The Overnight Report: US Earnings, CPI In Focus

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The company is included in ASX200, ASX300 and ALL-ORDS

The S&P500 retreated from an all time high ending weaker for the first time in six days.

US earnings reports are showing some disappointment with the market awaiting Microsoft and Meta earnings tomorrow and the Fed meeting.

ASX200 futures are flat ahead of today's June quarter CPI print.

Good Morning,

The ASX200 rose 7pts (under 0.1%) on Tuesday to 8704. Seven out of eleven sectors ended higher, led by Energy up 0.7% with property stocks lagging by -0.5%.

Investors will be awaiting the June quarter CPI print to be announced at 11.30am AEST.

Tony Sycamore, IG writes “A print of 2.6% for the trimmed mean would be in line with the RBA’s forecasts and, along with June’s disappointing jobs report, would give the green light for the RBA to cut rates at its August meeting.

“However, a trimmed mean print of 2.8% YoY or higher would increase the chances of the RBA keeping rates on hold in August, which would likely see a short term sell off in the ASX200.”

What happened overnight: NAB Markets Today Research extract

US data painted a mixed picture. The Conference Board’s consumer confidence index rose to 97.2 in July, driven by improved expectations, while the JOLTS job openings fell more than expected to 7.44m, suggesting a softening labour market. Job openings fell by -275k in June, a larger drop than expected from an upwardly revised figure for May. Of note too the difference between those saying jobs were plentiful against those saying jobs were hard to get, continued to ease, indicative of a softening labour market.

Ahead of the advanced US 2Q GDP release tonight, the US goods trade deficit narrowed sharply to US$86bn in June, driven by a broad-based drop in imports, boosting the Atlanta Fed’s Q2 GDP Now estimate to 2.9%, above the consensus 2.5%. Back in Q1 we had the opposite, where a big boost in imports, ahead of tariffs weighed on the Q1 GDP outcome.

The IMF revised upward its global growth estimates, now seeing 3.0% for 2025 (up two-tenths) and 3.1% for 2026 (up one-tenth). The IMF cited stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions. 

The IMF’s inflation outlook was little changed, with forecasts predicting inflation will remain above target in the US and be more subdued in other large economies. Despite the improved growth outlook, the IMF Chief Economist Pierre-Olivier Gourinchas also noted that “Global growth is expected to decelerate, with apparent resilience due to trade-related distortions waning,” adding that “Medium term growth has been relatively weak in recent years and is expected to continue being weak”.

US-China trade talks concluded in Stockholm with no final agreement, though both sides signaled willingness to extend the current tariff truce. Chinese trade negotiator Li told reporters both sides agreed on maintaining the truce, but in a slightly different interpretation of the events, US Treasury Secretary Bessent said the US and China will continue talks, adding an extra 90 days is one option. President Trump will be briefed on Wednesday, and he will decide.

US equities were softer, with the S&P500 down -0.30%, Nasdaq -0.38%, and Dow -0.46%, as investors rebalanced portfolios ahead of month-end and key earnings. The S&P500 ended a six-day winning streak with industrials down -1% and Consumer Discretionary off -0.73% leading the decline. Real Estate up 1.70% and Utilities up 1.17% outperformed. 

My BNZ colleague, Jason Wong, noted another highlight from US company reporting with Procter and Gamble announcing plans to raise prices for household products by about 5% in the US this year, to help offset the impact of a -US$1b hit to costs from higher tariffs. Many US companies have been avoiding publicly announcing tariff-related price increases, doing so less visibly, to avoid attention from President Trump.

In Europe, the FTSE100 rose 0.60% and DAX up 1.03% outperformed, the latter despite a sharp -23% drop in Novo Nordisk shares following a profit warning and CEO change. Yesterday, the Nikkei fell -0.79% after a strong run, while the Hang Seng eased 0-.15%. 

A strong bid for the US$44bn 7-year US Treasury auction helped extend the rally in Treasuries, with the auction yield nearly -3bps below pre-auction levels and the bid-to-cover ratio the highest since 2012. The 2y yield fell -5bps, 5y -6bps, and 30y -8.8bps. The US 10-year rate is currently 4.32%, showing a steady decline overnight and down -8bps from the AU close. European yields were mixed, with Bunds up 1.9bps and Gilts down -1.4bps.

Moving to currencies, The USD was broadly stronger, with the DXY up 0.26% and the Bloomberg Dollar Spot Index +0.13%. The AUD slipped -0.11% to 0.6514. The AUD traded in a 0.6529 and 0.6496 range overnight and it has extended its decline to a fourth day in a row. 

