Market Report.
📰 Trump announced on Tuesday that pharmaceutical imports would be subject to tariffs of up to 200% and copper imports would be subject to a 50% duty. He stated that the latter might go into effect in a year and a half, although he did not say when. U.S. copper futures jumped over 10% after Trump’s announcement, while pharmaceutical stocks slid on the threat of higher tariffs on drug imports.
🌐 Trump reiterated his threat of 10% tariffs on products from Brazil, India, and other BRICS countries, while saying trade talks have been going well with the EU and China. Trump’s administration has only reached two trade agreements so far, with the UK and Vietnam, despite promising “90 deals in 90 days” after unveiling the initial array of country-specific duties.
🤝 Japan and South Korea, facing possible 25% tariffs, are seeking concessions for their key industries in ongoing trade negotiations with the U.S.
📈 Despite the new tariffs, global markets have so far shown a muted response, with Asia-Pacific and European stock markets closing higher on Tuesday. The relatively calm market reaction is likely due to Trump’s seemingly more flexible approach, with the president stating the August 1 deadline is “firm, but not 100% firm” and that he is open to negotiating with affected countries.
🇪🇺 In Europe, the muted market reaction may be attributed to confidence that an EU-U.S. trade deal will be struck, potentially including a 10% baseline tariff and exceptions for certain goods like aircraft and spirits.
🏦 The European Union has long lagged behind the U.S. and China when it comes to the size and competitiveness of its banks. The EU’s banking union, which is still a work in progress, is seen as a key factor in boosting the competitiveness of European banks compared to their U.S. and Chinese counterparts. The aim is for bureaucratic officials in Brussels to have greater authority over mergers between Italian banks than Italy’s own banking authorities.
📜 The European Commission is preparing to send a letter to the Italian government, questioning its right to impose conditions on UniCredit’s planned takeover of Banco BPM. This clash between the EU and Italy over the UniCredit-Banco BPM deal may have ramifications across industries, as there is a broader push for consolidation in sectors ranging from banking to defense and transport.
⚖️ This is reminiscent of the episode in May 2020, when the German court ruled that a CJEU (Court of Justice of the European Union) ruling was not binding in Germany and ordered the German authorities not to implement the ECB’s debt purchase programme if the ECB did not provide additional justification within three months.
🇫🇷 France’s trade balance deteriorated in May 2025, with the trade deficit reaching €-7.766 billion, slightly worse than expected. Over the month, imports decreased by €0.6 billion to €56.7 billion, while exports fell further, by €1 billion to €49.1 billion. The deterioration in France’s trade balance suggests a weakening of the country’s export competitiveness or an increase in domestic demand for imported goods.
🧪 The European Union has pledged to use its trade defense powers and state aid measures to shield the continent’s chemicals makers from high energy costs and intensifying US and Chinese competition. The European Commission announced a strategy that would involve identifying critical chemicals at risk from unfair competition and setting up critical production sites to attract investment. The EU’s industry chief Stephane Sejourne stated that chemicals is the “mother of all industries,” with over 96% of manufactured goods relying on chemicals, making it a critical sector for the EU.
🔋 As part of the strategy, the Commission plans to update state aid rules to lower electricity costs for more chemical producers and provide fiscal incentives to boost demand for clean chemicals. The announcement comes a day after Dow Inc.(one of the world’s largest US companies in the chemical sector) said it would shutter three plants in Europe, cut hundreds of jobs, and take charges of up to $790 million, highlighting the strain the industry is under.
🌍 The trade war and deglobalisation are today a reality. Now it’s Europe vs China.
⚡ European Commission President Ursula von der Leyen accused China of distorting trade and limiting access for European firms, two weeks ahead of a summit between the economic powers. Von der Leyen stated that for the EU-China partnership to move forward, there needs to be a “genuine rebalancing” with fewer market distortions, less overcapacity exported from China, and fair, reciprocal access for European businesses in China.
🧲 Beijing has imposed export controls on rare earth magnets, hitting EU industries hard and compounding an increasingly unbalanced trading relationship, dashing earlier signs of a thaw due to U.S. tariff policies. The EU has imposed tariffs on electric vehicles over allegations of unfair Chinese subsidies and excluded Chinese firms from public contracts for medical devices, leading to retaliatory actions from Beijing.
🌊 Von der Leyen accused China of flooding global markets with cheap, subsidized goods to wipe out competitors, leading to the closure of entire Western industries, from solar panels to mineral processing. The Chinese government cancelling part of what was meant to be a two-day event between EU and China.
