EUROPEAN EQUITIES UPDATE: Stocks slumped on Trump's new tariff rates, AMZN -8% post-earnings

STOXX 600: -1.2%

• European bourses opened entirely in the red, and have continued to trundle lower as the August 1st tariff deadline passed. US President Trump announced new rates on 92 countries, which brought the average US tariff rate to 15.2% (prev. 13.3%, prev. 2.3% pre-Trump).


• Picking out some key regions: a rate of 10% for Brazil, 30% for South Africa, 20% for Taiwan and 25% for India. Canada’s tariff increased from 25% to 35%, while Mexico received a 90-day extension of the current tariff rates. Switzerland was bumped up to 39% (prev. 31%). Do note that the SMI is shut for the day on account of Switzerland National Day.


• Trade aside, there have been some data points in Europe; Spanish/Italian Manufacturing PMI beat slightly, whilst French and German figures were revised slightly lower. On the inflation front, EZ HICP matched the prior, but marginally topped expectations of some slight cooling; services cooled to 3.1% (prev. 3.3%).


• The rest of the day will be focused on the US side of things (see US section below). Though of note for the UK, and more specifically Lloyds and Close Brothers, the UK Supreme Court will issue a judgment on the mis-selling of car finance and associated compensation (guided time 16:35 BST). The court is expected to find lenders liable for the mis-selling, but reduce the compensation from GBP 30-44bln to around GBP 11bln. There is some speculation that Chancellor Reeves might step in to limit the compensation that firms will need to pay.

Sectors: Negative

• European sectors are entirely in the red, in line with the risk tone.


• Food, Beverage and Tobacco holds towards the top of the pile, cushioned by a broker upgrade at Nestle (-0.2%). Telecoms and Optimised Personal Care complete the top three.


• Media is found right at the bottom of the sectoral list, pressured by post-earnings losses in UMG (-6.3%); the Co. lowered its earnings forecast and highlighted rising content costs. Tech is also on the back foot, as the sector cools from recent upside and as the risk tone weighs.


• Healthcare completes the bottom three, with US President Trump to blame; he sent letters to 17 pharma companies (in both the US and Europe), asking them to lower drug prices before the end of September. The likes of Novo Nordisk (-4%) and GSK (-1.7%) both move lower, but are off worst levels. It is worth highlighting that Bayer (+1.3%) is resilient to the losses, after the Co. upped its FY25 guidance.

Movers:

• Campari (CPR IM) +6.5%: H1 Sales grow Y/Y, confirms FY target


• IAG (IAG LN) -1.8%: EPS rises, expects FX to be a small tailwind in H2


• Axa (CS FP) -5.6%: Net profit misses some expectations on FX headwinds


• Daimler Truck (DTG GY) -4.2%: Cuts guidance


• Evonik (EVK GY) -3.9%: Sees adj. EBITDA at the lower end of the guide reduces capex

US Equity Futures: ES -1%, NQ -1.2%, RTY -1.5%

• Futures are entirely in the red as the August 1st deadline crossed, and as the US announced the latest modifications to world tariffs.


• US President Trump announced tariffs on countries ranging from 10%-41% including a tariff rate of 10% for Brazil, 30% for South Africa, 20% for Taiwan and 25% for India. Canada’s tariff increased from 25% to 35%, while Mexico received a 90-day extension of the current tariff rates.


• There have also been two more earnings releases from the Mag 7; Apple (+1.8%) reported Q3 revenues above expectations, driven by strong iPhone 16 demand and a rebound in China. It guided Q4 revenue rising mid- to high-single digits, topping expectations (exp. 3%). Amazon (-8%) shares fall in the pre-market after guiding Q3 operating income below expectations; slower AWS growth and lack of visible returns from AI investment weighed on sentiment.


• The highlight of the day is the US jobs report for July, where the headline is expected to show 110k nonfarm payrolls added (vs 147k prior), and the unemployment rate is expected to rise by one-tenth to 4.2% (see below for preview). The ISM manufacturing data for July is released afterwards, where the headline is seen at 49.5 from 49.0. The University of Michigan sentiment (final) data is also due today. Focus also on potential speeches from Fed’s Bowman and Waller; the pair dissented earlier in the week.

01 Aug 2025 - 10:20- ForexEU Research- Source: Newsquawk