Stocks Climb Before the Open on Chip Tariff Relief and Ukraine Truce Hopes

September S&P 500 E-Mini futures (ESU25) are up +0.81%, and September Nasdaq 100 E-Mini futures (NQU25) are up +0.78% this morning as U.S. President Donald Trump’s 100% tariff threat on chip exporters included exemptions for firms investing in the U.S., while hopes for a truce in Russia’s war with Ukraine further boosted sentiment.

President Trump announced late Wednesday a roughly 100% tariff on semiconductors entering the U.S., but noted that tech firms like Apple investing in domestic manufacturing would be exempt from the duties. Mr. Trump said that “if you’re building in the United States of America, there’s no charge.” Also aiding sentiment, the Kremlin confirmed that Presidents Donald Trump and Vladimir Putin are set to hold summit talks in the coming days, fueling hopes for a potential truce in Russia’s war with Ukraine. Increasing speculation that the Federal Reserve will resume rate cuts in September is also buoying sentiment as U.S. reciprocal tariffs took effect against dozens of countries a minute past midnight Washington time on Thursday. In a social-media post, Mr. Trump said, “Billions of dollars in tariffs are now flowing into the United States of America.”

Investors now look ahead to U.S. jobless claims data for further insight into the health of the labor market.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed higher. Apple (AAPL) climbed over +5% and was the top percentage gainer on the Dow following reports that the tech titan is set to announce a fresh $100 billion investment in the U.S. in an effort to avoid steep tariffs on iPhones. Also, Arista Networks (ANET) surged more than +17% and was the top percentage gainer on the S&P 500 after the company reported stronger-than-expected Q2 results and issued solid Q3 revenue guidance. In addition, Shopify (SHOP) soared over +21% and was the top percentage gainer on the Nasdaq 100 after the company posted upbeat Q2 results. On the bearish side, Super Micro Computer (SMCI) plummeted more than -18% and was the top percentage loser on the S&P 500 after the AI server maker reported downbeat FQ4 results and provided disappointing FQ1 guidance.

“There are a lot of narratives to keep track of in today’s investing environment, but earnings remain the main catalyst for stocks. While pullbacks are possible — particularly due to macro-related influences and poor seasonality trends — those pullbacks will likely prove to be buying opportunities,” said Bret Kenwell at eToro.

Minneapolis Fed President Neel Kashkari said on Wednesday that a slowing of the U.S. economy could warrant an interest rate cut in the near term, and he still sees two cuts by the end of the year. Also, Fed Governor Lisa Cook described the July jobs report as “concerning” and suggested it may mark a turning point for the U.S. economy. “These revisions are somewhat typical of turning points,” Cook said. In addition, San Francisco Fed President Mary Daly said that policymakers will likely need to adjust interest rates in the coming months to prevent further labor market weakness.

Meanwhile, U.S. rate futures have priced in a 93.2% chance of a 25 basis point rate cut and a 6.8% chance of no rate change at September’s monetary policy meeting.

Today, investors will focus on U.S. Initial Jobless Claims data, which is set to be released in a couple of hours. Economists expect this figure to be 221K, compared to last week’s number of 218K.

U.S. Unit Labor Costs and Nonfarm Productivity preliminary data will also be closely watched today. Economists forecast Q2 Unit Labor Costs to be +1.6% q/q and Nonfarm Productivity to be +1.9% q/q, compared to the first-quarter numbers of +6.6% q/q and -1.5% q/q, respectively.

U.S. Wholesale Inventories data will be released today. Economists expect the final June figure to be +0.2% m/m, compared to -0.3% m/m in May.

U.S. Consumer Credit data will be released today as well. Economists expect this figure to be $7.40 billion in June, compared to the previous figure of $5.10 billion.

In addition, market participants will parse comments today from Atlanta Fed President Raphael Bostic.

On the earnings front, notable companies like Eli Lilly (LLY), Gilead (GILD), ConocoPhillips (COP), Constellation Energy (CEG), Vistra Energy (VST), and Monster Beverage (MNST) are set to report their quarterly figures today. According to Bloomberg Intelligence, S&P 500 companies are on track to post a 9.1% increase in Q2 profits from a year earlier, well above analysts’ forecast of 2.8%.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.215%, down -0.35%.

