Stock Market Update

Equity futures are higher this morning following an announcement from President Trump that companies that commit to domestic development will be exempt from the impending 100% import tariff on chips and semiconductors. 

The news follows yesterday's action that saw shares of Apple (AAPL 219.25, +5.98, +2.8%) surge after the company announced an additional $100 billion investment in domestic production, bringing their total investment figure to $600 billion. While President Trump announced an additional 25% tariff rate on India (50% total rate), the largest manufacturer of Apple's iPhone, a White House official stated that the company will be largely exempt from the tariff. 

Financial Times reports that the Indian Prime Minister Narendra Modi stated he "will never compromise on the interests of farmers, livestock owners and fishermen".

The first half of the tariff on India goes into effect today, as do several other levies, including a 35% tariff on Canada, a 39% tariff on Switzerland, a 20% tariff on Taiwan, and a 50% tariff on Brazil (with several exemptions, including orange juice and iron ore). 

Still, the market is largely focused on the exemptions for chipmakers this morning. 

Other noteworthy developments are relatively slim this morning, though a sizable round of companies are reporting earnings. The market will also receive the preliminary Productivity and Unit Labor Costs for Q2 today in addition to jobless claims data.

In corporate news:

• Airbnb (ABNB 122.75, -7.75, -5.9%) beat EPS expectations by $0.09 and beat revenue expectations. The company guided Q3 revenues in-line. 
• DoorDash (DASH 281.84, +23.87, +9.3%) beat EPS expectations by $0.21 and beat revenue expectations. 
• Eli Lilly (LLY 678.00, -68.37, -9.2%) beat EPS expectations by $0.71 and beat revenue expectations. The company raised its FY25 EPS and revenue guidance to in-line. Despite the earnings beat, shares are down in the pre-market in response to the Phase 3 trial results for its weight loss pill.
• Taiwan Semiconductor Manufacturing (TSM 244.18, +12.81, +5.5%) will not face the 100% tariff on semiconductor imports due to its plants in the U.S., according to Bloomberg.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Thursday on a higher note. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: +0.7%, China's Shanghai Composite: +0.2%, India's Sensex: +0.1%, South Korea's Kospi: +0.9%, Australia's ASX All Ordinaries: -0.1%.

In news:

• President Trump threatened to impose a 100% tariff on imports of semiconductors and he also threatened to impose new tariffs on imports from China if China continues buying oil from Russia.
• China's trade surplus for July was smaller than expected due to unexpected growth in imports.
• China Securities Journal reported that leveraged bets on Chinese equities are at their highest level in a decade.

In economic data:

• China's July trade surplus $98.24 bln (expected surplus of $105.20 bln; last surplus of $114.77 bln). July Imports 4.1% yr/yr (expected -1.0%; last 1.1%) and Exports 7.2% yr/yr (expected 5.4%; last 5.8%)
• Japan's June Leading Index 106.1 (expected 106.0; last 104.8) and Coincident Indicator 0.8% m/m (last 0.0%)
• South Korea's June Current Account surplus $14.27 bln (last surplus of $10.14 bln)
• Australia's June Building Approvals 11.9% m/m, as expected (last 3.2%) and June Private House Approvals -2.0% m/m, as expected (last 0.5%). June trade surplus AUD5.365 bln (expected surplus of AUD3.180 bln; last surplus of AUD1.604 bln). June Imports -3.1% m/m (last 3.3%) and Exports 6.0% m/m (last -3.0%)
• New Zealand's Q3 Inflation Expectations 2.3% (last 2.3%)

Major European indices trade on a mostly higher note while the U.K.'s FTSE (-0.7%) underperforms. STOXX Europe 600: +1.0%, Germany's DAX: +1.8%, U.K.'s FTSE 100: -0.7%, France's CAC 40: +1.2%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.7%.

In news:

• The Bank of England voted 5-4 in favor of a 25-basis point rate cut to 4.00%, which was expected.
• Maersk CEO said that the shipping industry continues experiencing uncertainty, though freight rates and demand from China have been resilient.
• Switzerland's federal council will hold an extraordinary meeting after President Keller-Sutter returned from Washington without a trade deal.

In economic data:

• Germany's June Industrial Production -1.9% m/m (expected -0.4%; last -0.1%); -3.5% yr/yr (expected -0.6%; last 0.0%). June trade surplus EUR14.9 bln (expected surplus of EUR17.8 bln; last surplus of EUR18.6 bln). June Imports 4.2% m/m (expected 1.0%; last -3.9%) and Exports 0.8% m/m (expected 0.5%; last -1.4%)
• U.K.'s July Halfiax House Price Index 0.4% m/m (expected 0.1%; last 0.1%); 2.4% yr/yr (last 2.7%)
• France's June Current Account deficit EUR3.40 bln (last deficit of EUR2.60 bln). June trade deficit EUR7.6 bln (expected deficit of EUR7.5 bln; last deficit of EUR7.6 bln)
• Swiss July Unemployment Rate 2.9% (last 2.9%)