European indices under pressure amid tariff concerns. Japan and the Philippines signed a tariff deal with the US

On Tuesday, the US stocks closed mixed: the Dow Jones (US30) rose by 0.40%, the S&P 500 (US500) gained 0.06%, while the tech-heavy Nasdaq (US100) closed lower by 0.39%. Semiconductor stocks weighed on the Nasdaq, with Nvidia down 2.4% and Broadcom falling 3.3% after reports that a major AI initiative involving SoftBank and OpenAI had stalled. Lockheed Martin (-10.8%) and Philip Morris (-8.2%) saw sharp declines following disappointing results. General Motors (-8%) also warned of a deeper profit decline due to tariffs, following a 32% drop in Q2, which amplified investor concerns about the impact of trade policy.

On the trade front, President Trump announced a deal with the Philippines, involving a 19% tariff rate, though confirmation from Manila is still pending. Meanwhile, Treasury Secretary Scott Bessent stated that the US will likely extend tariffs on China and plans to meet with Chinese officials next week in Stockholm.

The Mexican peso stabilized at 18.68 per US dollar, close to its yearly high of 18.60 reached on July 10, supported by a weaker dollar globally, continued duty-free access under USMCA, and attractive domestic interest rate differentials. Mexico has so far avoided retaliatory tariffs due to President Trump’s temporary suspension of new duties, which has boosted export competitiveness and eased current account pressures.

European stock markets traded mixed yesterday. Germany’s DAX (DE40) fell by 1.09%, France’s CAC 40 (FR40) closed 0.69% lower, Spain’s IBEX35 (ES35) gained 0.07%, and the UK’s FTSE 100 (UK100) also ended 0.07% higher. European stocks closed lower for the third straight day amid ongoing concerns about potential US tariffs. Treasury Secretary Bessent noted that White House officials prioritize favorable trade deals rather than rushing to meet the August 1 deadline, potentially paving the way for 30% tariffs on EU goods before negotiations conclude.

WTI crude oil prices rose to $66 per barrel on Wednesday after three days of declines, supported by progress in US trade talks that improved sentiment on demand prospects. Another bullish signal came from the US Energy Secretary, who stated that the government may consider sanctions on Russian oil to help end the war in Ukraine. Further support came from US crude inventories, which fell by 0.6 million barrels last week, ending a three-week streak of increases and indicating stronger demand. However, distillate inventories increased. Traders now await the release of official inventory data due later today.

Asian markets mostly rose yesterday. Japan’s Nikkei 225 (JP225) edged down 0.11%, while China’s FTSE China A50 (CHA50) rose by 0.74%, Hong Kong’s Hang Seng (HK50) climbed 0.54%, and Australia’s ASX 200 (AU200) gained 0.10%.

The Australian dollar rose to 0.656 USD on Wednesday, marking its fourth consecutive session of gains, supported by improving global trade sentiment. Domestically, recent data showed the Westpac Leading Index slowed to 0.03% in June, reflecting weaker momentum due to falling commodity prices and reduced work hours. Markets also digested the cautious tone of the Reserve Bank, as meeting minutes showed policymakers favor gradual policy easing and prefer to wait for clearer signs of inflation cooling. Attention now turns to PMI data due later today for insights into July’s business conditions.

On Wednesday, the offshore yuan rose to 7.16 per dollar, its highest level in more than two weeks, as investors closely monitored developments in US-China trade relations. On Tuesday, Treasury Secretary Scott Bessent announced that American and Chinese officials will meet next week in Stockholm for a third round of high-level talks. The ongoing negotiations aim to reach a temporary trade truce to ease tensions in the escalating tariff dispute, which has already led both countries to impose triple-digit tariffs, raising fears of a major disruption in bilateral trade.

President Donald Trump also announced the signing of a trade agreement with Japan, which includes a 15% tariff on Japanese exports to the US. He also stated that Japan will invest $550 billion in the US and open its markets to key American products.