Strong Alphabet report pushes indices to new highs; US-Canada tariff talks stall

On Thursday, the US stocks traded mixed: the Dow Jones Index (US30) fell by 0.70%. The S&P 500 (US500) rose by 0.07%, and the tech-heavy Nasdaq (US100) closed higher by 0.25%. The S&P 500 and Nasdaq 100 both ended Thursday at record highs, supported by strong earnings from Alphabet, which boosted investor confidence in AI-related investments.

Alphabet shares rose by 1% after the company beat Q2 expectations and raised its capital expenditure forecast for 2025 by $10 billion, lifting other tech giants like Microsoft, Nvidia, and Amazon. Tesla fell by 7.9% after CEO Elon Musk warned of challenging quarters ahead. Markets also focused on an unexpected visit by President Trump to the Federal Reserve, where he increased pressure on Chairman Powell regarding interest rates. Meanwhile, trade negotiations remained a key topic: progress was reported in talks with the EU, Japan, and South Korea, although Trump stated that tariffs would not fall below 15%.

The Canadian dollar traded near 1.36 per US dollar, rebounding sharply from the July 17 low of 1.374, aided by a weakening US dollar as optimism returned around US trade deals with Japan and the EU, possibly preventing tariff escalation. Rising crude oil prices also supported Canada’s export revenues and lent further strength to the loonie. However, the rally paused as markets shifted focus to the looming August 1 tariff deadline, with US-Canada talks deadlocked. At the same time, stronger June retail sales likely support domestic growth expectations and increase pressure on the Bank of Canada to extend its easing cycle.

European stock markets traded higher yesterday. Germany’s DAX (DE40) rose by 0.23%, France’s CAC 40 (FR40) closed down 0.41%, Spain’s IBEX35 (ES35) gained 1.34%, and the UK’s FTSE 100 (UK100) ended the day 0.85% higher. On Thursday, European stocks closed higher as markets evaluated the outlook for EU trade and monetary policy. The ECB kept interest rates unchanged and noted that disinflation is progressing in line with its previous forecasts. The central bank also stated that more information on economic developments is needed for further policy clarity. Nevertheless, markets trimmed expectations for rate cuts this year after ECB President Christine Lagarde said that cuts might be unjustified. Meanwhile, reports emerged that the US is likely to agree to reduce tariffs on the EU to 15%, the lowest level applied to other countries, amid a trade deal that EU diplomats are close to finalizing.

The UK’s GfK Consumer Confidence Index fell to 19 in July 2025 from 18 in June, pulling back from a six-month high as households became more cautious amid growing concerns about taxes and inflation. Finance Minister Rachel Reeves is expected to raise taxes for the second consecutive year in her upcoming budget, after Prime Minister Keir Starmer scrapped previous plans to cut billions in welfare spending. Amid uncertainty, households boosted savings, with GfK’s savings index jumping 7 points to 34, its highest since November 2007, reflecting a shift toward financial prudence.

Hopes that easing trade tensions will support global economic growth helped ease concerns over future oil demand. WTI crude prices rose 1.2% to $66 per barrel on Thursday, breaking a four-day losing streak. On the supply side, US crude inventories fell by 3.2 million barrels last week, more than double analysts’ expectations, signaling strong demand.

Asian markets mostly advanced yesterday. Japan’s Nikkei 225 (JP225) rose by 1.59%, China’s FTSE China A50 (CHA50) gained 0.11%, Hong Kong’s Hang Seng (HK50) increased by 0.51%, while Australia’s ASX 200 (AU200) declined by 0.32%.

In New Zealand, markets are pricing in a roughly 75% chance that the Reserve Bank of New Zealand will cut its official cash rate by 25 basis points from 3.25% at its August meeting, though investors suspect it may be near the end of the easing cycle. Meanwhile, RBNZ Chief Economist Paul Conway said Thursday that the central bank is prepared to lower rates further if price pressures continue to ease as expected, warning that US tariffs could weigh on economic growth and inflation. This week, the New Zealand dollar rose by 1%, ending a two-week losing streak.

The Australian dollar fell to around 0.658 USD on Friday, extending losses from the previous session as investors remained cautious ahead of next week’s key inflation data releases. Both monthly and quarterly inflation figures are expected, which could play a pivotal role in shaping the Reserve Bank of Australia’s monetary policy outlook. RBA Governor Michele Bullock recently emphasized that the central bank is not ready to cut interest rates until stronger evidence emerges that inflation is sustainably returning to its 2.5% target, defending the RBA’s slow and steady approach.