Markets caught between earnings optimism, tariff fears
Stock markets largely rose on Monday, as traders focused on upbeat US corporate news, but President Donald Trump's August 1 deadline for ramped-up tariffs still weighed on European indices. New York extended its positive trajectory from the previous week, which had also pulled Asia higher.
In Europe, London and Frankfurt rose, but Paris sank. 'As we start a new week, the focus is once again on tariffs and earnings reports,' said Kathleen Brooks, research director at trading group XTB.
Investors in US equities have been encouraged by forecast-beating results from major corporations, against only a modest uptick in inflation that suggested Trump's tariffs impact was not yet a worry.
But analysts warned the picture could change if Trump made good on his threat to slap higher tariffs on major US trading partners the European Union, Canada and Mexico.
Brooks and others stressed 'the clock is ticking' towards August 1, when a bruising US-EU trade war could be unleashed.
Brussels has readied reprisals against a range of US imports—including on Boeing planes and bourbon—should no breakthrough come in its negotiations with Washington.
Trump has threatened 30-percent tariffs on EU goods, which would rise further if Brussels retaliated. 'The upcoming US tariff deadline, which is due to kick in a week this Friday, continues to cast a long shadow, particularly across the EU,' said David Morrison, senior market analyst at Trade Nation.
US Commerce Secretary Howard Lutnick told CBS News over the weekend he was 'confident' a trade deal would be reached with the EU. But Jochen Stanzl, chief market analyst at CMC Markets, said that any agreement would likely be 'only a framework deal... requiring further negotiations on the details'.
'Realistically, there is a high probability that uncertainty will persist beyond August 1,' he said.
That uncertainty will be part of the European Central Bank's calculus as it meets this week. Expectations are for it to hold eurozone interest rates steady, pausing a long cycle of easing. Asia's equities advance was led by Hong Kong and came after strong earnings from Taiwanese chip giant TSMC and news that US titan Nvidia will be allowed to export key semiconductors to China.
The yen strengthened against the dollar after Japanese Prime Minister Shigeru Ishiba vowed to stay on even after his ruling coalition lost its majority in the upper house in elections on Sunday.
Ishiba, too, is struggling to reach a trade deal with Trump, who has threatened tariffs of 25 percent on goods from Japan.
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Al Jazeera
4 hours ago
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Qatar Tribune
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Donald Trump, Powell clash over renovation costs during tense Fed visit
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The Fed chair, after looking at a paper presented to him by Trump, said the president was including the cost of renovating a separate Fed building, known as the Martin building, which was finished five years visit represented a significant ratcheting up of the president's pressure on Powell to lower borrowing costs, which Trump says would accelerate economic growth and reduce the government's borrowing costs. Presidents rarely visit the Fed's offices, though they are just a few blocks from the White House, an example of the central bank's independence from day-to-day politics. 'We have to get the interest rates down,' Trump said later after a short tour, addressing the cameras this time without Powell. 'People are pretty much unable to buy houses.' Trump is likely to be disappointed next week, however, when Fed officials will meet to decide its next steps on interest rates. Powell and other officials have signaled they will likely keep their key rate unchanged at about 4.3%. 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Qatar Tribune
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US universities still a valuable investment for Chinese families
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The University of New Mexico, a public school specialising in STEM and health-related disciplines, has 89 Chinese students on campus and expects 20 more this autumn, putting the total higher than at the same time last year or in 2023, according to campus communications director Steven Carr. The university welcomed 21 new Chinese students last autumn, and 16 at the start of the 2023 academic nationals appreciate that the school has affordable tuition; offers scholarships for undergraduates and graduate students; and features hands-on learning opportunities in graduate programmes, Carr said. He said the campus can sometimes offer 'resources tailored to international students'. US Secretary of State Marco Rubio said in May that the United States would start 'aggressively' revoking visas issued to Chinese students and would 'enhance scrutiny' of new applications. The administration of US President Donald Trump was on track after its first 100 days to deport about half a million people this year, according to the Migration Policy Institute think tank. Singapore has been tipped to attract more Chinese students due to perceived instability in the US. In June, Trump announced that the US would indeed allow Chinese students into American universities, as part of a wider deal with China. However, many students and their parents were already on high alert over reports of students being denied visas, being detained at immigration checkpoints, or being shown hostility in America amid bilateral spats over trade and competing geopolitical ambitions. A pivotal moment came in May, when the Department of Homeland Security took steps to restrict the entry of new international students and considered revoking existing visas for current Harvard students, citing national security. But a federal judge blocked the government's move to bar foreign students and scholars from entering the US to study or work at Harvard, and the Ivy League school made that clear on its website. The University of California, San Francisco, admitted eight students from abroad for the upcoming academic year to its nationally ranked pharmacy graduate school, and five were Chinese nationals. One more was admitted from China but could not get a US visa. Last year, just four out of the School of Pharmacy's 127 students were from other countries. Applications from China, a perennial chief source of applicants, have shown no sign of slowing, said the school's admissions director, Joel Gonzalez. 'For the most part … when you look at the number of international students, probably the majority of them are going to be from China,' Gonzales said at his office in a tower of classrooms and university-run medical wards up the hill from San Francisco's Golden Gate Park and a city bus ride from Chinatown. Reasons for their applications 'could be the diversity of San Francisco versus somewhere in the [US] Midwest that might not be as inviting to a student in China', he said. 'And we're the top-ranked programme in California, so I can't help but think that those variables come into play.'It was another well-ranked programme, Human Computer Interaction, that drew Zhou Yubo to the University of Michigan for his graduate studies in August. Now he is just waiting to see whether he gets the necessary student visa, having already waited more than six weeks. The 22-year-old, with a tech-related undergraduate degree and two previous stays in the US, said he believed the campus in Ann Arbor would be 'a good place to study hard', due to what he sees as a lack of entertainment options compared with other university towns. Personal careers are now more important to US-bound Chinese students than visa issues or geopolitical pressures, said Perry Link, a comparative literature-Chinese professor at the University of California, Riverside. 'The graduate students, who are mostly in STEM fields, are interested in joining the international quest to advance scientific learning in universities or companies in the US,' Link said. 'Undergraduates are usually full-tuition-paying students from wealthy or fairly wealthy backgrounds in China,' he said. 'A lot of them study business or accounting and are looking for careers in the US or in family-affiliated firms back in China. They like to position themselves to do well in both systems – Chinese and American.' Another Ivy League school, Cornell University, has similarly found little change this year from last, despite some Chinese students having a little trouble getting visas, said Wendy Wolford, vice-provost for international affairs. Cornell lets students without visas start their studies at one of Cornell's three 'top' partner schools in other countries, she said. The California State University campus in the inland college town of Chico counts Chinese nationals as 3.5 per cent of the international student body, public relations director Andrew Staples said. The relatively small, crime-free city of 101,000 people is a selling point, he added. Students from second- and third-tier Chinese cities may go for the state school's relatively low tuition and living costs, compared with schools in bigger American urban areas, Staples said. 'Chico's setting as a university town offers an accessible and immersive American college experience that appeals to students and families alike,' he said.
