LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
For all the fog surrounding Friday’s payrolls data and the accuracy of the statistics, some Federal Reserve officials – unlike the White House – appear to be taking them at face value and are chiming in with souped up market easing expectations.
Markets are now almost fully priced for a quarter-point Fed rate cut next month. That and the forecast-beating corporate earnings season, which saw tech and defence firm Palantir surge another 6% after the bell overnight, have allowed Wall Street stock indexes to recover all of Friday’s steep losses – with futures still in positive territory early Tuesday as a stream of tech and pharma sector updates due later.
* San Francisco Fed President Mary Daly said on Monday mounting evidence of a softening U.S. job market and few signs of persistent tariff-driven inflation meant the time was nearing for rate cuts. Wall Street banks have jumped the gun, with Goldman Sachs now expecting three 25 basis-point cuts from September, with a 50 bps move possible if the unemployment rate rises in the next report. With another heavy week of debt sales kicking off later, 10-year Treasury yields came within a whisker of three-month lows on Tuesday. But the dollar strengthened slightly.
* Speculation remains about potential changes to U.S. tariffs before the new levies kick in on August 7. Switzerland said it was seeking to secure a better deal than the whopping 39% tariff it was hit with on Friday, and European Union trade chief Maros Sefcovic said he was in contact with U.S. officials Howard Lutnick and Jamieson Greer to turn July’s framework trade deal into practice. EU officials added that the 15% goods tariff Europe faces is “all-inclusive,” unlike the deals some other countries have struck with Washington
* Stocks in Asia and Europe were broadly firmer on Tuesday, with the earnings season in full swing. Japan’s Nikkei advanced as the yen weakened, with the Bank of Japan meeting minutes keeping rate rise expectations on the back burner as policymakers monitor fallout from U.S. tariffs. China and Hong Kong stocks climbed for a second consecutive session after a private-sector survey showed strong recovery in China’s services activity in July.
Make sure to check out today’s column, where I explore why the latest curve ball thrown at markets – uncertainty about economic data – is so tough to price.
Today’s Market Minute
* U.S. President Donald Trump again threatened on Monday to raise tariffs on goods from India over its Russian oil purchases, while New Delhi called his attack “unjustified” and vowed to protect its economic interests, deepening the trade rift between the two countries.
* A record number of Chinese companies are seeking a U.S. listing this year as onerous domestic listing rules and the prospect of better valuations convince them to brave volatile Sino-U.S. relations and U.S. calls for strict oversight of Chinese firms.
* South Korea will prepare measures to help companies cope with higher U.S. tariffs and expand into new markets, the Finance Ministry said on Tuesday, as it kicked off a task force to prepare the new administration’s economic policy plans.
* Trump’s decision to fire a top labor official following weak jobs data doesn’t just send ominous signals about political interference in independent institutions, writes ROI columnist Jamie McGeever, it is also a major strategic own goal.
* Asia’s imports of seaborne thermal coal ticked up in July, but the increase was driven by the developed economies of North Asia and not heavyweights China and India. Find out more from ROI columnist Clyde Russell.
Chart of the day
For investors seeking to lock into two super cycles – AI and defence, Palantir Technologies has been the catch-all winner. The data analytics and defense software firm is getting a boost from President Donald Trump’s focus on national security and a shift in the Pentagon’s software-buying process towards commercial and “non-traditional” providers.
Last week, the U.S. Army said it might purchase services of up to $10 billion from the company over a decade. Rising another 6% overnight after the firm raised its annual revenue forecast for the second time this year, Palantir’s stock has been the standout performer of the past year – even putting the likes of Nvidia in the shade. Its market cap has soared to more than $363 billion – more than six times what it was this time last year.
Today’s events to watch
* U.S. June international trade balance (8:30 AM EDT), July service sector surveys from S&P Global (9:45 AM EDT) and ISM (10:00 AM EDT): Canada June trade balance (8:30 AM EDT)
* U.S. corporate earnings: AMD, Super Micro Computer, Pfizer, Amgen, Marathon, DuPont De Nemours, Caterpillar, News Corp, Fox, Apollo, Arista, Molson Coors, DaVita, Aflac, Assurant, Eaton, ADM, Progressive, International Flavors and Fragrances, Match, Mosaic, Duke Energy, Devon Energy, Broadridge, Jacobs, Henry Schein, Cummins, Gartner, TransDigm, Zoetis, Yum! Brands
* U.S. Treasury auctions $58 billion of 3-year notes
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Alison Williams)
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