Daily Market Reports | 8:42 AM
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All-in-all it was a fairly muted reaction to President Trump’s tariff letters and threats against countries aligning themselves with BRICs.
Currencies like the Australian dollar have taken most of the hit as the US dollar firmed.
Ahead of todat’s RBA cash rate decision at 2.30pm AEST, the ASX200 futures are pointing to a circa -0.5% lower start for the index on Tuesday.
| World Overnight | |||
| SPI Overnight | 8526.00 | – 47.00 | – 0.55% |
| S&P ASX 200 | 8589.30 | – 13.70 | – 0.16% |
| S&P500 | 6229.98 | – 49.37 | – 0.79% |
| Nasdaq Comp | 20412.52 | – 188.59 | – 0.92% |
| DJIA | 44406.36 | – 422.17 | – 0.94% |
| S&P500 VIX | 17.79 | + 0.31 | 1.77% |
| US 10-year yield | 4.40 | + 0.05 | 1.08% |
| USD Index | 97.21 | + 0.39 | 0.40% |
| FTSE100 | 8806.53 | – 16.38 | – 0.19% |
| DAX30 | 24073.67 | + 286.22 | 1.20% |
Good Morning,
What happened overnight: NAB Markets Today Research extract
A mild reaction so far to the US’s tariff letters, of which seven so far were posted on Trump’s Truth Social account (incl. to Japan and South Korea).
As for the letters, President Trump posted seven letters that he sent to leaders regarding tariffs and negotiation deadlines. The tariff rates are effectively those announced on Liberation Day, most rounded to the nearest five: Japan 25% (Liberation Day was 24%); South Korea 25% (Liberation Day 25%); Malaysia 25% (Liberation Day 24%); Kazakhstan 25% (Liberation Day 27%); South Africa, 30% (Liberation Day 30%); Myanmar 40% (Liberation Day 44%); Laos 40% (Liberation Day 48%).
Note the White House Press Secretary suggested there would be 14 letters being sent on Monday with more to come in the following days.
Importantly the actual deadline for negotiation is now August 1: “if you wish to open your heretofore closed Trading Markets to the United States, and eliminate your Tariff, and Non Tariff, Policies and Trade Barriers, we will, perhaps consider an adjustment to this lettertariffs may be modified, depending on our relationship with your country”.
The room for negotiation and the deadline effectively being extended from July 9 to August 1 probably accounts for the mild market reaction. The EU also said it was closing in on a trade framework agreement with the US, following a weekend call between Trump and EC President von der Leyen. Reuters reported the EU won’t be receiving a letter from the US on higher tariffs.
If the agreement with Vietnam is anything to go by, then countries where the US has a trade deficit with look destinated to have a 20% tariff, and those where the US has a trade surplus with a 10% tariff. That could mean eventual tariff rates settle higher than what the current consensus is which is broadly for a 10% across the board tariff with a higher tariff on China.
Without further clarity though markets will have trouble pricing these different scenarios, especially given Trump’s quick reversal (termed TACO) following the market reaction in response to the initial Liberation Day tariffs.
President Trump was also active during Asia yesterday, threatening to levy a 10% tariff on countries following anti-American BRICS policies: “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter!”.
No clarity was given in what this related to. Some speculated this was in reference to the BRICS statement on the US and Israeli attacks on Iran. On alternatives to the USD, Russian President Vladimir Putin said national currencies in Russia’s trade with BRICS nations reached 90% last year.
In FX, what moved currencies initially was Trump’s BRICS post in Asia yesterday with both the AUD and NZD swiftly lower, given their trade links to the BRICS countries.
US Treasury yields are higher across the curve, led by the long end. Relative to last week’s close, ahead of the Independence Day holiday, the 2-year rate is up 2 bps to 3.90%, the 10-year rate is up 3.8bps to 4.38% and the 30-year rate is up 6bps to 4.92%.
Tariffs are one driver, worries over Treasury auctions during the week another (3, 10, and 30yr auctions are scheduled this week), as well as more criticism of the Fed Chair and the linking of monetary policy with fiscal financing by the White House’s Navarro. Equities closed lower, S&P500 -0.8%. Tesla underperformed in reaction to Musk’s new political hopes, -6.8%.
In a substack post, Navarro said: “about a quarter of the nation’s debt is financed through short-term Treasuries. These instruments are acutely sensitive to interest rate hikes. Keeping rates unnecessarily elevated by 50 basis points means taxpayers face an additional [US]$100 billion in debt-service costs over the next decade. Powell’s rigid policies thus impose a double fiscal burden –lost revenues and higher interest payments– on current and future generations” and also that lower growth due to too high rates sees “lost [tax] revenue snowballs into an additional [US]$150 billion to [US]$300 billion added to the national debt. Powell’s stubbornness, therefore, directly undermines America’s fiscal stability”
Finally, oil is up 2% after Saudi Arabia increased prices for Asian customers and signs of tightness in spot markets overrode concerns about OPEC-Plus supply increases.
Markets slip as tariff telegrams stir old ghosts: Stephen Innes, SPI Asset Management
Markets opened the week under the shadow of familiar ghosts. The echo of April’s tariff tremors reverberated faintly through the capital markets Monday, not a full-blown panic, but enough to rattle the blinds.
President Trump’s latest move, dispatching tariff letters like promissory notes of confrontation has brought the trade war narrative back to the marquee. The threat: levies ranging from 25% to 40% on a half-dozen nations, from industrial powerhouses like Japan to smaller exporters like Laos and Myanmar. But for now, it’s all conditional, more warning shot than artillery shell.
