fell 0.3%. Key movers included BMW (+4.15%), Mercedes-Benz (+1.63%), and L’Oréal (+2.11%), while SAP (-0.9%) and Allianz (-2.22%) declined. Investor sentiment was shaped by cautious optimism over U.S.-EU trade talks and potential tariffs on European exports.

The US dollar strengthened broadly this week, with the dollar index nearing 98 and on track for a 1% weekly gain amid rising trade tensions and hawkish Fed signals. The greenback advanced sharply against the euro, which slipped to 1.1682, as investors priced in fewer eurozone rate cuts and a resilient US labour market outlook.

Oil prices held steady in Asian trade on Friday after sharp losses, as traders weighed new US tariff threats and a cautious OPEC+ supply outlook. Brent rose 0.5% to $69.01 and WTI gained 0.7% to $67.00. Markets remain wary of weaker demand from trade tensions and OPEC+’s plans to pause production hikes after August.

President Trump announced a 35% tariff on Canadian imports from 1 August, citing fentanyl flows and unfair trade practices. He warned against retaliation and offered tariff relief if Canada cooperates. Some USMCA goods will be exempt, but the move heightens tensions despite recent signs of improved trade ties after Canada dropped a proposed digital tax.

Equities on the move

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

Apple plans to launch several new products in early 2026, including a budget iPhone 17e, updates to the entry-level iPad and iPad Air, and an external Mac monitor, Bloomberg reports. Upgraded MacBook Pro and Air models, initially set for 2025, may also be delayed to 2026.

Delta Air Lines reported stabilised bookings, below earlier forecasts, and issued a full-year profit outlook, lifting shares 13%. Despite weak domestic pricing, improved airfares are expected as capacity is cut. CEO Ed Bastian highlighted solid US economic fundamentals and called for tariff-free aircraft trade.

TSMC reported Q2 revenue of $31.9 billion, a 38.6% rise year-on-year, surpassing analyst forecasts and its own guidance. Driven by strong AI demand, the world’s largest contract chipmaker continues to benefit from key clients like Nvidia. Full earnings and outlook will be released on July 17.

Nordex reported a record Q2 order intake of 2,310 MW, 15% above consensus and up 82% year-on-year, with stable prices at €0.97 million per MW. Jefferies praised the strong demand and pricing discipline, boosting confidence in Nordex achieving a record 2024 order year and its 2026 EBITDA margin target of 8%.

MP Materials struck a multibillion-dollar deal with the US Department of Defence, making the DoD its largest shareholder to boost domestic rare earth magnet production and reduce China’s dominance. The agreement includes a price floor for key rare earths, new factories, and funding via the Defence Production Act, aiming to enhance national security and supply resilience.

Goldman Sachs upgraded Nvidia to a “buy,” highlighting early signs of AI monetisation and over $350 billion invested in related infrastructure. They favour performance and software leaders, expect growing demand for low-cost AI design tools, and maintain positive ratings on Nvidia, Broadcom, Cadence, and Synopsys despite ongoing geopolitical risks affecting chip exports.

Piper Sandler upgraded Oracle to Overweight with a $270 target, citing rising AI-driven CIO spending. Workday was downgraded to Underweight and its target cut to $235 due to weakening application spend and pricing pressure. Microsoft and SAP also saw target increases on strong AI-related demand.

HSBC upgraded AMD to Buy, doubling its price target to $200 due to stronger-than-expected AI GPU pricing and confidence in its data centre roadmap. It raised 2026 AI revenue forecasts by 57% and lifted 2025-26 earnings estimates. The MI400 AI server launch in 2026 could further boost growth, with broader segments also performing well.

Bank of America downgraded Commerzbank to “neutral,” citing limited upside despite strong fundamentals. The bank raised its price target, expecting higher 2025 earnings and share buybacks, but forecast a significant Q2 net income drop due to restructuring costs. They highlighted continued strength in net interest income, cost efficiency, and capital build-up as positive factors.

Deutsche Bank initiated coverage of Micron Technology with a Buy rating and $150 target, citing strong demand for High Bandwidth Memory (HBM) as a key growth driver. HBM revenues are expected to reach 23% by 2026 with higher margins, while traditional DRAM also shows growth potential. NAND remains less promising.

Bank of America reinstated coverage of Estee Lauder with a Buy rating and $110 target, citing recovery signs in Asia and confidence in its restructuring plan. Despite recent earnings declines, demand in China is improving. The “Beauty Reimagined” strategy aims for 4% annual revenue growth and margin expansion by FY27, backed by cost savings and reinvestment.

HC Wainwright downgraded Coinbase to Sell from Buy, citing the equity’s 150% rally as detached from fundamentals. Ahead of Q2 results, revenue estimates were cut due to a 41% drop in crypto trading volumes. Adjusted EPS was halved to $0.72, with full-year 2025 revenue and earnings forecasts also lowered amid cautious near-term outlook.

KeyBanc upgraded Roku to Overweight with a $115 target, citing better ad monetisation, new partnerships, and cost controls. It raised 2025-27 EBITDA estimates and expects profits by 2026. Strong user engagement and industry tailwinds support a 43% annual EBITDA growth through 2027, improving Roku’s risk-reward profile.

Upcoming data and events

Today’s economic calendar features monthly CPI data for Germany, along with EU Harmonized CPI figures. Later, the US federal budget balance for June is scheduled, with a projected deficit of $316 billion.

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