Daily Market Summary – Jul 1st

U.S. Fiscal Policy and Market Reactions

Global financial markets were significantly influenced by a series of high-impact developments, particularly surrounding U.S. fiscal and trade policy. President Trump's $3.3 trillion tax and spending bill passed the Senate, featuring sweeping tax cuts, reductions in clean energy subsidies, and increased military and border security funding. The bill, dubbed the "One Big Beautiful Bill," has sparked controversy for its potential to add trillions to the national debt and its impact on healthcare and renewable energy. Senate Republicans are struggling to secure final votes amid intraparty divisions, especially over Medicaid cuts and clean energy provisions. The bill’s passage has also intensified tensions between Trump and Elon Musk, with Trump threatening to cut subsidies to Musk’s companies, including Tesla and SpaceX, leading to a sharp decline in Tesla’s stock.

Federal Reserve and Inflation Concerns

Federal Reserve Chair Jerome Powell emphasized that the Fed would have cut interest rates in 2025 if not for the inflationary pressures caused by Trump’s tariffs. The tariffs have led to increased inflation forecasts, a weakened dollar, and a volatile bond market. Powell reiterated the Fed’s independence and its cautious approach, despite mounting political pressure. Financial markets responded with increased bets on a rate cut by September, and Treasury yields dropped to two-month lows. The dollar experienced its worst first-half performance since 1973, falling over 10% amid concerns about U.S. fiscal health and political instability.

Global Trade Negotiations and Tariff Deadlines

Trade tensions remained a central theme, with the July 9 deadline for the expiration of Trump’s 90-day tariff pause looming. Negotiators from the EU, Japan, South Korea, and other major U.S. trading partners are racing to finalize agreements to avoid steep tariff hikes. Canada scrapped its digital services tax in response to U.S. pressure, resuming trade talks with the U.S. The EU is pushing for immediate tariff relief in key sectors, while Japan faces pressure over auto imports. These negotiations are critical for global trade stability and investor sentiment.

Tech Giants Compete in AI

In the corporate sector, Meta Platforms made a bold move by launching Meta Superintelligence Labs, led by Alexandr Wang, to pursue artificial general intelligence (AGI). The initiative includes aggressive talent acquisition from rivals like OpenAI and Google, and a $14.3 billion deal with Scale AI. Meta’s stock hit a record high, reflecting investor optimism about its AI ambitions. Similarly, Elon Musk’s xAI secured $10 billion in funding to build a massive AI data center and expand its Grok platform, bringing its total capital raised to $17 billion. These developments underscore the intensifying race among tech giants to dominate the AI landscape.

Automation and AI in Logistics

Meanwhile, Amazon reached a milestone by deploying its one millionth robot, with 75% of global deliveries now robot-assisted. The company introduced a new AI model, DeepFleet, to improve robotic efficiency and announced plans for next-generation fulfillment centers. This automation push is expected to reduce workforce needs and reshape logistics operations. In a related move, Cloudflare launched a marketplace allowing publishers to charge AI bots for content scraping, potentially transforming how online content is monetized in the AI era.

Energy and Automotive Sector Disruptions

The energy and automotive sectors faced significant disruptions. Stellantis warned of potential factory closures due to EU CO2 emission fines, while Ford and GM reported strong Q2 sales but cautioned about future slowdowns due to tariffs. Tesla’s stock dropped sharply amid declining sales in Europe and China, political controversies, and fears over the expiration of EV tax credits. The renewable energy sector was rattled by the Senate’s proposed excise tax on wind and solar projects, though the tax was later removed. Plug Power shares surged after hydrogen tax credits were extended, while solar stocks remained volatile.

Banking and Financial Innovation

In banking and finance, Santander’s £2.6 billion acquisition of TSB from Sabadell will make it the third-largest bank in the UK by personal current account balances. UBS appointed Taylor Henricks as head of M&A in the Americas, signaling a strategic push in U.S. investment banking. Meanwhile, Circle applied for a U.S. national trust bank license, aiming to enhance regulatory compliance and expand its stablecoin services. Robinhood launched tokenized U.S. stock and ETF trading in the EU, marking a significant step in financial innovation and boosting its stock to an all-time high.

Sovereign Finance and Debt Management

The global economy also saw notable developments in sovereign finance and debt management. The Inter-American Development Bank announced initiatives to unlock $11 billion in climate finance, including Amazonia Bonds and disaster risk transfer programs. Wealthy nations launched the Debt Suspension Clause Alliance to allow developing countries to pause debt payments during crises. In Argentina, a U.S. court ordered the transfer of the government’s 51% stake in YPF to satisfy a $16 billion judgment, jeopardizing the country’s energy strategy and access to capital markets.

Asian Economic Indicators

In Asia, Japan’s manufacturing sector showed signs of recovery, with the Tankan survey indicating improved business sentiment despite U.S. tariff pressures. South Korea’s exports rose 4.3% in June, driven by tech demand, though shipments to the U.S. and China remained weak. China’s factory activity expanded modestly, but the property market continued to struggle, with resale home prices falling 0.75% in June. Two Chinese AI chip firms, Moore Threads and MetaX, filed for IPOs to raise $1.66 billion, reflecting China’s push for chip independence amid U.S. sanctions.

European Banking and Currency Strength

European markets were buoyed by strong bank performance, with the Stoxx 600 Banks Index rising 29% in the first half of 2025. Banco Santander became the most valuable lender in continental Europe, and Societe Generale surged 79% on a successful turnaround plan. The euro reached its highest level against the dollar since 2021, driven by expectations of ECB policy stability and a weakening dollar. Eurozone inflation hit the ECB’s 2% target, prompting cautious optimism about the region’s economic outlook.

Commodities Market Trends

In the commodities market, gold prices rose for a second consecutive day, trading near $3,310 an ounce, supported by a weaker dollar and expectations of Fed rate cuts. HSBC raised its gold price forecasts for 2025 and 2026, citing elevated risks and government debt. Oil prices fell due to expectations of increased OPEC+ output and concerns over economic slowdown from tariffs. Morgan Stanley forecasted Brent crude to drop to $60 per barrel by early 2026, citing ample supply and reduced geopolitical risk.

Corporate Earnings and Strategic Moves

Corporate earnings and strategic moves also shaped market sentiment. Oracle shares hit a record high after announcing multibillion-dollar cloud deals, with expectations of $30 billion in annual revenue by FY28. Boeing appointed Jay Malave as CFO amid efforts to recover from recent setbacks, and Bombardier secured a $1.7 billion aircraft order. Home Depot’s $4.3 billion acquisition of GMS aims to strengthen its Pro contractor business, while Grammarly acquired Superhuman to enhance its AI productivity suite.

Legal and Regulatory Developments

In the legal and regulatory arena, Apple failed to dismiss a U.S. antitrust lawsuit accusing it of monopolistic practices, potentially threatening its mobile hardware business. Standard Chartered faced a $2.7 billion lawsuit in Singapore over its alleged role in the 1MDB scandal. Meanwhile, the U.S. Postal Service reduced air transport costs by 43% after switching from FedEx to UPS, though operational issues remain.

Housing and Labor Market Signals

Finally, the housing and labor markets showed mixed signals. U.S. job openings rose to 7.8 million in May, defying expectations and indicating labor market resilience. However, economists anticipate a slowdown in June hiring. The U.S. housing market is cooling, with increased inventory and slower sales in the Sun Belt, while home prices remain elevated. Economists warn of potential impacts on consumer spending and GDP growth if housing investment and employment weaken further.