- Asian Stocks Post Modest Gain, Dollar Edges Down: Markets Wrap
Asian shares opened cautiously and Japanese equities dipped on lingering concerns over the impact from
President Donald Trump’s tariff agenda. The Nikkei-225 index fell 0.9% at the open as Trump threatened to
impose a fresh tariff level on the Asian country. The MSCI Asia-Pacific Index rose 0.2%. Contracts for the S&P
500 were flat after the index notched its best quarter since December 2023 and closed at a record high on
Monday. Hong Kong has a public holiday Tuesday. Wall Street’s bulls drove stocks to all-time highs at the end
of a solid quarter amid hopes the US is moving closer to reaching concrete deals with its top trading partners.
Bets the Federal Reserve will resume rate cuts powered the best first-half stretch for Treasuries in five years. - S&P 500 rises to another record to wrap up second-quarter comeback
Stocks rose on Monday as traders closed out a stunning month with even more record highs. The S&P 500
gained 0.52% and posted another record close, ending at 6,204.95. The Nasdaq Composite advanced 0.47%
and also reached fresh all-time highs, closing at 20,369.73. The Dow Jones Industrial Average climbed 275.50
points, or 0.63%, settling at 44,094.77. Monday marked the last day of June, a month in which the major
averages have staged a sharp recovery back to record levels. The S&P 500 rose nearly 5% in the month, while
the tech-heavy Nasdaq jumped more than 6%. The Dow added more than 4% in June. Prior to the S&P 500 and
Nasdaq hitting all-time highs Friday, global trade and tariff tensions rocked the market, putting the broad
market index within striking distance of a bear market in early April. All three major averages finished the
second quarter with solid gains, with the S&P 500 adding more than 10%, the Nasdaq rising nearly 18% and
the Dow popping almost 5%. - Oil edges down on expectations of more OPEC+ supply, tariff fears
Oil prices edged down on Tuesday, weighed by expectations of an OPEC+ output hike in August and concerns
of an economic slowdown driven by prospects of higher U.S. tariffs. Brent crude futures for September
delivery fell 16 cents, or 0.24%, to $66.58 a barrel by 0000 GMT. U.S. West Texas Intermediate crude declined
20 cents, or 0.31%, to $64.91 a barrel. “The market is now concerned that the OPEC+ alliance will continue
with its accelerated rate of output increases,” ANZ senior commodity strategist Daniel Hynes said in a note.
Four OPEC+ sources told Reuters last week that the group plans to raise output by 411,000 barrels per day in
August, following similar hikes in May, June, and July. If approved, this would bring OPEC+’s total supply
increase for the year to 1.78 million bpd, equivalent to more than 1.5% of global oil demand. OPEC and its allies
including Russia, together known as OPEC+, will meet on July 6. Uncertainty about U.S. tariffs and their impact
on global growth also kept a lid on oil prices. U.S. Treasury Secretary Scott Bessent warned that countries could
be notified of sharply higher tariffs despite good-faith negotiations as a July 9 deadline approaches, when tariff
rates are scheduled to revert from a temporary 10% level to President Donald Trump’s suspended rates of 11%
to 50% announced on April 2. Morgan Stanley expects Brent futures to retrace to around $60 by early next
year, with the market being well supplied and geopolitical risk abating following the Israel-Iran de-escalation.
