Stock Market Update

Equity futures are lower this morning after President Trump implemented widespread tariff increases on major trading partners, including Canada, Taiwan, and India, significantly reshaping the global trade landscape.

The executive order signed on Thursday evening added reciprocal tariffs on a number of countries, with the new duties set to kick in on August 7. Notably, the tariff rate on Canada will go from 25% to 35%, and a 40% tariff will be levied on all transshipped goods, regardless of what country they come from. 

The market also has a fresh wave of earnings reports to digest, which includes more mega-cap tech companies. Impressive earnings reports from Microsoft (MSFT 536.58, +3.08, +0.6%) and Meta Platforms (META 765.80, -7.64, -1.0%) lifted the S&P 500 and Nasdaq Composite to new record highs yesterday, though weakness in the broader market saw the major averages close in negative territory.

It is unlikely that Apple (AAPL 211.11, +3.54, +1.7%) and Amazon (AMZN 216.18, -17.82, -7.6%) will have the same effect today, as both companies beat EPS and revenue expectations, but Amazon trades lower in response to cautious profit guidance and a lower operating income for the current quarter.

Today is heavier on the economic data side, with the market set to receive employment data, the ISM Manufacturing Index, and the final University of Michigan Consumer Sentiment.

In corporate news:

• Apple (AAPL 211.11, +3.54, +1.7%) beat EPS expectations by $0.14 and beat revenue expectations. The company saw June quarter tariff costs of $800 million, with September quarter tariff costs expected to reach $1.1 billion.
• Amazon (AMZN 216.18, -17.82, -7.6%) beat EPS expectations by $0.35 and beat revenue expectations. The company guided Q3 revenues above consensus, but Q3 operating income is expected to be lower than anticipated.
• Chevron (CVX 151.69, +0.05, +0.0) beat EPS expectations by $0.04 and beat revenue expectations. 
• Exxon Mobil (XOM 111.90, +0.26, +0.2%) beat EPS expectations by $0.08 and beat revenue expectations.
• Moderna (MRNA 28.00, -1.56, -5.3%) beat EPS expectations by $0.83, beat on revenues, and lowered the high end of FY25 revenue guidance.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the week on a lower note with South Korea's Kospi (-3.9%) deepening Thursday's reversal from its best level in nearly four years. Japan's Nikkei: -0.7%, Hong Kong's Hang Seng: -1.1%, China's Shanghai Composite: -0.4%, India's Sensex: -0.7%, South Korea's Kospi: -3.9%, Australia's ASX All Ordinaries: -0.9%.

In news:

• Toyko Electron fell sharply after lowering its guidance and warning of sluggish demand.
• China's Caixin Manufacturing PMI (49.5) dipped below 50.0 in the reading for July, joining the official reading in contractionary territory.
• Japan's Labor Ministry Council expects that the average minimum wage will increase by 6% .

In economic data:

• China's July Caixin Manufacturing PMI 49.5 (expected 50.2; last 50.4) Japan's July Manufacturing PMI 48.9 (expected 48.8; last 50.1). June jobs/applications ratio 1.22 (expected 1.25; last 1.24) and June Unemployment Rate 2.5%, as expected (last 2.5%)
• South Korea's July Manufacturing PMI 48.0 (last 48.7). July trade surplus $6.61 bln (expected surplus of $5.36 bln; last surplus of $9.08 bln). July Imports 0.7% yr/yr (expected 2.0%; last 3.3%) and Exports 5.9% yr/yr (expected 4.6%; last 4.3%)
• India's July Manufacturing PMI 59.1 (expected 59.2; last 58.4)
• Australia's July Manufacturing PMI 51.3 (last 51.6). Q2 PPI 0.7% qtr/qtr (expected 0.9%; last 0.9%); 3.4% yr/yr (last 3.7%). July Commodity Prices -9.0% yr/yr (last -8.7%)
• New Zealand's June Building Consents -6.4% m/m (last 10.3%)

Major European indices trade in the red while Switzerland's market is closed for a holiday. STOXX Europe 600: -1.4%, Germany's DAX: -1.9%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -2.1%, Italy's FTSE MIB: -1.8%, Spain's IBEX 35: -1.2%.

In news:

• International Consolidated Airlines reported strong results for Q2 while AXA missed expectations.
• Bayer raised its outlook while Daimler Truck lowered its guidance for the year.
• Drugmakers are seeing pressure after President Trump sent letters to major manufacturers, requesting that they lower prices charged in the U.S.

In economic data:

• Eurozone's July Manufacturing PMI 49.8, as expected (last 49.5). July CPI 0.0% m/m (last 0.3%); 2.0% yr/yr (expected 1.9%; last 2.0%). July Core CPI -0.2% m/m (last 0.4%); 2.3% yr/yr, as expected (last 2.3%)
• Germany's July Manufacturing PMI 49.1 (expected 49.2; last 49.2)
• U.K.'s July Nationwide HPI 0.6% m/m (expected 0.5%; last -0.9%); 2.4% yr/yr (expected 2.1%; last 2.1%). July Manufacturing PMI 48.0 (expected 48.2; last 47.7)
• France's July Manufacturing PMI 48.2 (expected 48.4; last 48.1)
• Italy's July Manufacturing PMI 49.8 (expected 48.7; last 48.4). June Retail Sales 0.6% m/m (expected 0.3%; last -0.4%); 1.0% yr/yr (last 1.4%)
• Spain's July Manufacturing PMI 51.9 (expected 51.7; last 51.4)