Trade

Trump and US officials opted to keep USMCA alive on short leash of annual reviews rather than longer term renewalDonald Trump has refused to renew the North American trade pact he once championed as his signature deal, opting instead to keep it alive on a short leash of annual reviews rather than committing to another 16 years.Wednesday was the deadline built into the United States-Mexico-Canada Agreement (USMCA) for the three countries to jointly decide its fate, which is set to expire in 2036. Continue reading...

• Investors are focusing on Bank of England Governor Andrew Bailey’s upcoming speech at the ECB Forum in Sintra. • The market is seeking signals regarding the Bank of England's stance on future interest rate hikes. • A more cautious approach toward further rate increases could boost interest-rate-sensitive sectors, including real estate, housebuilders, and consumer discretionary.

• Manfred Weber, chief of the European People's Party (EPP), warned in an interview with Euronews that the EU is entering a "phase of conflict" with China. • The tension stems from significant trade imbalances between the two powers that have yet to be resolved. • Weber stated that a deal to reduce these imbalances must be reached by this autumn to avoid escalating trade hostilities.

• The UK stock market, including the FTSE 100, FTSE 250, and FTSE All-Share, is expected to open on a positive note following a streak of six consecutive quarterly gains. • Market optimism is being driven by easing inflation rates and a notable increase in mergers and acquisitions (M&A) activity across various sectors. • The London Stock Exchange Group (LSEG) is highlighted as a key stock to watch, currently trading near 8,076 GBX with a "Strong Buy" consensus and a 12-month target of 12,145 GBX.

• Asia-Pacific markets showed mixed performance following strong first-half gains on Wall Street, which were primarily driven by the semiconductor sector. • South Korea's KOSPI index fell 2.63% to 8,253.22, while financial markets in Hong Kong remained closed for a public holiday. • Investors are closely monitoring upcoming commentary from the Fed Chair and key economic reports due Wednesday, including the June ADP employment data and ISM manufacturing readings.

• Asian stocks mostly rose on Wednesday as investors positioned themselves ahead of critical US employment data. • Market participants are closely monitoring the reports to gauge the Federal Reserve's upcoming decisions regarding interest rate adjustments. • The Japanese yen remains a focal point for traders as the currency continues to fluctuate near four-decade lows.

• HSBC stock remained relatively flat, trading at GBX1,427 (up 0.24%) following the announcement of a sponsorship deal for the China Open tennis tournament. • The bank completed the acquisition and delisting of Hang Seng Bank in Hong Kong to consolidate control and foster long-term growth. • This integration reduced HSBC's CET1 ratio by 0.9 percentage points, which may limit immediate capital return flexibility due to increased risk-weighted assets.

• Japanese and South Korean stock markets opened higher on July 1, driven by significant gains in major tech firms including Samsung Electronics and SK Hynix. • SoftBank and Kioxia also tracked upward, contributing to the overall rise of the Nikkei 225 and KOSPI indices. • Separately, SpaceX (SPCX) shares closed at $170.86 on Tuesday, marking a 4.06% increase with a trading volume exceeding 82 million shares.

• Investors are monitoring 15 companies in today's trade, with a particular focus on four banks: HDFC Bank, Yes Bank, Axis Bank, and Bandhan Bank. • Other notable stocks in focus include RailTel Corp, BSE, Oberoi Realty, RITES, and Schneider Electric. • Jagsonpal Pharmaceuticals has signed a definitive agreement to acquire an 85% equity stake in Aequitas Healthcare for Rs 20.8 crore.

• A "SaaSpocalypse" is emerging as many software-as-a-service (SaaS) stocks continue to struggle despite a broader surge in the AI-driven tech trade. • While the overall market has seen a historic quarter, specific software companies are facing stagnant growth and valuation pressures. • This trend highlights a growing divergence between high-flying AI infrastructure plays and the application-layer software companies trying to integrate AI.

• HSBC warns that the current "explosive" rally of the US dollar represents one of the most significant "pain trades" for investors. • The bank forecasts that the greenback will continue to strengthen gradually through the first half of 2027. • This trend matters as it signals prolonged US dollar dominance, potentially pressuring other global currencies and complicating investment strategies.

• Asia-Pacific stock markets showed mixed performance as investors monitored ongoing U.S.-Iran negotiations and anticipated upcoming U.S. employment data. • Regional indices saw varied movements, with Australia's ASX 200 rising slightly to 8,827.00 and Shenzhen's SZI growing by 0.85% to 15,946.72. • Conversely, markets in South Korea, Hong Kong, and Shanghai experienced declines, with Hong Kong's HSI contracting by 0.64% to 22,879.80.

• Axis Bank's Chief Financial Officer, Puneet Sharma, has resigned from his position. • Jagsonpal Pharmaceuticals will acquire 85% of Aequitas through a Share Purchase Agreement. • State Bank of India has raised $300 million via 3-year senior unsecured floating rate bonds issued through its London branch.

• India and the US are nearing the completion of the first phase of a landmark trade agreement. • Key challenges remain as both nations work to resolve specific sticking points to finalize the deal. • The agreement is significant as India seeks to replicate the export-led growth models successfully used by China, Malaysia, and Vietnam.