It expects an oversupply of 1.3 million bpd in 2026. - Gold rises on weaker dollar, tariff uncertainty before deadline
Gold rose on Tuesday, supported by a weaker dollar and heightened uncertainty over U.S. President Donald
Trump’s tariff policies ahead of the July 9 deadline, driving investors toward safe-haven assets. Spot gold was
up 0.4% at $3,315.26 per ounce, as of 0229 GMT, while U.S. gold futures rose 0.6% to $3,326.50. “Weaker
dollar and concerns about the impact if Trump’s tariff deadline is not extended are supporting gold at the
moment,” said Nicholas Frappell, global head of institutional markets at ABC Refinery. The U.S. dollar
index .DXY fell 0.1% to a more than three-year low, making bullion more affordable for holders of other
currencies. Trump expressed frustration with U.S.-Japan trade negotiations on Monday as U.S. Treasury
Secretary Scott Bessent warned that countries could be notified of sharply higher tariffs, as a July 9 deadline
approaches despite good-faith negotiations. Meanwhile, Trump continued to press the Federal Reserve on
Monday to ease monetary policy, sending Fed Chair Jerome Powell a list of global central bank interest rates,
annotated with handwritten comments saying U.S. rates should be between Japan’s 0.5% and Denmark’s
1.75%. Spot silver fell 0.8% to $35.80 per ounce. - German inflation unexpectedly falls to 2% in June, hitting ECB’s target
Germany’s annual inflation rate unexpectedly eased to 2% in June, bringing Europe’s largest economy in line
with the European Central Bank’s target, preliminary data from statistics office Destatis showed Monday.
Analysts polled by Reuters had expected a reading of 2.2% in the twelve months to June. The German print is
harmonized across the euro zone, allowing for a direct comparison with other single currency states. The
consumer price index had eased to 2.1% in the year to May. Elsewhere in Europe, June inflation readings
showed a small rise in the harmonized rate of France and Spain, but no change in Italy. Franziska Palmas, senior
Europe economist at Capital Economics, said the latest inflation data would please the ECB, which is expected
to cut rates one more time in this cycle. “Overall, the figures add to the evidence that inflation in the euro
zone has sustainably returned to the target. Barring a renewed surge in energy prices we expect the headline
rate to average 2.0% this year and the ECB to make one final rate cut in September, taking the deposit rate to
1.75%,” she said in emailed comments. Euro zone inflation data is due on Tuesday, with the headline rate
expected to come in at 2% in June, according to analysts polled by Reuters. - Senate budget bill may be “good news” for this solar stock, Wolfe Research says
Shares in First Solar (NASDAQ:FSLR) gained in premarket U.S. trading on Monday, as analysts suggested that
the solar-panel manufacturer may have been one of only renewable-energy winners in the Senate’s proposed
sweeping tax-cuts and spending package. Republicans in the U.S. Senate have voted to begin debate over their
version of the massive “One Big Beautiful Bill Act,” even as President Donald Trump’s signature legislative
agenda faces holdouts from inside the GOP and staunch Democratic opposition. The measures, which a
nonpartisan forecaster said could add around $3.3 trillion to the country’s ballooning $36.2 trillion debt pile
over the next decade, are widely tipped to be passed by the upper chamber of the U.S. Congress, potentially
as early as Monday. Among a variety of initiatives, the bill would extend tax cuts first put in place by Trump in
2017, slash other taxes and increase spending on defense and border security. Meanwhile, the Senate’s version
would slap new taxes on wind and solar projects completed after 2027 that utilize some foreign components.
Wind and solar projects would also only qualify for certain current tax incentives if they begin before the final
day of 2027. - Canada rescinds digital services tax after Trump cuts off U.S. trade talks
Canada has walked back on its digital services tax “in anticipation” of a mutually beneficial comprehensive
trade arrangement with the United States, Ottawa announced Sunday night, just one day before the first tax
payments were due. The move comes after U.S. President Donald Trump announced over the weekend that
he will be “terminating ALL discussions on Trade with Canada” in response to Ottawa’s decision to impose
a digital services tax on American tech firms. “Today’s announcement will support a resumption of negotiations
toward the July 21, 2025, timeline set out at this month’s G7 Leaders’ Summit in Kananaskis,” Canadian Prime
Minister Mark Carney said in the statement. The first payments from Canada’s digital services tax, which was
enacted last year and applies retroactively to 2022, were initially set to be collected Monday. The tax would
have applied to both domestic and foreign tech companies, including U.S. giants such
