US President Donald Trump renewed his focus on trade, setting tariffs for a raft of partners including Mexico, Canada and the European Union after failing to reach agreements since the 90-day pause on the Liberation Day regime.
Stocks on Wall Street and in Europe were weaker on Friday as the initial tariff flurry set in, and ahead of the June quarterly earnings season with major US lenders JPMorgan Chase, Wells Fargo and Citigroup setting the tone of reporting.
Locally, ASX futures are pointing to a soft start for the week, while the BNZ-BusinessNZ services activity indicator and credit and debit card spending data are the latest gauges on New Zealand’s economy.
Meanwhile, Elon Musk’s SpaceX is reportedly injecting US$2 billion into his xAI business, almost half of the artificial intelligence startup’s US$5 billion capital raising.
Back to work
Stock markets on both sides of the Atlantic ended Friday weaker, with the S&P 500 down 0.3% and Germany’s DAX 30 declining 0.8%, as US President Donald Trump continued to roll out his new tariff rates for various trading partners coming into effect in August.
The White House had given trading partners a 90-day reprieve from his reciprocal tariff regime announced in April to stitch up deals and limit the import levies, but hasn’t made much headway.
Among the rates announced at the end of the week, Canada will face a 35% tariff while Mexico's and the European Union's were set at 30%. European Commission President Ursula von der Leyen said the bloc won’t retaliate until August while it tries to negotiate a deal.
“Risk appetite is likely to remain suppressed as the new week begins after Trump threatened higher tariffs for the EU and Mexico over the weekend,” Bank of New Zealand senior market strategist Jason Wong said in a note. “Overall, last week’s threats of higher tariffs had a muted impact on the market, with investors assuming that there is still time for negotiation.”
While stocks markets were subdued at the end of the week, Wall Street remains near record highs and investors are turning towards the upcoming earnings season, with JPMorgan, Wells Fargo, Citi and asset manager Blackrock among those reporting this week.
Lowering expectations
Analysts expect S&P500 company profits rose 4.8% in the second quarter, according to FactSet, marking the slowest quarterly growth since 2023.
Meanwhile, the Wall Street Journal reported Elon Musk’s SpaceX has agreed to invest US$2 billion in Musk’s xAI firm, as the Grok AI developer and X social media platform seeks to raise US$5 billion.
A slew of data is poised to be released this week, including inflation readings for the US, the UK, Europe and Japan, Australian employment data and Chinese trade and economic growth figures.
Local data today include the BNZ-BusinessNZ performance of services index, following from its sister manufacturing survey on Friday showing industrial activity shrank at a slower pace in June. Statistics New Zealand’s electronic card spending is also due today.
Double-dip
The Reserve Bank’s Kiwi-GDP NowCast estimate for June quarter gross domestic product predicts a 0.2% contraction.
The kiwi dollar traded at 60.18 US cents at 7am in Auckland from 60.29 cents last week.
Australian futures are pointing to a 0.2% decline for the S&P/ASX 200 index when it opens, with mining companies such as BHP, Rio Tinto and Fortescue advancing with the rise in iron ore prices.
Meanwhile, BusinessDesk reported minority investors in one of failed property developer Du Val Property Group’s wholesale funds have had their attempt to take a case against the Financial Markets Authority struck out.
Reporting by Paul McBeth. Image from Dominik Lückmann on Unsplash.