The S&P500 and Nasdaq gave up -0.8%, while the Russell2000 got tagged for -1.5%, a classic canary-in-the-coal-mine reaction. Every S&P sector ETF traded in the red save for utilities, the market’s safety blanket. Consumer discretionary names took the worst of it, as tariffs once again threaten to gum up supply chains and sap consumer margins.
And yet, this wasn’t a wholesale dash for the exits. Traders, seasoned by the first act of this saga, recognize the script: loud headlines, market jitters, then deals quietly hammered out under the table. No one wants to get too short too early, there’s still room for the president’s bark to outpace his bite.
The effective tariff math is moving, yes, but it’s all still pencilled in, not inked. With the August 1 deadline serving as a negotiation buffer, the current tape suggests markets are hedging, not fleeing. The mood? Edgy but not panicked, a poker table where the joker just hit the felt, but no one’s shoved their stack.
In rates, Treasuries bear-steepened, a reflationary nod to the potential second-round effects of higher tariffs. However, this too felt more like positioning than prophecy, an adjustment to risk premia, rather than a re-rating of growth. The fact these tariffs won’t take effect until July amounts to a “soft extension” of the 90-day truce. That’s not nothing.
In Washington, the White House stated roughly a dozen countries received Trump’s tariff notices on Monday, with more on the way in the coming days. Notably absent from the list, for now, is the European Union, which is angling to pre-empt a hit with a 10% placeholder deal.
Meanwhile, corporate buybacks are on mute, with the blackout window tightening ahead of earnings season. That leaves markets flying without their usual cushion of repurchases. CTAs are light net sellers in the short term, while longer-term flow models still suggest a supportive undercurrent, if volatility doesn’t scare it off.
Call it TACO Monday: Talk big, Apply Conditions, Offer delays. Traders have seen this episode before.
Whether it ends in a hard split or another handshake will depend on how the next few weeks unfold, and how much of the tariff drama makes it off the page and into the P&L.
Until then, the tape walks a fine line between tactical jitters and strategic patience.
Corporate news in Australia
-South32 ((S32)) is selling the Cerro Matoso mine to CoreX for $153m.
-WH Soul Pattinson ((SOL)) merger with Brickworks ((BKW)) is fully funded post the $220m equity raising.
-Origin Energy ((ORG)) shares rallied 6.75% on news Octopus Energy in the UK is looking to demerge Kraken tech operations for GBP10bn.
-Vocus is on track for the $5.25bn acquisition of TPG Telecom’s ((TPG)) fixed assets.
-Aldi is upping competition against Woolworths Group ((WOW)) and Coles Group ((COL)) launching a home delivery service in partnership with DoorDash.
On the calendar today:
-AU June NAB business survey
-AU RBA rate decision
-JP May BoP
-US June NFIB
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3346.35 | – 0.15 | – 0.00% |
| Silver (oz) | 36.95 | – 0.19 | – 0.50% |
| Copper (lb) | 5.01 | – 0.05 | – 1.03% |
| Aluminium (lb) | 1.17 | – 0.01 | – 1.00% |
| Nickel (lb) | 6.77 | – 0.09 | – 1.32% |
| Zinc (lb) | 1.22 | – 0.02 | – 1.54% |
| West Texas Crude | 68.11 | + 1.62 | 2.44% |
| Brent Crude | 69.59 | + 1.29 | 1.89% |
| Iron Ore (t) | 95.22 | – 1.02 | – 1.06% |
The Australian share market over the past thirty days
| Index | 07 Jul 2025 | Week To Date | Month To Date (Jul) | Quarter To Date (Jul-Sep) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8589.30 | -0.16% | 0.55% | 0.55% | 5.27% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AFG | Australian Finance Group | Downgrade to Neutral from Buy | Citi |
| ARB | ARB Corp | Upgrade to Buy from Neutral | Citi |
| BOE | Boss Energy | Downgrade to Neutral from Outperform | Macquarie |
| CMM | Capricorn Metals | Upgrade to Accumulate from Hold | Ord Minnett |
| DMP | Domino’s Pizza Enterprises | Upgrade to Buy from Hold | Ord Minnett |
| Downgrade to Sell from Neutral | Citi | ||
| EMR | Emerald Resources | Upgrade to Hold from Lighten | Ord Minnett |
| GEM | G8 Education | Downgrade to Neutral from Outperform | Macquarie |
| HLI | Helia Group | Upgrade to Neutral from Underperform | Macquarie |
| HUB | Hub24 | Upgrade to Buy from Neutral | UBS |
| Downgrade to Neutral from Buy | Citi | ||
| JHX | James Hardie Industries | Downgrade to Accumulate from Buy | Morgans |
| NWL | Netwealth Group | Downgrade to Neutral from Buy | Citi |
| PME | Pro Medicus | Downgrade to Hold from Buy | Bell Potter |
| PPM | Pepper Money | Downgrade to Neutral from Buy | Citi |
| STO | Santos | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| TLC | Lottery Corp | Downgrade to Sell from Buy | Citi |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: BKW - BRICKWORKS LIMITED
For more info SHARE ANALYSIS: COL - COLES GROUP LIMITED
For more info SHARE ANALYSIS: ORG - ORIGIN ENERGY LIMITED
For more info SHARE ANALYSIS: S32 - SOUTH32 LIMITED
For more info SHARE ANALYSIS: SOL - WASHINGTON H. SOUL PATTINSON AND CO. LIMITED
For more info SHARE ANALYSIS: TPG - TPG TELECOM LIMITED
For more info SHARE ANALYSIS: WOW - WOOLWORTHS GROUP LIMITED