as Amazon, Google and Meta with a 3% levy. - Trump threatens to end subsidies for Musk companies amid tax bill feud
U.S. President Donald Trump on Monday evening threatened to cut government subsidies received by Elon
Musk’s Tesla (NASDAQ:TSLA) and SpaceX, as the billionaire continued to criticize a major spending bill backed
by the president. “Elon may get more subsidy than any human being in history, by far, and without subsidies,
Elon would probably have to close up shop and head back home to South Africa,” Trump said in a post on
Truth.Social. “No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a
FORTUNE. Perhaps we should have DOGE take a good, hard, look at this?,” the president said. Musk responded
to the post on X by stating “I am literally saying CUT IT ALL. Now.” The exchange is the latest in a persistent
feud between Musk and Trump over the president’s “big beautiful bill” act, which outlines tax and spending
cuts. Musk has vehemently opposed the bill on grounds that it will increase the government deficit and push
up debt levels. A recent bipartisan analysis showed a $3.3 trillion increase to government debt over the next
decade if the bill proceeds in its current form. Musk has also argued that the bill will undermine his work done
under the Department of Government Efficiency (DOGE) to cut government spending. The bill, which is
currently being debated in a marathon session in the Senate, extends Trump’s 2017 tax cuts and outlines more
spending on defense and border control. - India aims to strike US trade deal this week to avoid Trump tariffs
India is close to finalising an interim trade agreement with the U.S. that could be announced as early as this
week, aiming to avoid steep tariffs threatened by President Donald Trump, the Financial Times reported on
Tuesday, citing two people briefed on the talks. The deal, which would be among the first struck with a major
U.S. trading partner under Trump’s 90-day tariff pause, is seen as a stepping stone toward a broader bilateral
pact, expected to be completed in phases by autumn, the FT reported. India faces tariffs of up to 26% if no deal
is reached by Trump’s July 9 deadline. Negotiators are working to exempt politically sensitive sectors like
agriculture and dairy, while India has agreed to increase imports of U.S. natural gas and some farm goods, the
report said. According to the FT report, the two sides have also agreed on tariff reductions covering thousands
of products. Talks remain sensitive, particularly over India’s protected dairy sector, which employs millions of
smallholders, the report added. India’s stock markets were largely unaffected, while the rupee’s USD/INR pair
inched 0.1% lower on Tuesday. - Paramount, Trump in ’advanced’ settlement talks, court filing says
Paramount Global and President Donald Trump are engaged in “good faith, advanced, settlement negotiations”
to resolve a lawsuit filed by Trump against CBS in October, alleging the network deceptively edited a “60
Minutes” interview with then-vice president Kamala Harris. Lawyers on Monday in a court filing asked a judge
in Texas to delay all proceedings until Thursday. Trump has sought $20 billion but a mediator proposed a $20
million settlement, the Wall Street Journal reported last week. The network owned by Paramount previously
said the lawsuit is “completely without merit” and asked a judge to dismiss the case.
A lawyer representing Trump, Edward Paltzik, could not immediately be reached for comment. A spokesman
and a lawyer for Paramount Global could not be reached for comment. A spokesperson for Paramount’s
controlling shareholder, Shari Redstone, could not be reached. CBS-parent Paramount Global is seeking
approval from the Federal Communications Commission for its $8.4 billion merger with Skydance Media.
FCC Chair Brendan Carr, who was named chair by Trump on Jan 20, said last week the commission was
continuing to review the transaction. The FCC did not make a decision by the 180-day informal deadline in mid
May. Trump contended CBS sought to “tip the scales in favor of the Democratic Party” and the former vice
president in the election by airing two different versions of answers Harris gave to a question, while CBS denied
any wrongdoing. - Oracle stock rises 4% after CEO touts strong start to fiscal year
Oracle Corporation (NYSE:ORCL) stock rose 4% in premarket trading after CEO Safra Catz indicated the
company is experiencing a strong start to fiscal year 2026, with continued robust growth in its cloud business.
According to an SEC filing, Catz plans to tell colleagues that Oracle’s MultiCloud database revenue continues to
grow at over 100%. She will also note that the company has signed multiple large cloud services agreements,
including one expected to contribute more than $30 billion in annual revenue starting in fiscal year 2028. The
positive outlook comes as Oracle continues to expand its presence in the competitive cloud computing market.
