BofA On European Earnings: Upside Surprise To Low Expectations

U.S. stock futures pointed to a steady open on Friday following record closes for the S&P 500 and the Nasdaq in the previous session, while investors looked for signs of progress in trade talks as they braced for the August 1 tariff deadline.

At 08:09 a.m. ET, Dow E-minis were up 33 points, or 0.07%, S&P 500 E-minis were up 4.25 points, or 0.07%, and Nasdaq 100 E-minis were down 12.5 points, or 0.05%.

The blue-chip Dow fell 0.7% in Thursday's session, but stayed close to its all-time high, last hit in December.

All three major indexes were poised to cap the week on a high note, as a flurry of tariff agreements between the United States and its trading partners - including Japan, Indonesia, and the Philippines - helped drive markets to new highs.

Expectations were rife the European Union would soon sign an agreement with Washington, while negotiations with South Korea gathered momentum ahead of the August 1 deadline set for most countries, as economies worldwide scrambled to avoid steep U.S. import tariffs.

"Tariff headlines are driving market risk sentiment, fuelling a risk-on mood this week. However, some volatility near the August 1st deadline remains possible," a group of analysts led by Adam Kurpiel at Societe Generale said.

A spate of upbeat second-quarter earnings also supported Wall Street's record run. Of the 152 companies in the S&P 500 that reported earnings as of Thursday, 80.3% reported above analyst expectations, according to data compiled by LSEG.

However, there were a few setbacks during the week. Heavyweights Tesla (TSLA.O), and General Motors (GM.N), stumbled and were on track for their steepest weekly declines in nearly two months.

Tesla CEO Elon Musk warned of tougher quarters ahead amid shrinking U.S. EV subsidies, while General Motors took a hit after absorbing a $1.1 billion blow from President Donald Trump's sweeping tariffs in its second-quarter earnings.

Intel (INTC.O), fell 7.5% in premarket trading on Friday after the chipmaker forecast steeper third-quarter losses than Street expectations and announced plans to slash jobs.

All eyes will be on the U.S. Federal Reserve's monetary policy meeting next week, with bets indicating that policymakers are likely to keep interest rates unchanged as they evaluate the effects of tariffs on inflation.

The central bank is under immense scrutiny from the White House, with President Trump leading a censure campaign against Chair Jerome Powell for not reducing borrowing costs, while often hinting that he would sack the top policymaker.

In a surprise move, Trump escalated the pressure by making a rare visit to the Fed headquarters on Thursday, where he criticized its $2.5-billion renovation project.

Uncertainty over Powell's tenure is prompting investors to assess potential market reactions in the event of a change in leadership at the central bank.

According to CME's FedWatch tool, traders now see a nearly 60.5% chance of a rate cut as soon as September.

Among other stocks, Newmont (NEM.N), added 2.3% after the gold miner surpassed Wall Street expectations for second-quarter profit.

Health insurer Centene (CNC.N), posted a surprise quarterly loss, sending its shares tumbling 15%.Deckers Outdoor

Paramount Global (PARA.O), rose 1.3% after U.S. regulators approved its $8.4 billion merger with Skydance Media.

Source: Kitco

Oil was steady on optimism over US trade talks ahead of a key deadline next week, and as tightness in diesel markets boosts sentiment.

Brent crude was above $69 a barrel after adding 1% on Thursday, while West Texas Intermediate traded near $66. Indian Commerce Minister Piyush Goyal said he was confident that his country could reach an agreement with the US before the Aug. 1 target date, while Brazil and Mexico looked to broaden trade ties.

Meanwhile, diesel prices have soared, leading to steep premiums for niche crude grades that yield more of the fuel and injecting much-needed strength into a bogged-down oil market. The latest European Union measures restricting Russian energy imports have also added to the tightness, according to TotalEnergies SE.

Crude has remained in a holding pattern this month, but is down for the year as increased supply from OPEC+ adds to concerns over a looming glut. The group will next meet on Aug. 3 to decide on production levels. On Thursday one member, Venezuela, was given a production reprieve by a US decision to let Chevron resume pumping oil in the country.

“The only strength right now is coming from the diesel markets,” said Florence Schmit, an analyst at Rabobank. “The US government’s backpaddling on curtailing Venezuelan oil supplies will only add to a relatively loose supply balance later this year.”

Source: Yahoo Finance

Durable Goods Orders Plunge in June as Transportation Sector Contracts Sharply.

U.S. durable goods orders fell sharply in June, down 9.3% month-over-month to $311.8 billion, reversing much of May’s 16.5% gain. The U.S. Census Bureau reported the drop was largely due to a steep decline in transportation equipment orders, which sank 22.4% to $113.0 billion. Traders are assessing whether this signals a broader cooling in manufacturing or a sector-specific retreat.

Transportation Slump Drags Overall Durable Goods Lower

The 9.3% drop in total durable goods orders was driven almost entirely by transportation, especially aircraft orders. Transportation equipment orders fell $32.6 billion in June, reflecting ongoing volatility in the sector. Excluding transportation, durable goods orders actually rose by 0.2%, slightly above the 0.1% forecast. This narrow gain offers limited relief, suggesting underlying manufacturing demand remains soft but stable outside transportation.

