Weak Macro Data
After a jobs report that roiled sentiment last week, a US gauge of services activity gave rise to stagflation concerns. The US Services PMI for July fell to 50.1 from June’s reading of 50.8. Although a reading above 50 indicates expansion, that figure is right at the flat line.
Firms reduced headcounts as costs rose with a measure of prices paid for materials and services climbing to highest since October 2022.The Services PMI fall is a big worry as 70% of the US economy comprises of services. This has given rise to stagflation (low growth, employment but high inflation) worries.
Tariffs Are Coming
In an interview to CNBC, US President Donald Trump said that tariffs on pharmaceuticals and semiconductors, which have been under investigation under Section 232, will be announced sometime next week.
Trump said that tariffs on Pharma would initially be small but over the next 12-18 months, graduate first to 150% and eventually to 250% as he wants pharmaceuticals to be manufactured domestically.
Although Trump did not share any potential tariff rate for semiconductors, the news led to a fall in majority of the chip stocks, thereby weighing on the Nasdaq and S&P 500.
Tariff Impact
Here’s how companies are reacting to Donald Trump’s tariffs during their quarterly results or otherwise:
- Mosaic Co. says US tariffs are impacting shipments to the US
- Mosaic is the world’s leading producer of two key crop fertilisers
- AMD gives strong guidance but stock falls in extended trading after company says China market access key for business
- Rivian falls 5% on guiding for wider than expected loss due to one big beautiful bill
Rivian falls 5% on guiding for wider than expected loss due to one big beautiful bill
The US Dollar index continues to remain below 99, Gold prices are steady above $3,400, while Brent Crude fell another 2% on Tuesday to slip below the $68 per barrel mark.
