U.S. stocks extend gains to conclude first half of 2025
The Dow Jones Industrial Average rose 275.50 points, or 0.63 percent, to 44,094.77. The S&P 500 added 31.88 points, or 0.52 percent, to 6,204.95. The Nasdaq Composite Index increased 96.28 points, or 0.47 percent, to 20,369.73.
Nine of the 11 primary S&P 500 sectors ended higher, with technology and financials leading the advance by rising 0.98 percent and 0.86 percent, respectively. Consumer discretionary and energy lagged behind, falling 0.86 percent and 0.66 percent.
Monday's gains came after Canada announced it would withdraw its digital services tax, a move widely seen as an effort to smooth relations with the United States just days after U.S. President Donald Trump declared an end to all trade discussions with Ottawa. The tax, which was set to take effect Monday, would have targeted major tech firms such as Google, Meta, and Amazon.
Market participants are now looking ahead to the expiration of Trump's 90-day tariff pause next week. Also on Monday, U.S. Treasury Secretary Scott Bessent said some countries are "negotiating in good faith," though he warned that tariffs could return to previously announced levels if talks falter.
Meanwhile, attention turned to the U.S. Senate, where lawmakers began a marathon session to debate amendments to Trump's proposed 4.5 trillion U.S. dollars tax package. The Congressional Budget Office projected the bill could add 3.3 trillion dollars to the federal deficit over the next ten years.
Despite the looming tariff deadline and uncertainty surrounding the tax legislation, analysts believe strong equity fundamentals and broader market participation could sustain the recent rally. Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, noted that improving breadth supports the view that gains may continue into the second half of the year.
"While the market has had much to digest the first six months of 2025, resiliency has prevailed," Leslie Falconio, head of taxable fixed income strategy at UBS Financial Services, wrote last Friday. "However, we are not out of the woods just yet, as bouts of volatility and pockets of vulnerability are expected in the second half of the year."
Among individual movers, Apple surged 2.03 percent after Bloomberg reported the company may integrate AI technology from OpenAI or Anthropic into its Siri voice assistant. Broadcom rose 2.34 percent, while Nvidia, Microsoft, and Meta Platforms posted modest gains. On the downside, Amazon and Tesla fell nearly 2 percent, and Alphabet declined 0.49 percent.
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Japan Forward
36 minutes ago
- Japan Forward
Fred Fleitz on Iran, North Korea, and the Changing Security Landscape
As tensions rise in the Middle East and the Indo-Pacific, few voices are as well-positioned to offer insights as Fred Fleitz. A former CIA analyst and chief of staff to the Donald Trump administration's National Security Council, Fleitz now serves as vice chair of the America First Policy Institute's Center for American Security. During his recent visit to Tokyo, Fleitz sat down with JAPAN Forward to share his perspective on United States military strategy, Iran, North Korean provocations, and what Japan is doing to meet the demands of a shifting global order. In a wide-ranging conversation, Fleitz discussed the Trump administration's recent airstrikes on Iranian nuclear facilities, the intelligence coup behind Israel's precision strikes, and the fragility of US-China deterrence. He also touched on Japan's growing responsibilities as a security partner. Whether on diplomacy with Pyongyang or debates over defense spending in Tokyo, Fleitz laid out a blunt but pragmatic assessment of the challenges ahead. Following a decisive US airstrike on Iran's nuclear infrastructure and a subsequent ceasefire between Israel and Iran, Fleitz emphasized that options for progress through diplomacy had been exhausted before taking military action. "Trump gave Iran sixty days to negotiate in good faith. When that failed, he extended another two weeks. But Iran refused to abandon its uranium enrichment, which is clearly linked to weapons development," Fleitz said. The strike, he argued, showcased Trump's willingness to use precision and force when necessary, sending a message not only to Iran but also to adversaries like China and Russia. Fleitz maintained that the ultimate goal was a peaceful resolution, but he expressed skepticism about the Iranian regime's willingness to negotiate in good faith. "This government is unlikely to step down or reform without significant external pressure," he noted. However, he pointed out that diminished Iranian influence could revive stalled regional diplomacy, particularly to broaden the Abraham Accords and efforts to stabilize Gaza. Fred Fleitz, Vice Chairman of the America First Policy Institute (AFPI), responds to an interview with JAPAN