Stock Market Update

Equity futures point slightly higher after yesterday's trade kept the major averages relatively flat throughout the session.

Developments on the trade front will likely continue to occupy headlines, as President Trump announced in a Truth Social post that he plans to send tariff letters to seven countries this morning, with an additional number being released in the afternoon.

Financial Times reports that the EU is close to a trade deal with the U.S., but that the tariff imposed will likely be higher than the rate for the U.K.

Additionally, Senator Lindsey Graham is working on a bill that would impose new sanctions on Russia, with the Senator remarking that President Trump is in support of the proposed legislation, according to Politico.

Treasuries are little changed with the 10-yr yield flat at 4.42%.

In U.S. corporate news:

• AES (AES 12.65, +1.58, +14.3%): exploring strategic options, including a potential sale, according to Bloomberg.
• Apple (AAPL 210.09, +0.08, +0.0%): is in negotiations to acquire U.S. screening rights for F1 racing after the success of its movie.
• Penguin Solutions (PENG 20.15, -1.04, -4.9%): beat Q3 EPS expectations on below-consensus revenue and raised its EPS guidance for FY25.
• Rhythm Pharmaceuticals (RYTM 69.10, +3.96, +6.1%): expected to announce top line results of one of its trials.
• Starbucks (SBUX 96.49, +1.55, +1.6%): has received proposals regarding its China business, according to Bloomberg.
• Verona Pharma (VRNA 104.68, +17.82, +20.5%): agreed to be acquired by Merck (MRK 81.55, +0.18, +0.2%) for $10 bln.

Reviewing overnight developments:

• Asian markets ended mostly lower. Japan's Nikkei +0.3%, Hong Kong's Hang Seng -1.1%, China's Shanghai Composite -0.1%
  • In economic data:
    • China's June CPI -0.1% m/m (expected 0.0%; last -0.2%); 0.1% yr/yr (expected -0.1%; last -0.1%). June PPI -3.6% yr/yr (expected -3.2%; last -3.3%)
    • Japan's June Machine Tool Orders -0.5% yr/yr (expected 3.4%; last 7.7%)
    • Australia's May Building Approvals 3.2% m/m, as expected (last -4.1%) and Private House Approvals 0.5% m/m, as expected (last 5.9%)
  • In news:
    • China's CPI for June deflated for the sixth time over the past eight months, pointing to ongoing weakness in consumption, while PPI deflated for the 33rd consecutive month
    • The Reserve Bank of New Zealand left its official cash rate at 3.25%, as expected, though there are high expectations for another rate cut in August
• Major European indices trade in the green. Germany's DAX +1.1%, U.K.'s FTSE +0.4%, France's CAC +1.3%.
  • No data today
  • In news:
    • The EU is reportedly willing to accept a temporary 10% reciprocal tariff while continuing trade discussions with the Trump administration. European Commission President von der Leyen said that the EU is ready for all potential outcomes
    • British advertiser WPP is sharply lower after cutting its guidance for the year