It’s August 1, the perfect time to review how major asset classes performed in July:

  • USD/EUR: +3.1% (the dollar staged a strong rebound thanks to tougher U.S. trade policies, resilient economic data, and fading expectations for a near-term Fed rate cut).
  • Gold: -0.7% (risk-on sentiment and reduced trade-related uncertainty weighed on safe-haven demand).
  • Equities: S&P 500: +2.2%; MSCI Emerging Markets: +1.7%; Stoxx Europe 600: +0.88%.
  • U.S. 10-year yield: +3.4% (modest tightening after Q2’s easing, driven by the Fed’s hawkish tone).
  • Brent crude: +7.7% (economic momentum remains solid while Washington hardens its stance on Moscow).
  • Bitcoin: +8% (the U.S. is moving quickly to regulate crypto, giving the sector more legitimacy).

That’s the July snapshot. Now, let’s turn to the short term.

Yesterday’s session was unusual. In the U.S., stocks surged early on strong earnings from Microsoft and Meta, only to reverse sharply and close at session lows. Europe followed a similar pattern: upbeat openings on solid results quickly faded to red by the close.

Why the reversal? Several factors are in play. Some chalk it up to seasonal patterns - August profit-taking and the looming specter of September, historically the weakest month for equities. Others point to mounting evidence that tariffs are starting to feed into U.S. inflation data. Anticipation of another wave of trade measures didn’t help either, nor did high valuations, strong gains since April, and lingering Fed-White House tensions. In short, caution returned in force.

What’s clear is that Washington delivered a fresh round of tariffs on countries deemed uncooperative or hostile. Brazil, Canada, and India are on the list, along with Switzerland, which faces a steep 39% rate. The measures, published in a presidential decree, take effect in a week. Mexico and China have temporary exemptions as negotiations continue.

Meanwhile, President Trump opened another front by sending letters to 17 major pharmaceutical firms demanding lower U.S. drug prices to match international levels. Companies targeted include Eli Lilly, Sanofi, Regeneron, Pfizer, GSK, Novo Nordisk, Amgen, Merck & Co., Johnson & Johnson, and AstraZeneca.

While investors digest all this, earnings season rolls on. Last night’s spotlight was on Amazon and Apple - with mixed results. Amazon fell short on profit forecasts, citing heavy investments in its cloud division. Apple posted a record quarter, but enthusiasm was muted: results were boosted by pre-tariff buying rather than core growth.

Looking ahead, U.S. job data and eurozone inflation figures are in focus. With the Fed balancing its dual mandate of price stability and employment, strong labor markets combined with sticky inflation make a rate cut increasingly unlikely. Recession fears continue to recede - the odds of a U.S. recession in 2025 dropped to 8% on Polymarket, down from 66% three months ago.

In Asia-Pacific, Washington’s new tariffs are weighing on sentiment: Japan -0.6%, Taiwan -0.5%, Australia -0.85%. South Korea is the hardest hit, down 3.7%, dragged by trade risks, tech weakness, and fiscal uncertainty. India and Hong Kong are faring better, off just 0.2%. European markets are set for a weaker open.

Today's economic highlights:

Three highlights today: eurozone inflation in July (5:00 a.m.), US employment data for June (8:30 a.m.) and the US ISM manufacturing index for July (10:00 a.m.). See the full calendar here.

  • USD/GBP: 0.7524 GBP
  • Bund/OAT spread: 65 points (unchanged)
  • VIX: 16.72 (+1.2%)
  • Gold: $3,340
  • Brent: $71.51
  • 10-year US: 4.376%
  • Bitcoin: $115,824

In corporate news:

