Market Quick Take - 9 July 2025

Q3-2025 Macro Outlook: Less chaos, and hopefully a bit more clarity

Market Drivers and Catalysts

• Equities: Trump confirms copper tariff; EU rally continues; UK exporters shine.
• Volatility: VIX eases to 16.8; SPX expected move ±0.44%; flat curve hints at calm.
• Digital Assets: Bitcoin steady; ETH gains; IBIT inflows continue; ETHA dips.
• Fixed Income: US Treasury yields rise further ahead of 10-year auction.
• Currencies: USD sees modest gains against its G10 currency peers.
• Commodities: HG copper surges to a near 30% premium over London.

Macro Events

Key macro events include the US 10-year Notes auction and the FOMC minutes from the June meeting.

Macro Data and Headlines

Trump's announcement of a 50% tariff on copper imports has caused significant turmoil in global copper markets, doubling the expected rate. This could lead to increased costs across various sectors in the US economy. Additionally, he threatened up to 200% tariffs on pharmaceutical imports, with a delay of 12 to 18 months for implementation. Trump also indicated no further extensions on country-specific levies set to take effect in early August and proposed a 10% levy on imports from India due to its participation in BRICS.

In June 2025, US consumer inflation expectations dropped to 3%, while commodity price expectations rose for gas (4.2%), medical care (9.3%), college education (9.1%), and rent (9.1%). Taiwan's trade surplus increased significantly, driven by strong exports in technology sectors.

Market Performance Overview

US Equities

US stocks were largely flat as traders reacted to conflicting tariff news. The S&P 500 ended down 0.07%, while the Dow fell 0.37%. Energy and materials stocks saw gains, while consumer staples and financials lagged.

European Equities

European markets rose, buoyed by hopes of a US-EU trade deal. The STOXX 50 added 0.57%, with Germany’s DAX reaching a one-month high. The UK’s FTSE 100 also gained, led by mining and energy stocks.

Asian Markets

Asian markets showed mixed results, with Hong Kong’s Hang Seng slipping while Chinese equities rose modestly, supported by trade talk optimism.

Volatility

Volatility indicators showed a decline, with the VIX dropping to 16.81, indicating a calm investor sentiment despite ongoing tariff concerns.

Digital Assets

Bitcoin remained steady around $108.8k, while Ethereum saw a slight increase. Institutional interest in digital assets continues to grow, with significant inflows into ETFs.

Fixed Income

US Treasury yields rose, reflecting concerns over inflation and the impact of tariffs. The focus remains on upcoming bond auctions.

Commodities

Copper prices surged following Trump's tariff announcement, significantly impacting the market dynamics. Gold prices remained stable but are closely watched amid tariff developments.

Currencies

The USD experienced modest gains against G10 currencies, with the Dollar Index rising due to tariff-related jitters. The Australian dollar held steady after the RBA's unexpected decision to maintain interest rates.

Earnings Events

Upcoming earnings reports include The Progressive Corporation, Fast Retailing, Cintas Corporation, Kongsberg, and Delta Airlines.

Conclusion

The market outlook for Q3-2025 suggests a need for diversification as geopolitical tensions and tariff implications continue to shape investor sentiment and market dynamics.