Morning Wrap: ASX 200 to fall, S&P 500 retreats from record as Trump threatens new tariffs

ASX 200 futures are down 47pts (-0.55%) as of 8:30 am AEST.

In a nutshell:

• S&P 500 and Nasdaq retreated from record highs after President Trump revealed a wave of new tariff threats on key trading partners

• Japan, South Korea, Malaysia and Kazakhstan will pay a 25% levy on their exports to the US, commencing 1 August

• The RBA is set to cut rates by 25 bps at 2:30 pm today

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, closed near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished lower, with a slight bounce off worst levels

• S&P 500 and Nasdaq both retreated from the prior session’s record highs

• Today’s big story – Trump has started issuing letters to countries that have completed a trade deal, so far established a 25% base tariff on both Japan and South Korea (effective 1-Aug), plus tariffs on five other countries including South Africa and Malaysia 

• BofA’s latest Flow Show said Bull & Bear indicator hit 6.0 last week, highest since US election on large inflows to high-yield and emerging market bonds, strong global stock index breath and robust credit market technicals

• US equities showing signs of euphoria, often a bad omen for small caps, and in need of a pullback (BBG)

STOCKS

• Tesla shares slump after Musk says will form political party, marking a new escalation in his feud with Trump (RT)

• Musk is struggling in China as Tesla falls behind local competitors, with his split from Trump limiting his influence (WSJ)

• Apple appeals a €500m EU fine, calling it "unprecedented" and the required App Store changes "unlawful" (BBG)

• Mercedes-Benz Q2 vehicle sales fell 12% in the US and 19% in China due to trade tensions and tariffs (BBG)

• Coreweave to acquire Core Scientific in $9bn all-stock deal, expanding AI infrastructure (CNBC)

• Amazon and Walmart face off in online discount battle with competing sales events (FT )

• Samsung's Q2 profit expected to drop 39% due to Nvidia AI chip delays (RT)

CENTRAL BANKS

• RBA set for first back-to-back rate cut in six years, most economists expect a 25 bp cut to 3.6% (BBG)

TARIFFS & GEOPOLITICS

• Trump unveils letters that threaten to impose higher tariff rates on key trading partners, including levies of 25% on goods from Japan and South Korea (BBG)

• Trump declares that countries aligning with BRICS will face an additional 10% tariff with no exceptions (AX)

• Hassett flags Trump administration aims to finalise trade deals before the Wednesday deadline on reciprocal tariffs (ABC)

• Chinese businesses are increasingly exporting goods to the US via Southeast Asia to avoid tariffs (FT )

• China accumulating large amounts of nickel to strengthen its reserves amid US trade war, taking advantage of low prices (FT)

• China hits back at EU's restrictions on its medical device makers by excluding EU-based companies from certain local medical devices (BBG)

ECONOMY

• Eurozone ZEW investor sentiment improves in July as recovery broadens (RT)

• German industrial production unexpectedly up 1.2% in May vs. consensus of 0%, driven by automotive, industrial and energy production (RT)

ASX TODAY

Check out our Live Blog for the latest coverage and analysis for company announcements, market movements and economic updates.

• Cochlear receives FDA approval for its Nucleus Nexa System, Nucleus Kanso 3 and Kanso 3 Nexa Sound Processors, products to be launched in the US by the end of 1Q26 (COH)

• Platinum Asset Management reports 30-Jun FUM of $8.06bn vs. $8.34bn a month ago, June net outflows of $428m, FY25 operating costs to be approximately $75m, FY26 savings target of $10-15m vs. prior $5m (PTM)

WHAT TO WATCH TODAY

• Trump tariff jitters: Is this Liberation Day 2.0? Trump has sent out individual 'trade letters' to countries with new tariff rates, also threatening even higher rates should the countries retaliate. This placed downward pressure on equities overnight, plus pushed yields slightly higher, weighed on copper and supported gold. We'll have to see where the dust settles, but so far, a 'buy the dip' or 'Trump Always Chickens Out' strategy has worked spectacularly.

• Gold and silver: Both safe havens reversed early Monday weakness to close near session highs. The Gold and Silver Miner ETFs (GDX, SIL) closed 0.49% and 1.65% higher respectively.

BROKER MOVES

• Domino’s Pizza upgraded to Buy from Neutral but target cut to $22 from $25 (UBS)

• Northern Star retained Buy; target cut to $21.00 from $22.00 (CITI)

• Northern Star downgraded to Neutral from Overweight; target cut to $17.50 from $21.25 (JPM)

• South32 downgraded to Neutral from Buy; target cut to $2.90 from $3.30 (GS)

• Titomic initiated Buy with $0.50 target (BP)

Stocks trading ex-dividend: 

• Tue 8 Jul: US Masters Residential Property Fund (URF) – $0.10

• Wed 9 Jul: None

• Thu 10 Jul: None

• Fri 11 Jul: Turners Automotive Group (TRA) – $0.083

Other ASX corporate actions today: 

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: NAB Business Confidence (Jun)

• 2:30 pm: RBA Interest Rate Decision (Ests: 25 bp cut to 3.60%)