US stocks retreated ahead of Trump's tariff deadline and the NFP report - Newsquawk Asia-Pac Market Open

US stocks faded the initial gains seen which had been spurred by the stellar Microsoft (MSFT) and Meta (META) earnings results after-hours on Wednesday, with the major indices retreating as trade progressed and uncertainties on tariffs mounted heading into Trump's deadline. As such, the deals the US had made with trading partners will be implemented with tariffs set to start from 00:01 EDT and those without a deal will face the tariffs Trump threatened in his letters, while those without a deal or letter will face the April 2nd tariff rate. Furthermore, Trump agreed with Mexico to extend the current tariff rates by 90 days and had previously noted that Canada's backing of the statehood of Palestine makes it hard for the US to make a trade deal with them, but has since commented that it is not a dealbreaker.
USD was modestly firmer on Thursday, with JPY weakness supporting the move higher and as the latest set of US data largely pointed towards a hotter economy than anticipated, with headline and core PCE Y/Y, employment costs, and Chicago PMI topping expectations, while participants look ahead to the Trump tariff deadline and NFPs.
Looking ahead, highlights include Australian Manufacturing PMI, Japanese Unemployment Rate, Regional PMIs, Chinese Caixin Manufacturing PMI, Trump Tariff Deadline, Supply from Australia.

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LOOKING AHEAD

Highlights include Australian Manufacturing PMI, Japanese Unemployment Rate, Regional PMIs, Chinese Caixin Manufacturing PMI, Trump Tariff Deadline, Supply from Australia.
Click for the Newsquawk Week Ahead.

US TRADE

US stocks faded the initial gains seen which had been spurred by the stellar Microsoft (MSFT) and Meta (META) earnings results after-hours on Wednesday, with the major indices retreating as trade progressed and uncertainties on tariffs mounted heading into Trump's deadline. As such, the deals the US had made with trading partners will be implemented with tariffs set to start from 00:01 EDT and those without a deal will face the tariffs Trump threatened in his letters, while those without a deal or letter will face the April 2nd tariff rate. Furthermore, Trump agreed with Mexico to extend the current tariff rates by 90 days and had previously noted that Canada's backing of the statehood of Palestine makes it hard for the US to make a trade deal with them, but has since commented that it is not a dealbreaker.
SPX -0.37% at 6,340, NDX -0.55% at 23,218, DJI -0.74% at 44,131, RUT -0.93% at 2,212.
Click here for a detailed summary.

TARIFFS/TRADE

US President Trump agreed with Mexico on a 90-day extension for the same deal they had before with a 25% fentanyl tariff and 25% on cars, while there is a 50% tariff on steel, aluminium and copper. Trump added that Mexico has agreed to immediately terminate its non-tariff trade barriers and the US will be talking to Mexico over the next 90 days with the goal of signing a trade deal somewhere within the 90-day period of time, or longer.
Mexican President Sheinbaum said she had a very good phone call with US President Trump on tariffs and avoided an increase in tariffs announced for Friday. Sheinbaum said the agreement reached with Trump safeguards the USMCA, as well as noted that they have the best deal possible and that investing in Mexico is the best option. Furthermore, she said the deal they made does not imply further action on Mexico's part and puts the country in a good position, while she believes an accord with the US on security will be signed in the coming week.
Mexico’s Economy Minister said all of this [90-day deal with US] was achieved without a concession from Mexico and they are moving closer to the renewal of their trade deal with the US.
US Treasury Secretary Bessent said they pulled down a lot of the non-tariff trade barriers in South Korea and do not know what is going to happen with India with the trade team frustrated with India. Bessent added that China are tough negotiators, although they have the makings of a deal with China and pushed back on them quite a bit, while he will speak to President Trump about the August 12th deadline and he is confident it will be done, according to a CNBC interview.
White House Press Secretary said they are moving in the right direction with China and direct communication with counterparts continues.
White House said new reciprocal tariff rates take effect on Friday and that President Trump took action on Pharma on Thursday in which he sent letters to CEOs, with Eli Lilly (LLY) urged to take actions within 60 days and they will deploy a tool to protect Americans if there is a refusal. Furthermore, it stated countries that haven't heard from them will hear by executive order or letter on Thursday night regarding tariffs.
White House official told FBN that tariffs will snap back to April 2nd levels starting at 12:01am EDT on August 1st for countries without a framework agreement or for countries that have been assigned a tariff rate through a letter or announcement.
US tariff on EU wine and spirits to be 15% from August 1 until a deal on the sector is reached between the EU and the US.
Japan eyes a 15% rate for the US chip tariff, on par with EU, with Japan’s trade negotiator stating Japan should be able to secure a 15% rate for the new sectoral tariff the US is planning to impose on chips, according to Nikkei.
India is reportedly mulling options to appease US President Trump following a "shock" 25% tariff level, with India reportedly considering upping its natgas purchases from the US, and imports of communication equipment and gold.
Brazil VP Alckmin said US President Trump excluded around 45% of what they export to the US from 50% tariffs, while he added that 35.9% of total exports to the US will face the 50% tariff and around 20% fall under global rates.

