Stock Market Update

Equity futures point to a lower opening to start September after a dip on Friday that ended an otherwise exceptional August, pushing the Dow, Nasdaq, and S&P 500 to record high levels.

Tariff uncertainty is at the core of today's headline coverage after Friday's ruling by a federal appeals court that the bulk of President Trump's implemented tariffs are illegal, with the court noting that the authority "to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution," according to CNBC. 

The levies will remain in effect until at least October 14, as the Trump administration seeks a Supreme Court appeal. 

Elsewhere on the trade front, Reuters reports that the U.S. is tightening restrictions on Samsung and SK Hynix by revoking licenses that previously let the companies use U.S. semiconductor manufacturing equipment in China, according to the Federal Register.

Bloomberg reports that gold hit record-high levels as the market becomes increasingly certain of a September rate cut. With the September 17 FOMC meeting just a touch over two weeks away, the CME FedWatch tool currently assigns a 91.8% probability of a 25-basis-point cut. 

In corporate news:

• Kraft Heinz (KHC 28.00, +0.03, +0.1%) announced that its Board of Directors has unanimously approved a plan to separate the Company into two independent, publicly traded companies through a tax-free spin-off.
• Meta Platforms (META 728.50, -10.20, -1.4%) removed several celebrity AI chatbots after using celebrity voices and generating images without their permission, according to Reuters. 
• Signet Jewelers (SIG 91.52, +3.47, +3.9%) beat EPS expectations by $0.37, beat on revenues, guides Q3 revenues above consensus, and raises its FY26 EPS and revenues to in-line. 
• Tesla (TSLA 329.28, -4.58, -1.4%) saw sales of its China-made electric vehicles drop 4% year-over-year in August, according to Reuters. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a mixed note. Japan's Nikkei: +0.3%, Hong Kong's Hang Seng: -0.5%, China's Shanghai Composite: -0.5%, India's Sensex: -0.3%, South Korea's Kospi: +0.9%, Australia's ASX All Ordinaries: -0.3%.

In news:

• South Korea's CPI unexpectedly deflated in August (-0.1%), causing the yr/yr growth rate to slow to 1.7% from 2.1%.
• South Korea is expected to gradually increase defense spending and President Lee called for bold steps to boost the potential growth rate.
• Japan's top trade negotiator said that there is no disagreement with the U.S. after last week's visit to Washington was canceled.

In economic data:

• Japan's August Monetary Base -4.1% yr/yr (expected -3.5%; last -3.9%)
• South Korea's August CPI -0.1% m/m (expected 0.2%; last 0.2%); 1.7% yr/yr (expected 2.0%; last 2.1%)
• Australia's Q2 Current Account deficit AUD13.7 bln (expected deficit of AUD15.9 bln; last deficit of AUD14.1 bln). Q2 Net Exports Contribution 0.1% (expected 0.3%; last -0.1%)
• New Zealand's Q2 Terms of Trade Index 4.1% qtr/qtr (expected 2.1%; last 1.9%)

Major European indices trade in the red while regional sovereign debt also trades lower. STOXX Europe 600: -0.9%, Germany's DAX: -1.5%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -0.2%, Italy's FTSE MIB: -1.1%, Spain's IBEX 35: -1.3%. 

In news:

• The British government is facing growing pressure to allay the market's concerns about the nation's fiscal standing. This has driven yields on longer-dated gilts to levels not seen in nearly 30 years.
• There was also some uncertainty linked to next week's confidence vote in the French government.
• European Central Bank policymakers Schnabel and Simkus said that there is no current need for a rate cut.

In economic data:

• Eurozone's flash August CPI 0.2% m/m (last 0.0%); 2.1% yr/yr, as expected (last 2.0%). Flash August Core CPI 0.3% m/m (last -0.2%); 2.3% yr/yr (expected 2.2%; last 2.3%)
• France's July budget balance -EUR142.0 bln (expected -EUR107.2 bln; last -EUR100.4 bln)
• Italy's July PPI 0.5% m/m (last 1.4%); 1.6% yr/yr (last 2.4%)
• Spain's August Unemployment Change 21,900 (expected 14,200; last -1,400)