The stock’s premarket jump was further supported by an upgrade to “buy” from Stifel, which helped boost
investor sentiment. Oracle has been focusing on strengthening its cloud infrastructure offerings to compete
with larger rivals like Amazon (NASDAQ:AMZN) Web Services, Microsoft (NASDAQ:MSFT) Azure, and Google
(NASDAQ:GOOGL) Cloud. The company’s MultiCloud database service has become a key growth driver as more
enterprises adopt hybrid and multi-cloud strategies. The $30 billion cloud agreement mentioned by Catz
represents a significant win for Oracle as it continues to secure large enterprise customers for its cloud services. - Renewable energy stocks including Vestas and Orsted drop as the Senate’s latest version of President
Donald Trump’s spending package looks to phase out key tax incentives for US wind and solar projects
more aggressively
Vestas is worst-performing stock on the wider benchmark, down 4.4%, Orsted -3%, Nordex -3.4%, SMA Solar
3.3% and EDP Renovaveis -3%. In the US, watch companies including NextEra, Clearway, First Solar, Sunrun and
Enphase. The tweak, which follows pushback by Trump on the Inflation Reduction Act credits, would sharply
limit the number of solar and wind farms that qualify for incentives. Under the new version of the $4.2 trillion
tax and spending package released late Friday, wind and solar projects would need to be up and running by
the end of 2027 to receive a pair of lucrative incentives for clean energy production. The initial version released
by the Senate’s tax-writing committee simply required projects to start construction by the end of 2025 to get
the incentives’ full value. - Shares in STMicroelectronics and Infineon gain as both stocks are placed on positive catalyst watch at
JPMorgan. The bank expects the semiconductor equipment firms to be able to raise their guidance during
the upcoming earnings season
STMicro shares rise 2.6% in Paris, Infineon +2.3% in Frankfurt as of 9:14 a.m. CET. A re-stocking of industrial
chips means that analog semi stocks have potential near-term upside ahead of results, according to analyst
Sandeep Deshpande. However, inventories remain high, likely due to a build-up in 1Q25 ahead of US tariffs.
Semiconductor equipment companies, as the most exposed to AI, are “less risky to hold in the current
environment,” he adds. STMicro has potential to beat estimates for the September quarter, given positive
implications of easing MCU (microcontoller) inventory correction for group’s mix. Infineon’s end markets are
seeing some re-stocking, while analyst adds that group will be able to raise FY25 guidance given previous
€400m haircut to estimates on tariff impact. - Shares of US banks gain Monday after the industry’s biggest names comfortably cleared the Federal
Reserve’s annual stress test late Friday, setting the stage for lenders to boost buybacks and dividends for
shareholders
A Fed official said banks are expected to announce buyback plans on Tuesday. Stock moves: Goldman Sachs up
as much as 3.4%; Wells Fargo +1.8%, Bank of America +1.1%, JPMorgan +1.9%, Morgan Stanley +0.8%, Citigroup
+0.8%. The KBW Bank Index rises as much as 1%, heading for eighth straight day of gains. Wells Fargo analyst
Mike Mayo: “Fed stress test is a clear demarcation that regulation is becoming less onerous, less volatile, and
more transparent both in results and the Fed’s comments”; Goldman Sachs is the big test winner, along with
JPMorgan, Bank of America and M&T Bank. Citigroup analyst Keith Horowitz: Stress test results were “very
positive,” estimate Stress Capital Buffers should decline around 70bps; Goldman best positioned to benefit
from deregulation, the magnitude of the SCB improvement was much larger than expected “as it appears GS
has been able to effectively argue its business model has a countercyclical component to it”. JPMorgan analyst
Vivek Juneja: “Much better than expected declines in stress capital buffers at all our banks, with several of our
banks’ SCBs now at the floor”; “Expect the large decrease in capital requirements to likely drive increased share
buybacks at all the banks that saw a decrease but banks with small improvements and unusual changes would
need to be mindful of how much they shrink capital as some of these changes could reverse in the future”.
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