📉 China continues to experience weak domestic consumption and risks of deflation: China’s producer deflation deepened to its worst level in almost two years in June, with the producer price index (PPI) falling 3.6% from a year earlier, indicating continued pressure on China’s export-oriented industries due to global trade uncertainty. China’s factory activity shrank for a third month in a row in June, with employment and new export orders still languishing. Subdued domestic demand remains a drag on China’s economy, with companies resorting to price discounts to boost sales, prompting authorities to urge an end to the auto industry’s “bruising price wars”. The consumer price index (CPI) edged up 0.1% in June from a year earlier, reversing a 0.1% drop in May.
📊 The diverging trend between PPI and CPI suggests the effects of the consumer goods trade-in scheme, but this boost is likely to fade soon, leading to a decline in underlying inflation later this year. The recent relative strength of the yuan and persistently soft inflation will give the People’s Bank of China room to cut rates further later in the year.
Geopolitics:
🚢 A drone and speedboat attack off Yemen killed four seafarers on a Liberian-flagged, Greek-operated bulk carrier, the Eternity C, in the second incident in a day. The Houthis, aligned with Iran, claimed responsibility for the attack on the Eternity C. The Houthis have been disrupting commerce in the Red Sea, a key waterway for oil and commodities, by launching hundreds of drones and missiles at vessels since November 2023, as a retaliatory measure against Israel if it does not end its attacks on Gaza, thereby imposing a trade blockade that is ruining Israeli ports.
🔫 In this context, Germany has summoned China’s ambassador over accusations that a Chinese warship endangered a German military plane operating as part of the EU-led ASPIDES mission in the Red Sea to protect Israel. According to the German defense ministry, the Chinese warship targeted the German surveillance aircraft with a laser without cause or warning, putting the plane and its crew at risk. The Chinese defense ministry has not yet responded to a request for comment on the incident.
🛡️ China has maintained a constant naval presence in the Red Sea and the Gulf of Aden since 2008, with a permanent base in Djibouti. The use of lasers demonstrates its technological capability and willingness to protect its interests and project power on strategic maritime routes.
🗳️ Elon Musk seems to be launching a political crusade over the infamous Epstein list, which he himself promised would be made public if Trump won the election. Yesterday, authorities said that, after all, the list does not exist and that Epstein committed suicide, despite irregularities during Epstein’s custody.
🚀 Musk made his first election promise yesterday if people vote for his new American Party, which is to reveal the Epstein list.
🤖 Tesla CEO Elon Musk told Wedbush Securities analyst Dan Ives, one of the most bullish Tesla observers on Wall Street, to “Shut up” after Ives offered give Musk 25% voting control, clear a path to merge with xAI, and provide oversight on Musk’s political endeavors. Other Tesla bulls, such as analysts at William Blair, have also criticized Musk’s continued political activism, saying it is a distraction at a critical time for the business. Hedge fund CEO James Fishback, a Trump supporter, has called on Tesla’s board to meet and evaluate whether Musk’s political ambitions are compatible with his full-time obligations as Tesla’s CEO.
Market View:
📉 US futures remain under pressure but are holding at strong levels. The Mini S&P 500 futures are trading in the 6,265-point zone, below the highs reached on Thursday. A similar case applies to the Nasdaq 100 futures, which remain in the 22,870-point zone.
📊 European equities are much more upbeat, pricing in the possibility of a trade agreement between the EU and the United States. DAX 40 futures have been rising all week and are once again approaching their all-time highs, trading at 24,325 points. The Eurostoxx 50 follows a similar trajectory, having surpassed 5,400 points yesterday before retreating slightly to the current 5,395 points.
💵 It is interesting to observe the strengthening of the US dollar despite everything, with the DXY Dollar Index climbing and currently trading above 97.50 points, heading towards its next resistance level at 98 points. This development has caused the EUR/USD pair, which had previously strengthened due to the dollar’s weakness, to pull back slightly and currently stand just above 1.17, at 1.1720.
🛢️ The crude oil market continues its upward trend, with WTI crude nearing $69 per barrel during yesterday’s session before retreating slightly to its current level of $68.10.
🏆 Gold futures, which began yesterday’s session reaching $3,350 per ounce, have since pulled back and are now trading below $3,300, likely discouraged by the recent strength of the US dollar.
💰 Bitcoin continues to test the 109,250 USD zone, hinting at a potential bullish pattern forming nearby. It is currently trading at 108,780 USD.
