Mixed Signals from Trade, Commodities, and Bonds

Image Source : Krish Capital Pty Ltd

Index Update:  Markets reacted to President Trump's announcement of revised tariffs on 14 countries, with some relief stemming from a delayed implementation date of August 1, allowing time for negotiations. A proposed deal with the EU, maintaining a 10% base tariff with sector-specific exceptions, also helped ease concerns. In the corporate sector, Tesla shares rebounded in premarket trading, while other major tech stocks, including Nvidia, Amazon, Meta, Broadcom, and Alphabet, posted modest gains.

Market Movers:  On Monday, the top gainers were Mustang Bio (+180.67%), followed by Wolfspeed, Inc (+95.76%). On the contrary Jasper Therapeutics, Inc (-55.10%) and Blue Gold Limited (- 30.63%) declined the most the same day.

Commodities Update:  Crude oil prices retreated from recent highs as demand concerns resurfaced following new U.S. tariff threats and a larger-than-expected output hike by OPEC+. Both WTI and Brent crude futures declined amid fears that higher tariffs, particularly on imports from Japan and South Korea, could dampen global demand. OPEC+’s decision to increase output by 548,000 barrels per day in August, restoring nearly 80% of previously cut volumes, also raised concerns about a growing supply glut. However, geopolitical tensions in the Red Sea provided some support to prices. Gold prices also fell as investors reacted to escalating trade tensions and stronger U.S. economic data. While President Trump's tariff threats initially weighed on sentiment, the delay in implementation until August 1 offered a temporary reprieve. Additionally, a solid U.S. jobs report reduced expectations of a near-term rate cut by the Federal Reserve. Market participants are now looking ahead to the upcoming FOMC meeting minutes for further guidance on the Fed's policy stance.

Macro Update:  The NFIB Small Business Optimism Index declined slightly to 98.6 in June 2025, missing expectations but remaining above the long-term average. The dip was mainly driven by a rise in reports of excess inventories. Taxes were cited as the top concern by 19% of owners, the highest since July 2021, while worries about labor quality and costs persisted. Expectations for better business conditions and higher sales both declined, and plans for capital spending edged down. However, overall uncertainty among small businesses eased, with the Uncertainty Index falling by five points to 89.

Bonds Commentary:  The U.S. 10-year Treasury yield rose above 4.4%, reaching a two-week high, as investors digested new trade developments and strong economic data. President Trump announced 25% tariffs on 14 countries without trade deals, extended the tariff deadline to August 1, and threatened additional levies on BRICS-aligned nations. Meanwhile, stronger-than-expected June jobs data reduced the likelihood of a Federal Reserve rate cut in July, contributing to the recent rise in yields.

Dollar Commentary:  The U.S. dollar index fell below 97.5 as trade tensions resurfaced following President Trump's announcement of new tariffs on 14 countries, including Japan and South Korea, and a warning of additional levies on BRICS-aligned nations. Although the tariff deadline was extended to August 1, the renewed uncertainty pressured the dollar. This pullback followed gains in the previous session, driven by easing trade concerns and strong U.S. jobs data that reduced expectations for a Federal Reserve rate cut in July.

Futures Update:  U.S. stock index futures traded mixed as investors weighed the impact of President Trump's latest tariff moves. While Dow futures edged lower, the S&P 500 and Nasdaq 100 futures posted modest gains. This followed a decline in major Wall Street indexes, which pulled back from record highs as investors locked in profits amid ongoing uncertainty over U.S. trade policy.

Stocks experienced a significant decline during Monday’s trading session, erasing recent gains after several consecutive sessions of upward movement. The S&P 500 fell by 49.37 points, or 0.79%, closing at 6,229.99. From a technical analysis perspective, the index remains above key resistance levels, which could indicate the potential for further upward movement in the near term. Additionally, the 14-period RSI is trending higher, suggesting continued bullish momentum unless a divergence develops. Critical support levels are identified around 6,100, while resistance is anticipated near 6,380.