US stocks gained following better-than-expected data including Retail Sales, Philly Fed and Jobless Claims - Newsquawk Asia-Pac Market Open

• US stocks traded higher with all major indices in the green and both the S&P 500 and Nasdaq 100 printed fresh record highs, while the small cap Russell 2000 outperformed for the second consecutive day with sentiment underpinned by encouraging data releases including better-than-expected US Retail Sales and Retail Control, although analysts highlighted the growth was not as strong in real terms. Furthermore, the Philly Fed headline index topped the most optimistic of analyst estimates and Initial Jobless Claims surprisingly declined, while sectors were almost exclusively positive on the day, led by Technology, Financials, and Industrials, with only Healthcare in the red which was weighed on by disappointing Elevance Health (-13.5%) earnings.
• USD reversed the selling seen the prior day which had been triggered by reports of a possible Trump firing of Fed Chair Powell, while the latest US data releases also facilitated the recovery including stronger-than-expected Retail Sales and Philly Fed Business Index, while Initial Jobless Claims declined.
• Looking ahead, highlights include Japanese CPI, Malaysian GDP and Trade Data, Comments from Fed's Waller, Supply from Australia.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include Japanese CPI, Malaysian GDP and Trade Data, Comments from Fed's Waller, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks traded higher with all major indices in the green and both the S&P 500 and Nasdaq 100 printed fresh record highs, while the small cap Russell 2000 outperformed for the second consecutive day with sentiment underpinned by encouraging data releases including better-than-expected US Retail Sales and Retail Control, although analysts highlighted the growth was not as strong in real terms. Furthermore, the Philly Fed headline index topped the most optimistic of analyst estimates and Initial Jobless Claims surprisingly declined, while sectors were almost exclusively positive on the day, led by Technology, Financials, and Industrials, with only Healthcare in the red which was weighed on by disappointing Elevance Health (-13.5%) earnings.
• SPX +0.54% at 6,297, NDX +0.74% at 23,078, DJI +0.52% at 44,484, RUT +1.20% at 2,254.
• Click here for a detailed summary.

TARIFFS/TRADE

• White House Trade Advisor Navarro told Fox that non-tariff barriers remain a major challenge for the EU and that EU VAT is also a subsidy, while he would like to see VAT relief and lower tariffs.
• White House said the EU continues to be very eager in trade negotiations.
• EU is reportedly preparing a list of potential tariffs on US services alongside export controls, in the scenario that trade talks with the US fail, according to FT citing sources.
• US is set to impose a 93.5% tariff on battery material from China.
• China's Foreign Ministry said the responsibility for fentanyl lies with the US itself and tariffs seriously impacted China's dialogue with the US on drug control.
• US Treasury Secretary Bessent is to pay a visit to Japanese PM Ishiba on Friday, according to the Japanese government.
• Thai adviser said Thailand is to offer no duties on 90% of US goods in an attempt to avert a 36% Trump tariff, according to Bloomberg.
• Brazilian President Lula said they are going to regulate and tax US digital companies, while he said the best thing for him and Trump is to sit down and negotiate, as well as noted he doesn’t see a crisis yet regarding US tariffs.

NOTABLE HEADLINES

• Fed's Kugler (voter) said it is appropriate to keep policy steady "for some time" given low unemployment and increasing pressure from tariffs. Kugler said inflation remains above target and the labour market is stable and resilient, while a restrictive stance is important currently to keep inflation expectations anchored.
• Fed's Bostic (2027 voter) said economic outlook remains highly uncertain and the economy's tariff adjustment could take months. Bostic's view is that questions (re. if the economy can absorb tariffs) are blocking the path to further cuts for now, especially given lasting scars from the searing inflation the economy weathered in the early 2020s, while he noted cuts "might be difficult in the short run". Furthermore, with the Fed facing intense pressure from President Trump and his allies to cut rates, Bostic said the central bank must be ready to make unpopular decisions when they are in the economy's best long-run interest.
• Fed's Daly (2027 voter) said they still have some work to do on inflation, while they have solid growth and a solid labour market but what is bothersome still is they haven't achieved price stability. Daly sees both the economy and policy in a good place and noted that rates have been restrictive for a significant number of years. Daly stated that they have not seen any evidence that tariffs are spilling over more broadly into persistent inflation and might have a more muted impact from tariffs than they thought. She also said don't want to lower rates pre-emptively, and two rate cuts this year is a 'reasonable' outlook.
• US President Trump posted "'Too Late' Great numbers just out. LOWER THE RATE!!!".
• Kevin Warsh said he sees AI trends which could reduce costs in the long run, while he said it is a golden opportunity and is concerned the Fed cannot see that. Warsh said the last thing they need is continuity and don't think they need continuity when the central bank does not have credibility. Furthermore, he said they need a regime change at the Fed and the first rate cut would be a first step towards regime change.
• US House passed the crypto market structure legislation, sending the measure to the Senate.