NOTABLE HEADLINES

US President Trump said "Too late" Powell has done it again and that he is too late, too angry, too stupid and too political, to have the job of Fed Chair.
US President Trump posted a letter to 17 pharma companies and told pharma executives to extend the most favoured nation pricing to Medicaid.

DATA RECAP

US PCE Price Index MM (Jun) 0.3% vs. Exp. 0.3% (Prev. 0.1%, Rev. 0.2%); 0.2805% (prev. 0.1358%)
US Core PCE Price Index MM (Jun) 0.3% vs. Exp. 0.3% (Prev. 0.2%); 0.2563% (prev. 0.1788%)
US PCE Price Index YY (Jun) 2.6% vs. Exp. 2.5% (Prev. 2.3%, Rev. 2.4%)
US Core PCE Price Index YY (Jun) 2.8% vs. Exp. 2.7% (Prev. 2.7%, Rev. 2.8%)
US Personal Consumption Real MM (Jun) 0.1% (Prev. -0.3%, Rev. -0.2%)
US Consumption, Adjusted MM (Jun) 0.3% vs. Exp. 0.4% (Prev. -0.1%)
US Employment Costs (Q2) 0.9% vs. Exp. 0.8% (Prev. 0.9%)
US Employment Wages QQ (Q2) 1.0% (Prev. 0.8%)
US Employment Benefits QQ (Q2) 0.7% (Prev. 1.2%)
US Chicago PMI (Jul) 47.1 vs. Exp. 42.0 (Prev. 40.4)
US Initial Jobless Claims w/e 218.0k vs. Exp. 224.0k (Prev. 217.0k)
US Continued Jobless Claims w/e 1.946M vs. Exp. 1.955M (Prev. 1.955M, Rev. 1.946M)

FX

USD was modestly firmer on Thursday, with JPY weakness supporting the move higher and as the latest set of US data largely pointed towards a hotter economy than anticipated, with headline and core PCE Y/Y, employment costs, and Chicago PMI topping expectations, while participants look ahead to the Trump tariff deadline and NFPs.
EUR traded indecisively with little catalysts from the bloc and following somewhat mixed inflation data from Germany.
GBP retreated against the dollar and tested the 1.3200 level to the downside with a lack of pertinent drivers for the UK.
JPY was pressured amid the firmer buck and following comments from BoJ Governor Ueda in the post-meeting press conference who stated there is no large change to the central outlook that the growth pace will slow down and underlying inflation stalls.
SARB cut its Repo Rate by 25bps to 7.00%, as expected, with the decision unanimous.

FIXED INCOME

T-notes pared some of the post-Powell downside on month-end ahead of NFP and Trump's tariff deadline.

COMMODITIES

Oil prices trimmed recent gains driven by Trump's tariff threat on India over purchases of Russian crude, as escalatory updates on the matter take a breather.
Indian state refiners reportedly paused Russian oil purchases in the past week amid narrowing discounts and tariff threats from US President Trump, according to Reuters sources.

GEOPOLITICAL

MIDDLE EAST

Hamas cut off contact and is not ready to negotiate, according to Al Arabiya citing Israeli media sources.
Israeli PM Netanyahu discussed with White House Envoy Witkoff the possibility of moving from an incremental and partial Gaza deal to a comprehensive deal, according to an Israeli official cited by Axios.
Iran told European powers it may withdraw from the nuclear Non-Proliferation Treaty (NPT) if UN sanctions are reimposed, Western diplomats told Iran International after last week’s talks in Istanbul.
US State Department released a joint statement with global nations which condemns the growing number of state threats from Iranian intelligence services.

RUSSIA-UKRAINE

US told the UN Security Council that President Trump made it clear that an end to Russia's war in Ukraine must be done by August 8th and the US is prepared to implement additional measures to secure peace in Ukraine.
Microsoft (MSFT) Threat Intelligence said it uncovered a cyberespionage campaign by the Russian state actor they track targeting embassies in Moscow.

ASIA-PAC