  • Alphabet – CapitalG, its growth-stage investment arm, and Nvidia are reportedly in talks to invest in AI infrastructure provider Vast Data in a funding round that could value the startup at $30 billion, according to two sources.
  • Apple – Reported revenue guidance for the current quarter ending in September well above Wall Street expectations, lifting the stock despite CEO Tim Cook’s warning that U.S. tariffs would add $1.1 billion in costs during the period. Cook also said Thursday that the iPhone maker is ready to ramp up AI spending—by building more data centers or acquiring a major player—breaking from its long-standing fiscal discipline.
  • Arthur J. Gallagher – Posted higher second-quarter earnings on Thursday, driven by strong insurance spending that boosted commissions and fees.
  • Blackstone – Emerging as the frontrunner to acquire energy data provider Enverus for around $6 billion, according to sources familiar with the matter.
  • Boeing – Being sued by four Alaska Airlines crew members who were aboard the 737 MAX 9 that suffered a midair cabin panel blowout in January. They are seeking compensation for physical and psychological injuries.
  • Coinbase Global – Reported a drop in adjusted earnings for the second quarter on Thursday, as growth in subscription and services revenue was offset by a slowdown in trading activity due to lower crypto volatility.
  • Eastman Chemical – Lowered its third-quarter earnings forecast on Thursday and announced plans to reduce inventory due to weak demand and U.S. trade policy challenges. The stock fell over 10% after the market close.
  • Edison International – Reported lower second-quarter earnings on Thursday, citing higher operating expenses and ongoing investigations linked to the wildfires that swept through Los Angeles earlier this year.
  • Exxon Mobil – Topped Wall Street’s second-quarter earnings estimates on Friday, as increased oil and gas output helped offset lower crude prices.
  • Ford – Recalling 312,120 vehicles in the U.S. due to potential loss of brake assist while driving, which could increase braking distance and accident risk, the NHTSA said Friday.
  • Intel – Confirmed to Reuters on Thursday that three senior manufacturing executives are preparing to retire, as new CEO Lip-Bu Tan moves forward with sweeping changes to revive the struggling U.S. chipmaker.
  • Kimberly-Clark – Reported higher organic sales in the second quarter, with Kleenex tissues seeing their best volume growth in five years despite lower prices. The stock is up nearly 5% in premarket trading.
  • Microsoft – Is under investigation by Brazil’s competition authority CADE, following a complaint from Norwegian browser company Opera about Microsoft Edge, according to a Thursday statement on CADE’s website.
  • Moderna – Beat Wall Street expectations on both revenue and earnings Friday, citing strong spring demand for COVID-19 booster shots and aggressive cost-cutting.
  • Pfizer – And its German partner BioNTech lost their appeal on Friday in the London Court of Appeal, which upheld a ruling that their COVID-19 vaccine infringed on one of Moderna’s patents.
  • Southwest Airlines – Announced Thursday that Doug Brooks, a current board member, will become independent board chair effective August 1.
  • Strategy – Reported its first profit in six quarters on Thursday, benefiting from the strong performance of cryptocurrencies during April through June. It remains the largest corporate holder of bitcoin.
  • Stryker – Raised its full-year profit forecast and beat quarterly earnings estimates on Thursday, citing strong demand for its medical and surgical devices.
  • Tesla – New car sales fell in Sweden, Denmark, and France in July for the seventh straight month, amid backlash over CEO Elon Musk’s political stances, regulatory challenges, and intensifying competition from European and Chinese brands.
  • UnitedHealth Group – Said Thursday that CFO John Rex will be replaced by external candidate Wayne DeVeydt, marking another leadership change at the insurer, which is struggling to control medical costs.
  • Wells Fargo – Announced Thursday that its board plans to appoint CEO Charlie Scharf as chairman and award him a one-time special grant worth $30 million in restricted stock and stock options.

Analyst Recommendations:

  • Amazon: China Merchants Securities maintains its buy rating and raises the price target from $213 to $271. 
  • Apple: KGI Securities maintains its hold rating with a price target raised from $191 to $204.
  • Automatic Data Processing: Argus Research maintains its buy rating and raises the price target from $340 to $345.
  • Bright Horizons Family Solutions: JP Morgan maintains its overweight rating and raises the price target from $145 to $156.
  • Builders Firstsource: Zelman & Associates maintains its underperform rating with a price target reduced from $116 to $110.
  • Caesars Entertainment: Susquehanna maintains its neutral rating with a price target reduced from $28 to $27.
  • Cognex: Vertical Research Partners maintains its buy rating and raises the price target from $40 to $50.
  • First Solar: Wells Fargo maintains its overweight rating and raises the price target from $177 to $213.
  • Floor & Decor Holdings: Zelman & Associates maintains a neutral rating with a price target reduced from $90 to $81.
  • Fortune Brands Innovations: Zelman & Associates maintains its outperform rating and raises the price target from $65 to $67.
  • Grab Holdings: New Street Research maintains its buy rating with a price target raised from $5.60 to $6.60.
  • HF Sinclair: TPH&Co. maintains its buy rating and raises the price target from $49 to $51.
  • KLA: Berenberg maintains its buy rating and raises the price target from $900 to $1,010.
  • Lam Research: Argus Research maintains its buy rating and raises the price target from $105 to $120.
  • Masco: Zelman & Associates maintains its outperform rating and raises the price target from $78 to $86.
  • Microsoft: BNP Paribas Exane maintains its outperform rating and raises the price target from $625 to $630.
  • Monster Beverage: Deutsche Bank maintains its buy rating and raises the price target from $68 to $69.
  • Pool: Baptista Research maintains its hold rating with a price target raised from $320.30 to $343.
  • Reddit: Deutsche Bank maintains its buy rating and raises the price target from $180 to $205.
  • Roblox: Deutsche Bank maintains its buy rating and raises the price target from $130 to $150.
  • Strategy: Maxim Group maintains its buy rating and raises the price target from $500 to $515.
  • Stryker: Goldman Sachs maintains its neutral rating with a price target raised from $418 to $430.
  • Vici Properties: CBRE Research maintains its buy rating and raises the price target from $36 to $37.
  • Western Digital: Argus Research maintains its buy rating and raises the price target from $65 to $90.