Forward. July 27, Chiyoda Ward, Tokyo. Asked about Israel's earlier precision attacks on Iran, Fleitz credited the Mossad for an intelligence operation of exceptional sophistication. "Mossad had agents inside Iran feeding precise human intelligence. They recruited defectors from the Iranian government and military, even setting up drone bases inside Iran," he explained. For example: "They sent fake messages to lure generals to targeted locations. The Iranian regime didn't even know it was happening. That's both a triumph for Israeli intelligence and a massive failure for Iran." According to Fleitz, the most consequential moment came when Iran fired missiles directly at Israel. That act of retaliation allowed Israel to assess and expose Iran's underperforming air defenses. "They had Russian-made systems that either didn't work or weren't deployed in sufficient numbers. Israel figured out how to neutralize them. Without that attack, they [the Israelis] wouldn't have known," he said. Japan imports roughly 80% of its oil from the Middle East, and Fleitz acknowledged Tokyo's delicate position. While Japan neither endorsed nor condemned the US strike, it called for de-escalation. "Japan wants peace in the region, understandably. But Iran may not see Japan as a neutral player due to its close alliance with the US. Still, if there's any chance Japan can help defuse tensions, it should try," he said. On the question of whether Japan should dispatch its Self-Defense Forces to the Strait of Hormuz, Fleitz was cautious. "I don't think that will be necessary. China has advised Iran not to escalate, and Iran doesn't want to jeopardize that relationship. I don't believe the Strait will be closed," he added. Turning to North Korea, Fleitz warned that Pyongyang's arsenal is already formidable and growing. "They likely have 40 to 80 nuclear weapons and solid-fueled ICBMs that can launch quickly. That's a serious threat to US national security." He expressed hope that Trump would pursue another summit with Kim Jong Un. "Trump is personally invested in resolving the abductee issue, especially after his conversations with Prime Minister (Shinzo) Abe. That will absolutely be part of any renewed talks," Fleitz affirmed. However, he also noted new complications: "North Korea resumed missile testing after perceiving US weakness under (Joe) Biden. They've grown closer to Russia, receiving satellite tech and cheap energy in exchange for weapons and possibly troops in Ukraine." Fleitz was particularly concerned about battlefield experience being gained by North Korean soldiers in Ukraine. "They're dying in large numbers, but also learning modern warfare tactics, including drone warfare. That's dangerous for global stability," he said. In conversation with Fred Fleitz (right). June 27 (©JAPAN Forward) Asked whether Japan is doing enough to deter regional threats, Fleitz urged greater defense spending and capability development. "Trump supports alliances, but he expects allies to carry their weight. Japanese officials often respond that they want to spend more, but face backlogs in US weapons deliveries. That's a fair complaint," Fleitz noted. "Japan should both buy American and increase its own defense production." He dismissed concerns that US global commitments would weaken its posture in Asia. "There's a view that we can't support Ukraine and deter China at the same time. I don't buy that. A global power like the US has to do both," he insisted. Still, he acknowledged that many Trump advisors view China as the number one threat, and that resource prioritization debates will continue. Emphasizing that he is not an economist, Fleitz briefly addressed the Trump administration's reciprocal tariff policy. This is an issue of considerable concern in Japan. "Trump wants fair trade, and that includes eliminating structural imbalances and non-tariff barriers," Fleitz said. "Whatever the friction, he values the US-Japan relationship deeply. This is a minor dispute between friends." Fleitz concluded by reaffirming Trump's hard stance on Iran's nuclear ambitions. "The Joint Comprehensive Plan of Action was the worst deal ever. It allowed enrichment and had weak verification. Under Trump, any new deal would prohibit both uranium enrichment and plutonium reprocessing. No exceptions." Author: Daniel Manning
Globe and Mail
41 minutes ago
- Globe and Mail
Global markets' 90-day tariff pause rollercoaster nears an uncertain end