Core Orders Surprise to the Upside, But Trend Remains Weak

Core durable goods orders—excluding transportation—posted a modest 0.2% gain, matching a downwardly revised 0.6% rise in May. Although slightly above expectations, the result reinforces a view that core manufacturing growth is tepid. Meanwhile, orders excluding defense spending fell 9.4%, pointing to waning demand from the private sector. These trends highlight cautious capital expenditure from businesses in a climate of elevated interest rates and tighter financial conditions.

Market Reactions and Rate Expectations in Focus

The softer headline figure has not significantly altered rate expectations. With inflation readings showing signs of stabilization, the Federal Reserve is expected to maintain its current policy stance. However, continued weakness in durable goods orders—particularly in transportation—could start influencing forward guidance, especially if business investment falters further. Bond yields were little changed following the report, while the dollar held steady, reflecting market consensus that the Fed will stay on hold for now.

Outlook: Bearish Near-Term Tone for Manufacturing Sector

The sharp drop in durable goods orders in June, especially in transportation, points to a bearish short-term outlook for the manufacturing sector. While core orders showed modest growth, the broader trend remains fragile. Unless transportation rebounds and private-sector demand strengthens, traders should anticipate further pressure on industrial stocks and manufacturing-related assets in the near term.

Source: FX Empire

It’s been a mediocre week for UK economic data.

House price data at the start of the week pointed to a flat market, with reasonable activity but no great conviction. The public finances turned out to be in worse shape than expected. Yesterday’s snapshots of economic activity from S&P Global pointed to a weaker-than-hoped services sector, with talk of job cuts and falling new orders.

Now, this morning, we’ve seen a tepid reading for consumer confidence, plus retail sales data which — you guessed it — missed expectations.

So what’s the damage?

The most eye-catching point from the consumer confidence survey was that UK households feel like (and do remember, this is about stated “feels” rather than actions) saving more now than at any point since November 2007. As you’ll recall, that was in the run-up to the financial crisis and not long after Northern Rock had tested the British love of queuing to its limit.

That is strikingly downbeat. Saving money is no bad thing. But cautionary saving points to wider problems with the economy — people refrain from spending because they’re worried — and we’re spoiled for choice on those.

Inflation remains pretty high and shows no real sign of retreating. Wages might have gone up on average in “real” (after inflation) terms but not everyone has enjoyed an inflation-matching pay rise this year, with better-paid sectors tending to see the lowest increases in recent months.

So it’s possible that the better off are aware of the pinch and are keen to save more. People might also be worrying about their job security. It’s not at all clear what’s going on with the UK labour market right now, but we can fairly assume that it’s not booming.

Or it might be that they’re worried about taxes going up in autumn, given the state of the public finances, and so they’re saving as a precaution. Whatever the reason, the issue here is that the UK is a consumer economy. As I said, saving is no bad thing, but if spending is weak then that isn’t great for business sentiment — or employment — either.

The Glass Half-Full Option

On the other hand, we don’t want to get too downbeat. As Rob Wood, chief UK economist at Pantheon Macroeconomics points out, the official retail sales figures have been distorted somewhat by the timing of Easter this year. Looking at the figures across the year, retail sales have gone up by about 0.3% a month, “a healthy clip.”

The consumer confidence figure, says Wood, should be taken with a pinch of salt. Savings intentions alone don’t necessarily correlate with actual savings balances — in other words, what people say and what they do are two different things.

Looking at company results also points to people acting in a less cautious manner than they’re necessarily letting on. The hot weather helps of course, but pubs have been reporting very solid results so far this year, with JD Wetherspoon, Marston’s, and this morning, Mitchells & Butler’s, all doing decent business.

At the end of the day, you can’t spend money you don’t have. And so far, it seems that people do have money to spend, even if they don’t feel that cheerful about what’s going on in the wider world.

Will it last? Clearly that depends on what happens with the jobs market. That may in turn depend on how many more political mini-crises we end up having between now and the end of the year.

There is a lot of pressure on the government, and while there are hints that a wealth tax is not the way that UK chancellor Rachel Reeves is inclined to go — as much for practical reasons as anything else — she has also talked up the need to obey the fiscal rules, and that almost certainly means tax increases.

The lack of predictability, as much as anything else, will continue to hang over consumers and businesses until the direction of travel is clearer.

But on the bright side, the mediocre data should make life easy for the Bank of England next month. A quarter-point interest rate cut is widely expected — even if there’s a chance it could be the last we’ll see this year.

And as I pointed out in yesterday’s piece, in relative terms, the UK does still have some advantages. Not least that we’re hardly the only economy suffering from uncomfortable levels of uncertainty. Sometimes muddling through until things get better is all you need to do. Let’s hope we can manage that.

Looking at wider markets — the FTSE 100 is down 0.3% at around 9,110. The FTSE 250 is down 0.4% at 22,060. The 10-year gilt yield is sitting at 4.64%, higher on the day, as are yields on its German (2.73%) and French (3.40%) peers.

Gold is down 0.7% at $3,340 an ounce, and oil (Brent crude) is up about 0.2% to $69.30 a barrel. Bitcoin is down 2.0% at $116,420 per coin, while Ethereum is down 0.5% at $3,720. The pound is down 0.4% against the US dollar at $1.345, and down 0.2% against the euro at €1.147.

Source: Bloomberg Europe

Source: Reuters

Source: Reuters