Global equity markets recovered to register gains after an initial decline this week. The tariff deadline of July 9th  was not enforced and pushed forward to August. However, President Trump announced a 50% tariff on Brazil due to the ongoing trial against former President Bolsonaro. Markets were also concerned about the announcement of a 35% tariff on Canada, 50% on copper and 15-20% on the rest of the world effective from August 1st. The U.S. has decided to resume supply of arms to Ukraine, after Russia escalated with drone and air attacks on Kyiv. Russian foreign minister Sergei Lavrov and US secretary of state Marco Rubio met in Malaysia to discuss an end to the war. President Trump is scheduled to make a statement on the Russia-Ukraine war soon. Israel also resumed its attacks on Gaza this week. Elon Musk announced the formation of a new political party.

Global Updates
  • The MSCI All Country World Index rose slightly after an initial decline earlier in the week. Global equity markets lagged initially due to uncertainty regarding the tariff deadline on July 9th. However, markets recovered following the postponement of the deadline to August. President Trump also communicated with South Korea, Japan and other countries to discuss potential trade deals. Later in the week President Trump announced a 35% tariff on Canada and 50% on copper imports effective August 1st. All other trading partners would be levied in the 15-20% range. 
  • U.S. pharmaceutical firm Merck has announced plans to acquire Verona Pharma for $10 billion to enter the respiratory therapy sector. 
  • TSMC posted a higher-than-expected revenue of $31.9 billion due to the increased AI driven demand for its chips.
  • The members of OPEC+ have agreed on raising their daily output by 548,000 barrels in August due to the positive economic outlook for the near future. However crude oil prices rose due to the possible sanctions on Russia and the rising supply risks due to Houthi attacks on two cargo vessels in the Red Sea. The increased demand from China also signaled increasing demand.
  • Stock prices of Lynas Rare Earths and other Australian mining firms rose after the U.S. Department of Defense entered into an agreement with MP materials for the production of rare earth magnets. 
  • China’s GDP growth is expected to slow down to 5.1% during the second quarter due to the trade tensions with the U.S. 
  • Gold prices were subjected to opposing forces this week. The rising bond yields reduced the demand for gold, whereas the tariffs announcement raised its safe haven demand. Copper prices also jumped sharply owing to President Trump’s decision to levy a 50% tariff on copper imports essential for industrial use.
U.S. Equity
  • The S&P 500, Dow Jones and Nasdaq continued to rise for the third consecutive week. Both the broad market indices the S&P 500 and the Nasdaq closed at record highs this week. Nvidia became the first public company whose market capitalization crossed the $4 trillion mark this week. The security markets were broadly unaffected by President Trump’s tariff announcements. 
  • The unemployment benefit claims unexpectedly dropped to 227, 000 for the previous week, as layoffs were less than expected by the U.S. Labor Department. 
  • Tesla stock price declined following the removal of the $7,500 tax credit for electric vehicles from the new budget bill passed by the U.S. Congress. Tesla CEO Elon Musk’s announcement for the launch of a new political party, the ‘America Party’, also disheartened investors due to the possible extension of the Trump-Musk conflict. 
  • First Solar and other renewable energy companies declined due to the removal of the federal tax credits for solar installations. President Trump signed an executive order this week, terminating federal subsidies for renewable energy projects. The budget bill passed last week had already terminated ‘clean energy tax credits.’ 
  • Wells Fargo has raised the price target for Uber Technologies stock based on its positive income outlook due to its expansion strategies. 
  • Moderna’s stock price fell this week following a directive by the U.S. Department of Health and Human Services removing the COVID-19 shot from the immunization schedules for infants. 
  • Intel is expected to lay off more than 500 personnel from its Oregon facilities.   
  • Delta Airlines posted a higher-than-expected EPS of $2.1 on revenue of $15.5 billion for the second quarter. Delta also restored its full-year EPS outlook to the $5.25-$6.25 range. 
  • AI cloud provider CoreWeave announced its plans to acquire Core Scientific for $9 billion to leverage its data center infrastructure.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index was slightly lower this week.
  • The U.S. 10-year Treasury yield rose to 4.382% and the yield on the 2-year note was slightly higher at 3.887% over the week. 
  • The U.S. Dollar Index rose slightly to 97.81 this week.

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