The deadline U.S. President Donald Trump set for major trading partners to strike deals with Washington or face hefty tariffs expires next week, bringing to a close 90 days of volatility but leaving global investors in the dark over what will happen next. Mr. Trump's propensity to issue a threat, or impose a new tariff, only to reverse course shortly afterwards has led to turmoil over the past three months. Investors, however, have now become somewhat inured to this sort of policymaking on the fly. And, as a result, there is little evidence at this point that many are preparing for fireworks on July 9. Instead, most expect some kind of delay, pause or compromise. What that will look like, however, is anyone's guess. Here is a snapshot of where major markets are now, relative to where they were when Mr. Trump dropped his initial tariffs bombshell on April 2: Global stock markets have staged a strong recovery following the intense volatility triggered by Mr. Trump's tariff announcement. The MSCI World index, which fell 10 per cent between April 2 and April 9, the day Mr. Trump paused the tariffs, has hit successive record highs and gained over 11 per cent since the original 'Liberation Day' announcement. Global equities got another boost in May, when the U.S. and China reached a temporary truce, pausing many tariffs for another 90 days. Geopolitical tensions, including Israel's recent strikes on Iran and Washington's subsequent bombing of Iranian nuclear sites, briefly reined in sentiment but have not derailed the broader rally. The S&P 500, which had lagged other major equity markets earlier in the year, has closed those gaps, gaining over 10 per cent since April 2, and is neck and neck with the MSCI all-country index, which excludes the United States . There's an important caveat, however. The S&P has only hit record highs in dollar terms. The weakness in the U.S. currency has eroded the returns for overseas investors. In euro or Swiss franc terms, for example, the index is still about 10 per cent below February's record high, while in pounds, it's 7 per cent below the sterling-denominated peak. The U.S. dollar, widely regarded as the world's most powerful and stable currency, has suffered a knock to its reputation from Mr. Trump's tariffs and the subsequent 90-day pause. The dollar index, which reflects the U.S. currency's performance against a basket of six others including the euro and the Japanese yen, suffered its worst first half of the year since 1973, declining by approximately 11 per cent. It has fallen by 6.6 per cent since April 2 alone. Against the currencies of some of the United States' biggest trading partners, the decline has been even more marked. It has lost some 8 per cent against the euro and the Mexican peso since then and 5 per cent against the Canadian dollar. Vincent Mortier, the CIO of Europe's largest asset manager Amundi, said the euro has plenty more room to run, especially as U.S. debt worries are also driving the dollar down. 'I won't be surprised if by the end of next year we start to revisit the $1.30 level,' he said, highlighting that at its 2008 peak, the euro got as high as $1.60. European shares have more than recovered losses suffered since Trump's 'Liberation Day'. But strength in the euro and anxiety over tariffs have kept them below March's record highs. Large exporting sectors such as pharma and autos, which make up around one-third of EU exports to the United States, have rebounded too, but have been more volatile. Brussels is reportedly open to a U.S. deal that would apply a universal 10-per-cent tariff on many of its exports, something several investors would view favourably should it be confirmed. Citi said markets risk being caught offside if tariffs are reimposed at 20 per cent or reach 50 per cent. 'Trump is truly unpredictable, but if it's really around 10 per cent, I think the markets will react very well,' said Carlo Franchini, head of institutional clients at Banca Ifigest. The impact of the trade talks extends beyond Europe, however, with automakers in Japan also being watched. Citi's base case is for a sustained 25-per-cent tariff, while a surprise cut to 10 per cent could unlock a 50-per-cent upside for Japanese auto stocks. Gold has featured as the hedge of choice against an array of risks, from tariff-induced inflation, to geopolitical risk and a shift away from the U.S. dollar. The price has hit record after record, rising 26 per cent so far this year to around US$3,330 an ounce. Gold has eclipsed bitcoin , which has gained about 14 per cent year to date, and even Nvidia , the maker of chips that power AI capabilities, whose shares went parabolic last year and have risen about 18 per cent this year. Since April 2, gold's ascent has gathered pace, fuelled by purchases from central banks, fund managers and even individuals. A survey by UBS Asset Management this week showed 39 per cent of respondents said they planned to increase their gold holdings, compared with 15% last year. The independence of the Federal Reserve - whose chair, Jerome Powell, Mr. Trump has berated repeatedly for not cutting interest rates fast enough - is one of the key concerns cited in the survey. Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.
Toronto Star
an hour ago
- Toronto Star
What if killing Canada's digital tax is just the beginning for Donald Trump?
