Morning Wrap (28.07.2025)

The main theme of today’s session is the preliminary trade agreement between the US and the European Union regarding tariffs.

The deal, though still a framework and requiring further details, includes several key elements: a permanent 15% ceiling on tariffs for EU goods imported into the United States, an EU commitment to purchase $750B worth of American energy (reducing reliance on Russian supplies), and an additional $600B of EU investment into the US economy.

Furthermore, the agreement includes a 0%-for-0% tariff system on a range of products, including all aircraft and parts, semiconductor equipment, certain chemicals, some generic drugs, some agricultural goods, natural resources, critical raw materials, and others.

The issue of tariffs on alcoholic beverages still requires negotiation.

Asian equity markets ended mixed: Japan’s Nikkei 225 fell by about 0.85%, while Hong Kong’s Hang Seng rose 0.48%; the Shanghai Composite was nearly flat.

Sentiment in the region was shaped by expectations of renewed US–China trade talks in Stockholm, with strong indications that the current tariff truce will be extended for another 90 days, boosting market sentiment, especially in China.

According to the National Bureau of Statistics, industrial profits in China fell 4.3% year-on-year in June, following a 9.1% drop in May.

Futures for European indices and the US S&P 500 point to solid gains of around 1% at the European cash session open, following the weekend trade agreement between the US and the EU.

Samsung Electronics signed a multiyear $16.5B chip manufacturing deal with Tesla, triggering a surge in its stock by as much as 3.5% during the day.

On the currency market, the US dollar opened higher, with the EUR/USD pair dropping towards 1.1740 after news of the EU-US trade agreement and the announcement of increased US energy imports and investment in Europe.

Risk currencies such as the British pound, AUD, and NZD remained weak against the USD; the Japanese yen and Swiss franc remained stable, with USD/JPY trading around 147.7 (just below a major technical resistance).

Investors’ attention this week remains focused on the upcoming Fed and Bank of Japan meetings, as well as Wednesday’s Australian inflation data, which could prove crucial for RBA policy outlook.

It’s also worth noting that earnings season enters its most important phase this week, with 37% of all S&P500 companies reporting results, including the Mag7 firms.

Precious metals are seeing little volatility at the start of today’s session.

The picture is slightly different in the energy market, where natural gas and WTI crude are up by 0.86% and 0.75%, respectively.