• On June 29, Foreign Institutional Investors (FIIs) became net sellers, offloading equities worth ₹1,350 crore, while Domestic Institutional Investors (DIIs) continued a five-session buying streak with ₹2,800 crore in purchases. • GIFT Nifty is currently trading marginally higher at approximately 23,991.50, suggesting a positive opening for Indian domestic benchmark indices. • These movements are critical as the market enters F&O expiry day, with traders monitoring whether the Nifty 50 and Bank Nifty can rebound from recent range-bound trading.

• Asian stock markets showed mixed performance on June 30, with Japan's Nikkei 225 remaining volatile and the Topix falling 0.65%. • South Korea's Kospi initially surged 1.17% at the open but reversed its gains to trade 1% lower, while the small-cap Kosdaq declined 0.41%. • Other regional indices remained relatively stable, with Australia's S&P/ASX 200 trading largely unchanged and Hong Kong's Hang Seng index futures dipping below 23,026.68.

Two sides agree to try to make bilateral relationship ‘more balanced’ after weeks of threatsThe EU and China have agreed to enter three months of talks to try to avoid a trade war over the bloc’s €360bn (£310bn) annual import/export imbalance.In their first joint statement in seven years, the two sides agreed in Brussels to open a formal trade consultation after weeks of threats and recriminations from China if the EU imposed any measures to stop the flood of goods and components into the bloc. Continue reading...

• The Indian stock market enters the week with the Sensex closing at 77,100.47 (up 0.39%) and the Nifty at 24,056 (up 0.18%). • A primary focus is the ongoing negotiation of a trade pact between India and the US, highlighted by a recent two-day visit to New Delhi by representative Greer. • The deal is critical for strengthening bilateral economic ties, though it faces hurdles as India seeks lower tariffs while the US demands greater market access for American products.

• Asia-Pacific markets showed mixed results as investors weighed geopolitical tensions between the U.S. and Iran alongside corporate investment plans from major tech firms. • Regional indices saw varied movement, with Japan's NIKKEI falling 0.50% to 69,011.93 and South Korea's KOSPI dropping 0.88%, while Hong Kong's HSI rose 0.89% to 22,874.71. • Market volatility is driven by anticipation of upcoming U.S. employment data, specifically the nonfarm payrolls report, which may signal persistent inflation.

• Asian currencies remained steady as traders monitored the stability of a fragile ceasefire in Iran and prepared for a high-volume week of economic data. • Investors are focusing on a dense regional calendar featuring China’s manufacturing activity, Japan’s Tankan business survey and PMI readings, and inflation data from Indonesia. • Additional key reports are expected from South Korea regarding trade and industrial output, as well as India’s industrial production figures.

• Iran launched missiles and drones targeting U.S. military bases in Bahrain and Kuwait following recent U.S. strikes on Iran's southern coast. • The attacks signal a breakdown of the ceasefire in the strategically critical Strait of Hormuz, escalating tensions between the two nations. • Oman’s foreign ministry has officially condemned the violence, urging both sides to prioritize diplomacy and restraint to prevent further regional instability.

• Intercontinental Exchange (ICE), the owner of the NYSE, is currently trading significantly below optimistic analyst price targets. • Zacks has assigned the company a Rank 3 "Hold" rating, citing a balance between favorable growth estimates and valuation compression. • The company is facing slower-than-expected growth and integration benefits following its acquisition of Black Knight.

• Jefferies strategist Chris Wood warns that the current AI investment boom will end when investors realize hyperscalers are failing to generate adequate returns on their massive spending. • Wood argues that the primary risk is not a surplus of chips or supply issues, but rather a systemic concern over capital misallocation. • This shift in perception is critical because it could trigger a prolonged pause in the AI trade, potentially destabilizing the valuations of major tech companies.

• The EUR/USD pair is trading slightly higher on Friday, though the Euro remains on track for its second consecutive weekly loss. • The US Dollar's decline is being limited by a combination of geopolitical instability in the Middle East and a hawkish outlook from the Federal Reserve. • This trend highlights the market's current sensitivity to safe-haven assets and expectations regarding US interest rate trajectories.

• Asian stock markets plunged on Friday, with Taiwan's Taiex dropping 3.6%, Hong Kong's Hang Seng losing 1.7%, and the Shanghai Composite slipping 1.4%. • The sell-off was driven by traders locking in profits following recent rallies in AI-related stocks, particularly after record highs in Japan and South Korea. • This volatility follows a surge of investment into AI data centers and strong earnings reports from chipmakers Qualcomm and Micron Technology.

• The U.S. advance goods trade balance reported a deficit of $105.8 billion, significantly wider than the $85.0 billion deficit analysts had expected. • Published by the Census Bureau, this monthly report provides an early estimate of exports, imports, and the overall goods deficit before the full FT-900 figures are released. • The larger-than-expected deficit matters as it serves as a key indicator of domestic consumption and global trade health, potentially influencing market sentiment and economic forecasts.

• Troy Rohrbaugh, an options trader, has emerged as a surprise front-runner to succeed Jamie Dimon as the head of JPMorgan. • Rohrbaugh is currently competing against Doug Petno for the top leadership position at the financial giant. • This succession race is critical as the market anticipates who will maintain the strategic direction of one of the world's largest banks.

• Asian stock markets plunged on Friday, with Japan's Nikkei 225 dropping 4.4% and South Korea's Kospi crashing 7.7%. • The sell-off was driven by traders locking in profits following a period of significant rallies in stocks tied to artificial intelligence. • Other regional markets were also affected, including Hong Kong's Hang Seng, which lost 1.9%, and the Shanghai Composite, which slipped 2.1%.