DATA RECAP

• US Retail Sales MM (Jun) 0.6% vs. Exp. 0.1% (Prev. -0.9%)
• US Retail Control (Jun) 0.5% vs. Exp. 0.3% (Prev. 0.4%, Rev. 0.2%)
• US Export Prices MM (Jun) 0.5% vs Exp. 0.0% (Prev. -0.9%, Rev. -0.6%)
• US Import Prices MM (Jun) 0.1% vs. Exp. 0.3% (prev. 0.0%, Rev. -0.4%)
• US Philly Fed Business Index (Jul) 15.9 vs. Exp. -1.0 (Prev. -4.0)
• US Philly Fed Prices Paid (Jul) 58.8 (Prev. 41.4)
• US Philly Fed New Orders (Jul) 18.4 (Prev. 2.3)
• US Philly Fed Employment (Jul) 10.3 (Prev. -9.8)
• US Initial Jobless Claims 221k vs. Exp. 235k (Prev. 227k, Rev. 228k)
• US Continued Jobless Claims w/e 1.956M vs. Exp. 1.965M (Prev. 1.965M, Rev. 1.954M)

FX

• USD reversed the selling seen the prior day which had been triggered by reports of a possible Trump firing of Fed Chair Powell, while the latest US data releases also facilitated the recovery including stronger-than-expected Retail Sales and Philly Fed Business Index, while Initial Jobless Claims declined.
• EUR weakened against the dollar to beneath the 1.1600 handle as trade uncertainty lingers with White House Trade Advisor Navarro noting that non-tariff barriers remain a major challenge for the EU and that EU VAT is also a subsidy, while the bloc is reportedly preparing a list of potential tariffs on US services alongside export controls in the event that trade talks with the US fail.
• GBP was flat on the day in the aftermath of mixed UK jobs and unemployment figures, as well as relatively inline average earnings data.
• JPY resumed its recent softening trend but with USD/JPY off today's best levels after briefly testing the 149.00 level to the upside.

FIXED INCOME

• T-notes were mildly lower on a choppy session and the curve flattened in an unwinding of the Trump vs Powell trade with attention on US data.

COMMODITIES

• Oil prices were firmer and rallied into settlement with prices largely supported by further drone strikes on Iraqi oil fields.
• A march attack reportedly targeted the Taouki oil field in the Kurdistan Region of Iraq, according to Al Arabiya.
• Iraqi government decided that Iraq's Kurdistan is to immediately deliver 230k bpd of oil to SOMO and Iraq allocates 50k bpd of crude for local use in the region, while KRG is to cover production and transport costs.

GEOPOLITICAL

MIDDLE EAST

• Qatar, Egypt, and the US presented Israel and Hamas with an updated Gaza ceasefire and hostage deal proposal on Wednesday, according to Axios.
• US State Department official said all parties must step back and engage in dialogue for a lasting ceasefire and there is no change in US policy towards Syria.
• New US assessment found that US strikes destroyed just one Iranian nuclear site and strikes degraded two other sites, according to NBC. One of the three sites was mostly destroyed, setting work there back significantly but two others were not as badly damaged and may have been degraded only to a point where nuclear enrichment could resume in the next several months if Iran wants it to.

RUSSIA-UKRAINE

• Russia's Deputy Chairman of the Security Council Medvedev said Russia should respond to the West to the full extent, with preventative strikes if needed, according to Tass.
• Russian Foreign Ministry spokesperson said regarding US President Trump's comments that it is a signal to continue slaughter in Ukraine and in such circumstances, the need to fulfil the aims of operations in Ukraine only increases.

ASIA-PAC

NOTABLE HEADLINES

• Japan and the EU are said to plan 2+2 economic talks and are to explore joint rare-earths procurement, while they will consider public-private partnerships to reduce reliance on China in areas like rare earth procurement.

EU/UK

NOTABLE HEADLINES

• BoE reportedly asked some lenders to test for resilience to US dollar shocks, while testing follows similar moves by the ECB and scenarios include the US Dollar swap market drying up.
• ECB's Nagel said if tariffs materialise in August, a recession in Germany in 2025 cannot be ruled out, while he sees that GDP growth of 0.7% in 2026 would possibly be eaten up by tariffs now on the table.
• ECB's Villeroy said French budget plan still needs to be clarified and savings detailed, while the general direction of the budget plan moves in the right direction towards bringing debt under control.
• German Chancellor Merz said it is unacceptable to finance the EU budget through EU-wide corporate tax.

DATA RECAP

• UK Employment Change (May) 134k vs. Exp. 46k (Prev. 89k)
• UK HMRC Payrolls Change (Jun) -41k (Prev. -109k, Rev. -25k)
• UK ILO Unemployment Rate (May) 4.7% vs. Exp. 4.6% (Prev. 4.6%)
• UK Avg Earnings (Ex-Bonus)(May) 5.0% vs. Exp. 4.9% (Prev. 5.2%, Rev. 5.3%)
• UK Avg Wk Earnings 3M YY (May) 5.0% vs. Exp. 5.0% (Prev. 5.3%, Rev. 5.4%)
• EU HICP Final YY (Jun) 2.0% vs. Exp. 2.0% (Prev. 2.0%)