Prime Minister Mark Carney, left, listens to U.S. President Donald Trump while posing for a photograph during the G7 Summit in Kananaskis, Alta. on June 16, 2025. DARRYL DYCK THE CANADIAN PRESS Flash forward to last week. There was Trump, posting on social media that Canada's incoming Digital Services Tax — a policy that would force American tech giants and other firms, including Canadian ones, to pay up — was nothing short of a 'blatant attack' on the United States. Trump declared he had cut off all negotiations to resolve the trade war that started earlier this year with his wave of tariffs on Canadian goods. In other words, Canada's most important commercial and military partner, the destination for 76 per cent of all exports last year, was willing to ditch talks and dictate terms that could jeopardize thousands of jobs and hundreds of billions of dollars in economic activity. All over a domestic policy the Americans didn't like. Barely 48 hours later, shortly before midnight on a Sunday, the government announced the tax was dead. Not only would Canada not implement the policy as planned, it would repeal the 2024 law that created it. Is this Trump using economic pressure to force Canada's hand? 'It is exactly that,' said Lawrence Herman, a veteran trade lawyer and special counsel with the firm, Cassidy Levy Kent. 'It's an example of, on a particular issue, how much pressure can be brought to bear to force Canada to abandon not only a policy, but a law that has been in force for 18 months.' In Herman's view, the decision looks like a 'significant retreat' by the government, which shows 'how dependent we are on a reasonable relationship' with Canada's largest trading partner. Other policies that Trump has complained about, such as the supply management system for dairy and poultry, could be next, he said. Pete Hoekstra, the U.S. ambassador to Canada, told the CBC this week that he has a 'strong belief' Canada could water down that system by changing a law designed to protect it if that becomes part of a new trade deal. 'It's not a particularly good start to this so-called new economic and security relationship,' Herman said. He was referring to Carney's stated goal of talks that are now continuing under an agreement struck at the Group of 7 summit in the Alberta Rockies last month to strive for a deal to redefine the relationship by July 21. Others have been harsher in their judgment. Lloyd Axworthy, a former Liberal foreign affairs minister, posted online that Carney was acquiescing to Trump in a way that contradicts his 'elbows up' mantra on the campaign trail. 'Forget any dreams of a more sovereign, self-directed Canada. We're doubling down on the corporate cosiness and U.S. dependency that's defined our last half-century,' he wrote on Substack. Axworthy did not respond to an interview request Thursday. For Jean Charest, a former Quebec premier who sits on the government's Canada-U.S. advisory council, the situation illustrates the 'chaos' of dealing with Trump, whose administration is grappling with trade talks and tariffs threats against most countries on the planet. This meant that Carney's government was operating 'in a world of very bad choices,' Charest said. Deciding to scrap the Digital Services Tax, in that context, was 'certainly a legitimate choice,' he said. 'We are not in an ordinary world of negotiations,' Charest added. 'It would be nice to think, 'You give, I give ... we compromise.' It doesn't work that way with Donald Trump, and we're making our way through this by trying to protect essentially what's the most important for us in the short term, and that's a negotiation that has some legs.' Charest noted that there was opposition inside Canada to the Digital Services Tax, which would have applied back to 2022 with a three per cent tax on Canadian revenues from digital services companies with more than $1.1 billion in global earnings and $20 million inside Canada. The U.S. also pushed back against the policy when Joe Biden was in power. David Pierce, vice-president of government relations with the Canadian Chamber of Commerce, said his business lobby group felt the Digital Services Tax should be paused. He also said it would have been wrong to proceed with it after the U.S. dropped a controversial provision from Trump's major budget bill last week: the so-called 'revenge tax' that would have hit the U.S. assets of foreign businesses and individuals. That decision came as the G7 agreed to exempt American firms from a co-ordinated effort to ensure corporations pay a minimum tax, which was 'absolutely a win' for the U.S. Even so, Pierce said Canada likely had no choice but to drop the policy, given Trump's exploitation of Canada's 'weakness' — its major economic reliance on trade with the U.S. 'We just hope that this now paves the way for a good renewed deal,' said Pierce. The ultimate goal of the federal government in that deal, at least publicly, has been to return to the terms of the Canada-United States-Mexico Agreement (CUSMA), which Trump signed in 2018 during his first term, after disparaging North American free trade as unfair to his country. That would mean lifting the rounds of tariffs Trump has imposed since the winter, with import duties tied to concerns about drugs and migration over the border, and others that Trump slapped on Canadian autos, steel and aluminum in a bid to promote those sectors in the U.S. Canada has responded with countertariffs on its own that the government says hit more than $80 billion worth of American imports to Canada. Canada's lead trade negotiator with the Trump administration, Ambassador Kirsten Hillman, was not available for an interview this week, the embassy in Washington told the Star. Charest, however, said he believes it is possible that Canada could accept some level of tariffs in a July 21 deal, so long as they have no material effect. Such 'zero-effect' tariffs could only kick in at levels of trade that Canada doesn't or likely won't achieve, for example.
