Morning Wrap: ASX 200 to push record highs, S&P 500 shrugs off Trump tariff threats

ASX 200 futures are up 51pts (+0.59%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished broadly higher, with the S&P 500 and Nasdaq within an arms reach of recent all-time highs

• Markets continue to believe that Trump will back out of recent tariff threats

• US second quarter 2025 earnings season kicks off this week, with major investment banks set to report solid earnings growth

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher, closed near best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks inched higher, finished near session highs 

• Markets not giving up on TACO narrative despite Trump threatening EU and Mexico with 30% tariffs starting 1-Aug

• Overall, a very quiet session with no major directional drivers and no updates around trade/tariffs

• Q2 earnings season kicks off, with analysts forecasting modest S&P 500 EPS growth of 4.8% – the lowest since Q4 2023

• 10% of S&P 500 market cap reporting this week, current reporting season themes include low expectations, emerging tariff impact on margins, improved AI monetisation and weak US dollar

• US CPI report out tonight – core CPI forecast to rise 0.3% month-on-month, lifting annualised core to 3.0% or the highest since February

• CPI report will impact near-term Fed rate path, though July cut currently seems unlikely (market pricing in ~7% chance) but September is sitting on the fence at ~60% 

• US Treasury to unleash US$1tn in bills, but money market funds set to buy (RT)

STOCKS

• Amazon Prime Day saw significant increase in retail traffic driven by gen-AI products, including chatbots and browsers (TC)

• xAI announces $200m contract with Defense Department (NW)

• Meta's Zuckerberg pledges hundreds of billions for AI data centers in superintelligence push (RT)

CENTRAL BANKS

• Trump's economic adviser Hassett is emerging as top Fed chair contender (WP)

• Fed's Hammack says there is no need for imminent rate cuts, wants to see more inflation progress (WSJ)

• BOJ likely to raise inflation forecasts from 2.2% for this fiscal year amid stronger-than-expected food inflation (BBG)

• BOJ completes bank stock sales, ending a nearly two decade process, brings ETF holdings into focus (BBG)

TARIFFS 

• Trump threatens 100% secondary tariffs on Russia if Ukraine peace deal isn't reached in 50 days (AP)

• European Union is readying a €72bn package of retaliatory tariffs against the US (TG)

• EU was surprised as they thought agreement was close, and warned tariffs at this level would make US-EU trade "almost impossible" (FT).

• EU preparing to step up engagement with other countries hit by Trump tariffs, including Canada and Japan (BBG)

• Mexican officials taken aback by Trump's latest tariff threat, Mexican PM Sheinbaum pledged a "cool head" to deal with threats (BBG)

• China's rare earth exports surge to highest since 2009 high, exports up 60% year-on-year, data on June exports due on Friday (BBG)

• US tariffs on Brazil threaten coffee prices, with prices spiking sharply overnight (NYT)

ECONOMY

• China's exports jump in June after US trade war truce, boosting global trade (RT)

• Singapore's GDP surprises with 4.3% growth in Q2 vs. expectations of 3.5%, avoids technical recession after 0.5% contraction in Q1 (RT)

ASX TODAY

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

• Alcoa and JV partner IGNIS announce restart process of the San Ciprian smelter in Spain, revised prior estimates and expats to record net loss for the smelter of $90-100m in 2025 (AAI)

• Newscorp subsidiary Realtor.com acquires Zenlist, a real estate technology platform known for its collaborative search and productivity tools, terms undisclosed (NWS)

WHAT TO WATCH TODAY

• Not a whole lot: A fairly uneventful overnight session, markets largely in waiting mode for tonight's US CPI report and earnings (starting off with banks).

• Bond yields: Bond yields are starting to look a little troublesome. The Australian 10-year yield gained 5 bps overnight (and up 25 bps this month) to 4.41%, the highest since 23-May.

• Lithium: A massive unexpected rally took place for most local lithium names on Monday, with Pilbara Minerals and Liontown up 6.4% and 3.0% respectively. On the same day, Chinese lithium futures surged in early trade (their market opens at 11:00 am AEST, with prices up as much as 6.8% in the first our). The blog will keep an eye out for how Chinese futures perform in early trade today.

• Hansen: Hansen (HSN) upgraded its underlying EBITDA to $110-112m (up 15% vs. prior guidance) and above-consensus EBITDA margins of 28%, driving the stock 10% higher on Tuesday. Will be interesting to see if brokers hike their target prices in response to the strong update.

BROKER MOVES

• Telix Pharmaceuticals initiated Overweight with $31.00 target (JPM)

Stocks trading ex-dividend: 

• Tue 16 Jul: None

• Wed 17 Jul: WAM Global (WGB) – $0.04

• Thu 18 Jul: None

• Fri 19 Jul: None

Other ASX corporate actions today: 

• Dividends paid: None 

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 10:30 am: Westpac Consumer Confidence (Jul)

• 11:30 am: China House Price Index (Jun)

• 12:00 pm: China GDP (Q2)

• 12:00 pm: China Retail Sales, Industrial Production, Fixed Asset Investment (Jun)

• 10:30 pm: Canada Inflation (Jun)

• 10:30 pm: US Inflation (Jun)