The Euro Stoxx 50 Index is up +1.14% this morning as upbeat earnings from some of the region’s biggest companies outweighed weak economic data. Sentiment was further boosted after the Kremlin confirmed that Presidents Donald Trump and Vladimir Putin are set to hold summit talks in the coming days, fueling hopes for a potential truce in Russia’s war with Ukraine. Insurance and travel stocks outperformed on Thursday. Data released on Thursday showed that German monthly industrial production saw its steepest decline in nearly a year in June, heightening concerns that Europe’s largest economy may have contracted more sharply last quarter than previously estimated. Separately, data showed that Germany's goods exports to the U.S. fell further in June, as the effects of tariffs on the country’s export-driven economy continued to take a toll. Meanwhile, investors await the Bank of England’s monetary policy decision due later in the session, with the central bank widely expected to cut its benchmark rate by 25 basis points to 4.00%. On the trade front, Switzerland’s president departed Washington without announcing any progress in reducing the 39% tariff imposed by President Trump on her country. In corporate news, Ap Moller-Maersk A/S (MAERB.C.DX) rose over +2% after the shipping group boosted its full-year profit guidance. Also, Allianz SE (ALV.D.DX) climbed more than +5% on solid quarterly results. In addition, Henkel (HEN3.D.DX) gained over +1% after the company posted better-than-expected Q2 results and raised the lower end of its adjusted EBIT margin forecast.

Germany’s Exports, Germany’s Imports, and Germany’s Industrial Production data were released today.

The German June Exports rose +0.8% m/m, stronger than expectations of +0.5% m/m.

The German June Imports rose +4.2% m/m, stronger than expectations of +1.0% m/m.

The German June Industrial Production fell -1.9% m/m, weaker than expectations of -0.4% m/m.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.16%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.65%.

China’s Shanghai Composite Index closed slightly higher today as upbeat trade data from the country helped extend the recent rally despite fresh U.S. tariff threats. Rare earth stocks gained ground on Thursday. Customs data released on Thursday showed that China’s export growth unexpectedly picked up pace in July, marking the fastest increase since April, indicating that U.S. tariffs haven’t slowed China’s export engine, even as trade with the U.S. has declined. The trade data reinforces investor confidence that China’s growth will hold up, supporting the Politburo’s decision last week to refrain from additional stimulus measures. Investors are also waiting for clarity on whether the tariff truce between Beijing and Washington will be extended ahead of the August 12th deadline. U.S. President Donald Trump said on Tuesday that he was “getting very close to a deal” with China to extend the truce. At the same time, Mr. Trump said on Wednesday that he may impose additional tariffs on Chinese goods, similar to the 25% levies placed on India over its purchases of Russian oil, depending on what happens. The U.S. president also said a tariff of around 100% would be imposed on semiconductor chips imported from countries that do not manufacture in the U.S. or plan to, though analysts noted the move would have only a limited impact on Chinese chipmakers and could even speed up domestic production. Investor attention is now on China’s inflation data, scheduled for release on Saturday, for further clues about domestic demand and the overall state of the economy.

The Chinese July Trade Balance stood at $98.24B, weaker than expectations of $105.20B.

The Chinese July Exports rose +7.2% y/y, stronger than expectations of +5.4% y/y.

The Chinese July Imports rose +4.1% y/y, stronger than expectations of -1.0% y/y.

Japan’s Nikkei 225 Stock Index closed higher today, tracking overnight gains on Wall Street. Utilities, financial, and technology stocks outperformed on Thursday. Preliminary data from the Cabinet Office released on Thursday showed that Japan’s leading economic indicators index, which gauges the economic outlook for a few months ahead based on data such as job offers and consumer sentiment, rose to a 3-month high in June. Meanwhile, a new divergence in interpretations of the U.S.-Japan trade deal emerged on Thursday, as Japan’s chief negotiator, Ryosei Akazawa, traveled to Washington to push for the implementation of a promise to reduce the car import tariff to 15%. Akazawa said earlier this week that “there will be no stacking” of new 15% tariffs on top of existing levies, but Japanese media reports said that Washington would not exempt Tokyo from an order imposing 15% across-the-board tariffs on top of existing duties. In other news, foreign investors bought a net 193 billion yen worth of Japanese stocks in the week ended August 2nd, marking the smallest weekly total in six weeks. In corporate news, Sony Group rose over +4% after the game and camera maker lifted its annual operating profit guidance. Also, Shiseido surged about +11% after the company reported a 21.3% increase in core operating profit for the first half of the year. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -4.77% to 25.15.