Oil prices jumped (Brent up 4.14% and WTI up 4%) as President Donald Trump reiterated the US may impose additional tariffs on Russia and said the nation has 10 days to reach a truce with Ukraine. Iron ore rebounded 1.93% to US$102.74, while gold rose 0.43% to US$3324.30. Base metals were mostly weaker, with aluminium down -0.99%, zinc -0.44%, and copper up 0.69%.

In other news, President Trump said India may face tariffs of 20–25% if no trade deal is reached by August 1.

Investors are complacent about tariff risks: Nigel Green, deVere Group

Trump on Monday confirmed that countries without bilateral trade agreements with the United States will soon face universal tariffs in the range of 15 to 20%. 

Over 200 nations are expected to be notified of the new regime imminently. The US President is calling it a “world tariff” and has made clear it will apply broadly and quickly.

Investors are behaving as if this is just more background noise, but this isn’t noise. This is a fundamental change in global trade architecture, and the market is barely blinking.

The White House has already moved forward on several fronts. A 15% tariff deal has been signed with the EU alongside massive investment and energy purchase pledges. Japan has locked in a US$550 billion trade pact. 

However, for the rest of the world, particularly nations like India, Canada, and Brazil, time is running out. Trump’s deadline for new deals is this Friday. Those left without agreements will be subject to higher blanket rates as early as next week.

The most astonishing part isn’t the policy shift itself. It’s the market’s reaction—or lack of one.

Equities remain buoyant. Volatility is low. It’s as though investors have convinced themselves this is just another bluff. That assumption looks dangerously optimistic.

Trump’s rationale is straightforward: fewer deals, more tariffs, simpler rules. But the economic impact is already showing up in the data. US growth has cooled, GDP expansion slowed to just over 1% in the first half of the year, and estimates for full-year performance are edging lower. The average effective tariff rate has climbed steeply and is set to rise again.

Tariffs are functioning like a shadow tax on the economy. They distort pricing, suppress trade volumes, and increase friction across supply chains. This is not a theoretical risk; it’s real, and it’s measurable.

Yet despite this, the prevailing market view remains that the inflationary effects are temporary and the growth drag manageable. 

While inflation has moved more gradually than some expected, the second-order effects—reduced investment, weaker consumer sentiment, and declining trade volumes—are beginning to bite.

Too many investors are still focused on short-term disinflation and assuming that tariffs are just noise in the system. That’s a mistake.

These are structural shifts in the way global trade is priced and governed. It’ll take time to filter through, but the direction is already clear.

Markets can absorb a lot of noise, but they don’t cope well with declining growth and rising unemployment, which is exactly the mix these tariffs could deliver.

What’s different this time is the scale and scope. Trump is no longer targeting a handful of adversaries. He’s applying pressure globally. His argument is that the US can no longer manage hundreds of separate deals and that tariffs are now the baseline for doing business.

The world’s largest economy is shifting to a tariff-first model, which deserves a much more serious response from investors.

With the deadline for new deals just days away and further retaliatory measures likely from affected countries, the risks are stacking up. Yet for now at least, markets remain calm.

It’s time for investors to reassess their assumptions, and seek advice, because the ground under their feet is moving faster than they may be thinking,

Corporate news in Australia

-Monadelphous ((MND)) has won a $150m contract with Rio Tinto ((RIO)), Newmont Corp ((NEM)) and others.

-Lazard is looking for buyers for HMC Capital’s ((HMC)) Neoen renewables unit.

-HSBC is considering selling its Australian retail bank as it streamlines global operations. It has hired Citi to execute the process.

-Capricorn Metals ((CMM)) received approval for the development of Karlawinda expansion project to grow gold production to 150kozpa.

-Ford reduces lithium orders from Liontown Resources ((LTR)) as EV demand declines.

On the calendar today:

-NZ ANZ Business Confidence

-AU 2Q CPI

-EZ 2Q GDP

-US 2Q PCE

-US FOMC rate

-US July ADP

-ALS LIMITED ((ALQ)) AGM

-ATLAS ARTERIA ((ALX)) Qtr report

-CHAMPION IRON LIMITED ((CIA)) earnings report

-DETERRA ROYALTIES LIMITED ((DRR )) Qtr report

-EBR SYSTEMS INC ((EBR)) earnings report

-IGO LIMITED ((IGO)) Qtr Report

-LIONTOWN RESOURCES LIMITED ((LTR)) Qtrly update

-MINERAL RESOURCES LIMITED ((MIN)) Qtrly update

-NICKEL INDUSTRIES LIMITED ((NIC)) earnings report

-PILBARA MINERALS LIMITED ((PLS)) Qtr Report

-RIO TINTO LIMITED ((RIO)) earnings report

-SANDFIRE RESOURCES LIMITED ((SFR)) Qtrly update

-SMARTPAY HOLDINGS LIMITED ((SMP)) earnings report

-VULCAN ENERGY RESOURCES LIMITED ((VUL)) Qtr report

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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