Morning Wrap (31.07.2025)

The indices on the U.S. stock market fully recovered yesterday from the losses triggered by the Fed’s press conference following its interest-rate decision. The driver of such a strong rebound was the very robust quarterly results of technology companies, above all Microsoft and Meta. The US100 and US500 indices ended the day at record highs.

BoJ left the short-term interest rate at 0.5 % and unanimously voted to maintain its current policy, while raising its core CPI inflation forecasts for fiscal years 2025–2027.

The Bank expects a gradual rise in inflation, supported by higher wages and moderate consumption. The BoJ remains cautious and signals that further hikes are possible only if economic and price data justify them.

The BoJ acknowledged that inflation will likely slow in the near term but expects it to accelerate further out. It pointed to rising inflation expectations but warned that trade tensions could undermine wage growth. Fiscal support in the U.S. and Europe may improve global demand. The base scenario assumes no major supply disruptions.

USDJPY fell below 148.65 after the BoJ decision and the inflation-forecast revision, but the pair later rebounded. Markets read the BoJ’s stance as a sign of slow normalisation rather than immediate tightening.

Trump unveiled a comprehensive trade deal with South Korea, including USD 350 bn in U.S. investment and USD 100 bn in LNG purchases. South-Korean exports to the U.S. will face a 15 % tariff, while U.S. exports will be tariff-free.

Commerce Secretary Lutnick confirmed new trade deals with Thailand and Cambodia. Details remain limited.

Japan’s June industrial production rose 1.7 % m/m (forecast -0.6 %), and retail sales grew 2.0 % y/y, beating expectations. The rebound in production and consumption supports the BoJ’s cautious optimism.

China’s July manufacturing PMI fell to 49.3, marking the fourth straight monthly decline. The services PMI came in at 50.1 – the lowest since November. Exports are losing momentum and domestic demand remains weak. Markets took the data as evidence of continued economic softness.

Australia’s June retail sales rose 1.2 % m/m (forecast +0.4 %), bolstering the narrative of economic recovery. Deputy Governor Hauser expressed optimism about consumer resilience and labour-market strength. Markets still expect an RBA rate cut in August.

Trump threatened India with 25 % tariffs and criticised its trade ties with Russia. He said a deal with Canada would be “very difficult” in light of its plans to recognise Palestine.

Goldman Sachs estimated that the new effective U.S. tariff rate on imports from Brazil is 30.8 %.

Visa reported Q3 revenue of USD 10.2 bn (forecast USD 9.87 bn) and EPS of USD 2.98 (forecast USD 2.85). Cross-border transaction volume rose 12 %, and total payment volume gained 8 % y/y. Net profit reached USD 5.3 bn, driven by strong consumption.

OpenAI’s annual revenue climbed to USD 12 bn, doubling in seven months. ChatGPT now has 700 mn weekly active users.