The Japanese June Leading Index stood at 106.1, stronger than expectations of 106.0.

Pre-Market U.S. Stock Movers

Apple (AAPL) rose over +3% in pre-market trading after announcing a $100 billion U.S. investment that could exempt it from President Trump’s threatened tariff on chip imports.

Duolingo (DUOL) soared more than +25% in pre-market trading after the language-learning app posted upbeat Q2 results and raised its full-year bookings guidance.

DraftKings (DKNG) climbed over +7% in pre-market trading after the online gaming company reported better-than-expected Q2 revenue.

Fortinet (FTNT) tumbled more than -20% in pre-market trading after the cybersecurity company issued weak Q3 revenue guidance.

Airbnb (ABNB) slid over -5% in pre-market trading after projecting slower growth for the second half of the year.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - August 7th

Eli Lilly (LLY), Gilead (GILD), ConocoPhillips (COP), Constellation Energy (CEG), Brookfield (BN), Parker-Hannifin (PH), Motorola (MSI), Vistra Energy (VST), Canadian Natural (CNQ), Monster Beverage (MNST), Flutter Entertainment (FLUT), Sempra Energy (SRE), Cheniere Energy (LNG), Becton Dickinson (BDX), Atlassian Corp Plc (TEAM), Block (XYZ), Datadog (DDOG), Wheaton Precious Metals (WPM), The Trade Desk (TTD), Take-Two (TTWO), Kenvue (KVUE), Consolidated Edison (ED), Martin Marietta Materials (MLM), Targa Resources (TRGP), Microchip (MCHP), Live Nation Entertainment (LYV), Sun Life Financial (SLF), Warner Bros Discovery (WBD), Restaurant Brands Int (QSR), Pinterest (PINS), Expedia (EXPE), Godaddy Inc (GDDY), BCE Inc (BCE), Pembina Pipeline (PBA), Insmed (INSM), Insulet (PODD), US Foods (USFD), Twilio (TWLO), Erie Indemnity (ERIE), Natera Inc (NTRA), Ralph Lauren (RL), Zimmer Biomet (ZBH), Gen Digital (GEN), Alliant Energy (LNT), Evergy (EVRG), Sharkninja (SN), Warner Music (WMG), Somnigroup International (SGI), YPF Sociedad Anonima (YPF), Nuscale Power (SMR), Nebius NV (NBIS), Hyatt (H), Solventum (SOLV), Maplebear (CART), Chime Financial (CHYM), Texas Roadhouse (TXRH), MP Materials (MP), Ascendis Pharma AS (ASND), Wynn Resorts (WYNN), Akamai (AKAM), Doximity (DOCS), Celsius (CELH), Viatris (VTRS), MACOM Tech (MTSI), Kratos Defense&Security (KTOS), ADS (WMS), EPAM Systems (EPAM), Open Text (OTEX), Nova (NVMI), Dropbox (DBX), Genpact (G), Globus Medical (GMED), Starwood Property (STWD), Stepstone (STEP), Elanco Animal Health (ELAN), UWM Holdings (UWMC), Millicom (TIGO), Karman Holdings (KRMN), Installed Building (IBP), Crocs (CROX), Post (POST), Main Street Capital (MAIN), Nexstar (NXST), D Wave Quantum (QBTS), Construction Partners (ROAD), Sezzle (SEZL), ESCO Technologies (ESE), B2Gold (BTG), Jfrog (FROG), Acushnet Holdings (GOLF), Victory Capital (VCTR), Americold Realty (COLD), SoundHound AI (SOUN), Onto Innovation (ONTO), IAMGold (IAG), Zai Lab (ZLAB), ACI Worldwide (ACIW), Adtalem Education (ATGE), Assured Guaranty (AGO), Maximus (MMS), Arcosa (ACA), Cytokinetics Inc (CYTK), Granite Construction (GVA), PTC Therapeutics (PTCT).