United States
US equity markets faltered overnight as mounting trade tensions and sticky inflation data overshadowed an earnings-driven tech rally. The S&P 500 slipped 0.4%, marking a reversal after gaining over 1% intraday — the first such retreat since April. The Nasdaq 100 fell 0.5%, while the Dow Jones Industrial Average dropped 0.7%. Despite these declines, the Magnificent Seven megacaps continued to defy gravity, with Microsoft briefly topping a $4 trillion valuation and Meta Platforms surging 11.3% on the back of a blowout earnings result.
The tech rally was cut short as renewed geopolitical risks took centre stage. Former President Donald Trump announced new tariffs that will come into effect Friday, targeting trading partners such as India and Brazil, while striking deals with others including the European Union, UK, Japan, and South Korea. Mexico was granted a 90-day reprieve. Tensions also escalated with Canada, after it signalled support for Palestinian statehood — prompting Trump to threaten retaliatory trade measures.
Investors were also unnerved by signs that inflation is proving persistent. The Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) price index, rose 0.3% in June, lifting the annual rate to 2.8% — one of the fastest increases so far this year. Consumer spending, however, inched up only 0.1%, reinforcing concerns that while price pressures remain, economic momentum may be losing steam.
Apple shares rose as much as 3.6% in after-hours trading after the iPhone maker beat expectations on both product sales and revenue across key regions, particularly Greater China and the Americas. Quarterly revenue climbed 9.6% to USD 94.04 billion, ahead of consensus estimates, with iPhone revenue alone up 13% year-on-year. By contrast, Amazon shares slid up to 7% in extended trade after the company’s outlook for operating income disappointed. While sales in AWS and advertising exceeded expectations, margin compression and cautious guidance weighed on sentiment.
Elsewhere, Google lost a court appeal in its app store antitrust case, and Figma’s highly anticipated IPO soared 250% on debut. Moderna announced a 10% workforce reduction as COVID-related product demand declines, while CVS Health lifted its 2025 profit outlook thanks to strong performance in its insurance and pharmacy segments.
Europe
European equities closed lower, with the Stoxx Europe 600 index falling 0.8%, reversing early gains and snapping its positive momentum. The drop was led by miners and carmakers, with copper prices plunging and luxury car demand showing signs of weakness. Despite the retreat, the index still posted a 0.9% gain for July.
The sharpest declines came from Ferrari, which tumbled 12% after reporting weaker-than-expected demand, and Anheuser-Busch InBev, which fell 12% as global beer volumes missed forecasts. Mining stocks also suffered as Trump confirmed a 50% import tariff on semi-finished copper products, sending global copper prices tumbling and hitting shares of ArcelorMittal, down 2.6%. Wendel SE dropped on disappointing asset valuation figures, and London Stock Exchange Group declined despite announcing a fresh share buyback.
Still, not all was bleak. Rolls-Royce soared to record highs after upgrading its earnings guidance. Societe Generale rallied 6.9% on stronger-than-expected capital returns, and Rentokil jumped 9.5% after reiterating full-year growth targets. Analysts noted that while July ended in positive territory, seasonal headwinds may weigh on European equities through August and September, historically the weakest months for the region.
Australia
The Australian sharemarket finished July in positive territory, with the S&P/ASX 200 gaining 2.4% for the month despite closing 13.6 points lower on Thursday at 8742.80. The dip was led by a sharp sell-off in the materials and energy sectors, triggered by a surprise collapse in copper prices and underwhelming earnings from Rio Tinto.
US copper prices dropped by as much as 22% overnight after the White House clarified that its new tariffs would apply only to semi-finished copper products. Traders had braced for more sweeping measures, and the narrower scope sparked a sharp repositioning. This, coupled with Rio Tinto’s 16% earnings decline, pushed its shares down 3.6%. BHP and Fortescue Metals fell 2.4% and 2.3% respectively, while Mineral Resources plummeted 7.1% after recent broker downgrades.
Energy also weighed on the market, with Beach Energy tumbling 9.3% after flagging a AUD 674 million impairment tied to weaker commodity prices. Flight Centre slumped 7.3% after guiding to the lower end of its earnings range, citing travel disruptions in the Middle East and Asia.
On a more positive note, tech stocks outperformed, buoyed by strong earnings in the US. Life360 jumped 3.2% and WiseTech rose 1%. Retailers rallied after June retail sales exceeded expectations, climbing 1.2% versus forecasts of 0.4%. JB Hi-Fi and Wesfarmers both rose over 1%. The big banks staged a late recovery, with NAB up 1.1% and CBA gaining 0.5%.
ASX futures point to a softer open, down 64 points or 0.7%, as investors digest the latest round of tariff threats from the Trump administration and brace for critical economic data. Locally, attention will turn to July dwelling prices and second-quarter producer price data, while globally, all eyes are on tonight’s US nonfarm payrolls report — expected to shed light on the health of the labour market and influence the Fed’s next move.
ResMed’s earnings are also due today and could be a key swing factor for local healthcare sentiment.
Commodities
Commodity markets saw heightened volatility. Copper led declines, collapsing to USD 4.35 per pound in its biggest one-day drop since 1988. Brent crude fell 1% to USD 72.53 a barrel, weighed by renewed trade concerns and easing demand expectations. Iron ore declined 2% to USD 99.70 a tonne, pushing prices back below the psychological USD 100 mark.
Gold was one of the few gainers, rising 0.5% to USD 3,289.93 per ounce as investors sought safe-haven assets amid rising uncertainty. Bitcoin dropped 0.4% to USD 116,583, while Ether lost 0.9%.
Currency markets reflected a risk-off tone. The Australian dollar eased 0.1% to US64.26¢. The US dollar continued to firm, supported by higher yields and safe-haven flows, with the Bloomberg Dollar Spot Index up 0.2%. The Japanese yen weakened 0.9% after dovish comments from the Bank of Japan governor, and the euro remained flat near USD 1.1413.
Economic Calendar
AU:
- Producer Prices (QoQ Q2) 11:30
EU:
- Inflation (Jul) 19:00
US:
- Non-farm Payrolls (Jul) 22:30
- ISM Manufacturing (Jul) 00:00
- University of Michigan Consumer Sentiment (Jul) 00:))
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
