Markets pulled between earnings and tariffs
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Why did US equities rally to new highs before pulling back today?
US equities rallied today with the SP reaching another new high before pulling back. Concerns about the next Liberation Day, perhaps. August the first is looming and still no deal with Europe, for example. Meanwhile, let's talk central banks. It's the ECB tomorrow. The Bank of England's Andrew Bailey is fronting up to a government panel today. And Jerome Powell talking at a conference, but it is Fed lockdown, so probably he can't say too much. And nor can we It's quite an event-free day. It's Tuesday, it's the twenty-second of July 2025. It's the morning call from Nap. Good morning. Well, quite a fall in the US dollar this morning. It's down naught point six percent on the DXY with a half percent rise in the pound and the euro, but just a quarter percent rise in the Aussie to sixty five and a quarter US cents.
US shares, well, they started well, then they lost ground, but they picked up just before the close. The Nasdaq and the S P uh both flat an hour from the close, but finished up naught point two percent for the S P, uh, which incidentally hit a new High again today, and a 0.4% rise in the Nasdaq. The Dow finished flat. The Russell 2000 closed down 0.4%. We had falls in Europe as well, half percent off the Eurostocks 50 and the Cat Carrant. And bond yields quite a bit lower. Four basis points off 10-year treasuries to 4.38%, down six basis points for 10 years in Canada, down 10% in France and Italy and Spain, down 80%.
What caused bond yields across major markets to drop in this session?
In Germany and seven in the UK. Aussie ten years though at 4.32% yesterday. They haven't really moved overnight. And oil is low. WTI is down half a percent and Brent down 0.4%, down below 69 a barrel. All of that really in the last hour or so. So Taylor Nugent with me today from NAB in Melbourne. Uh it's been a fairly quiet 24 hours, it's fair to say. But look, equities, let's talk about them because they start. Started so well, a bit of enthusiastic enthusiasm about earnings prospects, uh, but that died away it seemed as we got towards the close. Uh perhaps markets have finally realised august the first. It's just a week away, and we do know, I mean, Liberation Day, Mark two, it is gonna happen, isn't it?
These new tariffs are gonna be applied.
Yeah, certainly there is some some kind of, you know, building expectation that there will be, you know, at least at least some increase from that ten percent baseline tariffs for for a lot of countries. The the EU certainly, and we might talk about that in a moment, um, officials there, especially in Germany, kind of less optimistic that a ten percent baseline uh tariff is is kind of a reasonable expectation for what what can be achieved. But, you know, I think on on the day, you know, there's nothing particular that we can point to in terms of um in terms of catalysing any any market reaction as you said there was kind of you know a more material increase in in US equities um during the session in today and it's you know paired back a little bit in the the last hour of power um but um you know what's driving those those themes kind of those competing tensions you know w working out where where tariffs are gonna settle what the momentum is
in in the US economy and then measuring that against the the steady stream of earnings, which so far have been have been reasonably positive. If we look at the the companies that had reported uh up until the end of of last week, about eighty three percent had had beaten expectations. Um and it's a pretty pretty full calendar in in prospect, including the the first of the the Magnificent Seven companies, Alphabet and Tesla coming up. So you know, expectations. clearly reasonably reasonably optimistic um in terms of the the earnings prospects this um in reporting this week.
How are the EU’s secondary tariff plans affecting trade talks with the US and China?
It's still a day away for uh for us for those uh for the Magnificent Seven. But yeah, we wait with bated breath. So uh yes, the EU, um I mean, obviously the big imbalances of pharmaceuticals and cars, autos, the the European I I'm not quite sure whether they're gonna reach a resolution on this. The European Commission has said that um they're gonna meet early next week week to you know, if the if the ongoing negotiations aren't successful, they're gonna meet next week to try and
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Chapters
8 chapters
1
Why did US equities rally to new highs before pulling back today?
0:01–1:26
2
What caused bond yields across major markets to drop in this session?
1:26–3:32
3
How are the EU’s secondary tariff plans affecting trade talks with the US and China?
3:32–5:51
4
Why are US import volumes falling and what does that mean for GDP data?
5:51–8:26
5
How did New Zealand’s CPI surprise affect expectations for an August rate cut?
8:26–9:55
6
What are the market implications of Japan’s recent election results?
9:55–12:11
7
Will the ECB’s Q2 loan‑demand survey signal stronger credit growth?
12:11–14:27
8
What new clues do the RBA July minutes give about the timing of rate cuts?
14:27–15:20