By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
The S&P 500 may have stalled on Thursday, but the Nasdaq hit a new high, as a week of positive earnings surprises and rising Fed easing expectations overshadowed tariff worries and a few isolated stock flubs. Tech excitement continues to push up all major index futures ahead of Friday’s bell.
* The stock stumbles on Thursday included an outsize 14% earnings-day hit to pharma giant Eli Lilly after a disappointing drug trial and a 3% drop in Intel after Trump demanded the resignation of its CEO due to Chinese links.
* Longer-term Fed easing expectations were buoyed after Trump said he will nominate Council of Economic Advisors Chairperson Stephen Miran to temporarily fill Adriana Kugler’s vacant board seat and dovish Fed Governor Chris Waller was reported to be his top pick for the Chair next year. JPMorgan now expects a rate cut next month, and the futures market is pricing in rates as low as 3% by the end of next year, about 20 basis points lower than expected a month ago.
* U.S. Treasury yields flatlined and the dollar nudged higher, as Thursday’s long-bond auction continued a week of lukewarm debt sales and weekly jobless claims data showed few signs of the softness flagged in last week’s payrolls report. Sterling was firmer after the Bank of England only narrowly voted to cut rates on Thursday, and the peso was steady after Mexico’s central bank eased again too.
* U.S. gold futures climbed to a record high on Friday after a Financial Times report said the United States had imposed tariffs on imports of one kilo and 100 ounce gold bars, a move that could impact Switzerland, the world’s largest gold refining hub. Crude oil prices fell to two-month lows as the expected talks between Trump and Russian President Vladimir Putin raised the prospect of easing sanctions on Russia.
Today’s Market Minute:
* U.S. President Donald Trump has wielded the threat of tariffs as an all-purpose foreign policy weapon. With a Friday deadline for Russia to agree to peace in Ukraine or have its oil customers face secondary tariffs, Trump has found a novel, but risky, use for his favorite trade tool.
* OpenAI launched on Thursday its GPT-5 artificial intelligence model, the highly anticipated latest installment of a technology that has helped transform global business and culture.
* Israel’s political-security cabinet approved a plan early on Friday to take control of Gaza City, as the country expands its military operations despite intensifying criticism at home and abroad over the devastating almost two-year-old war.
* Britain’s ambition to rev up its economy and tap the AI revolution faces the harsh reality that the abundant, clean and reliable electricity supply this requires is unlikely to materialise any time soon. Read the latest from ROI energy columnist Ron Bousso.
* U.S. President Donald Trump has the so-called ‘BRIC’ group of nations directly in his trade war crosshairs, slapping super-high tariffs on imports from Brazil and India. But this belligerence could backfire writes ROI columnist Jamie McGeever.
Chart of the day:
The New York Fed’s latest survey of household inflation expectations saw the long-term price rise outlook creeping back up to the highest since March, with views over one, three and five years now converging toward 3% – a point above the Fed’s 2% inflation target. However, the history of the survey shows consumer views frequently gravitate to these levels over the past decade even before the post-pandemic inflation surge and during periods when actual inflation was much lower.
Weekend reads:
TRUMP WINNING?:
Just over six months into his second term in the White House and amid huge economic policy disruption, Trump looks to be getting what he wants without bowling over the economy, writes former International Monetary Fund chief economist Kenneth Rogoff in a review. How successful those wins prove over the longer run remains far less clear, he argues on Project Syndicate.
DATA MANIPULATION COSTS?:
Trump’s firing of the Bureau of Labor Statistics chief has raised questions about politically-biased government economic data going forward. Council on Foreign Relations fellow Benn Steil gives a glimpse of what studies show about the cost of data manipulation elsewhere in the world.
CHINA TRADE AND EU JOBS:
Following a recent European Central Bank blog on the impact of rising Chinese imports on European inflation, the ECB’s latest bulletin contains a piece on how rising Chinese import competition – partly due to trade diversion from tariffed U.S. markets – might affect European labor markets. While auto and chemical sectors are already affected, it reckons the broader implications might extend to nearly one-third of euro area employment.
OFFSETTING ‘CHINA SHOCK’:
America’s hit from Chinese competition has only really been felt in Germany since 2020, argues Technical University of Munich Professor Dalia Marin in a VoxEU column. To avoid America’s painful de-industrialisation of the 2000s, she says, Chinese market entry in Europe should be made conditional on forming joint ventures with European firms in order to retain global competitiveness.
MUSK VS MODI?:
Elon Musk’s court case against Indian Prime Minister Narendra Modi’s government in the Karnataka High Court targets the entire basis for tightened internet censorship in India, one of the biggest user bases of Musk’s X platform. As regulators globally weigh free-speech protections against concern about harmful content, Reuters Munsif Vengattil, Arpan Chaturvedi and Aditya Kalra give a detailed account of this pivotal battle between the world’s richest person and authorities of the world’s most populous country.
Today’s events to watch
* Canada July employment report (8:30 AM EDT)
* St. Louis Federal Reserve President Alberto Musalem speaks; Bank of England Chief Economist Huw Pill speaks
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(by Mike Dolan; editing by Sharon Singleton)
