Morning wrap (01.09.2025)

An appeals court in the United States has ruled over the weekend that the majority of Donald Trump's tariffs are illegal, specifically those imposed on Canada, Mexico, China, and the broad reciprocal tariffs. According to the court, the International Emergency Economic Powers Act (IEEPA) does not grant the president the ability to unilaterally impose tariffs. Some analysts point out that these powers only allow the president to regulate imports, while tariffs are the domain of Congress.

The decision has been stayed until October 14 to allow for a new appeal. The case is expected to go to the Supreme Court, but the current odds favour the repeal of the most significant tariffs, leaving only those targeted at specific sectors. This could potentially offer relief to many companies and improve prospects for economic growth.

Gold closed on Friday at a record high of $3,452 per ounce and is currently seeing further gains, reaching $3,477 per ounce. The highest daily spot level was slightly below $3,500 per ounce.

The Nasdaq lost more than 1% on Friday, while the S&P 500 was down over 0.6%. The main sell-off occurred in technology stocks. Futures are continuing to decline this morning after an attempted rally. The US100 is down 0.2%, while the US500 has fallen 0.11%. The sell-off was partly motivated by the news that Alibaba will produce its own AI chips, aiming for independence from Nvidia. Alibaba shares lost more than 3% on Friday.

Asian indices are experiencing a sharp sell-off, though most of the declines have been contained. The JP225 is down 0.12%, while the CH50cash has fallen 0.88%. It is worth noting, however, that the Chinese stock market was one of the strongest in August. The aforementioned CH50cash contract gained nearly 10%, driven by technology companies.

The DE40 is falling this morning and remains below 24,000 points.

The EURUSD is trading around 1.1711, its highest level since August 25. Friday's PCE inflation data met expectations, suggesting the Federal Reserve is prepared to cut interest rates.

WTI crude oil is below $64 a barrel, slightly extending the declines from the end of last week.

China's official manufacturing PMI came in at 49.4, against an expectation of 49.5 and a previous level of 49.3. The services PMI rose to 50.3, in line with expectations.

The Caixin/S&P Global China manufacturing PMI, which focuses on smaller companies, rose to 50.5, exceeding expectations of 49.7 and the previous level of 49.5.

Japan's manufacturing PMI was 49.7, against an expectation of 49.9 and a previous level of 48.9.

Australia's manufacturing PMI rose to 53.0, exceeding expectations of 52.9 and the previous level of 51.3.

Increasing competition is forcing Tesla to cut prices in China for its Model 3 by 3.7%. The price is now approximately $36,000.

Bitcoin is trading at a low, slightly above $107,000.

Market in the US and Canada are closed today due to Labour Day