Newsquawk European Market Wrap - 31st July 2025

• Stocks mixed, DXY up, US curve continued to flatten, crude lower


• Core PCE M/M in line; Fed pricing little changed


• Markets look ahead to tomorrow's key NFP print

EQUITIES

• 
  European bourses opened higher across the board with a slew of mostly positive earnings from within Europe, and with significant post-earnings strength in Meta and Microsoft also boosting sentiment. Though as the session progressed, the complex waned off its best levels, and looked to close the European day in negative territory at lows.


• 
  European sectors opened mixed but had a negative bias into the European close. Banks were buoyed by several European earnings today; including from the likes of BBVA (+8%, Bottom line beat), SocGen (+6%, lifts annual targets), Credit Ag (-2%, broadly in-line), Mediobanca (-0.5%, in-line), ING (-0.3%, missed on NII, expects impact following sale of Russian business). Industrials were strengthened following key results from within the sector; Safran (+3%, Revenue beat and upped its rev. growth outlook for FY), Rolls Royce (+10%, soars after raising profit guidance), Airbus (-0.3%, Q2 metrics beat but provided cautious commentary on meeting 2025 delivery target). As for Autos, BMW (-0.5%, slips after rev. and profit falls), Ferrari (-9%, slight miss on diluted EPS whilst other metrics were in-line, also said 50bps risk on percentage margins removed amid recent agreement between EU-US). Basic Resources were found right at the foot of the pile, pressured by the significant losses seen in copper prices in the prior session, after President Trump exempted refined metals.


• 
  US equity futures are mixed, with clear outperformance in the NQ following stunning earnings from Meta and Microsoft, which are both higher by 11% and 8%, respectively; the latter is now a USD 4tln company. To break them down, Meta beat on quarterly metrics and guided above expectations for Q3, lifted the bottom end of CapEx guidance. Microsoft beat on quarterly numbers and raised FY CapEx guidance, with revenue guidance also strong. Other key movers: Qualcomm (-6%, Beat on EPS and revenue, but reliance on high-end smartphone chips and losing the AAPL modem business overshadowed), Arm (-8%, Gave weak guidance).


• 
  US data docket was filled with employment and inflation metrics; on the former, Employment Costs rose a touch in Q2 whilst jobless claims printed a touch below expectations – a figure which OxEco suggests is consistent with a low pace of layoffs. As for inflation, M/M Core PCE printed in line with expectations, whilst Y/Y was a touch above expectations. Little follow-through into futures given it is not a game changer for the Fed, as the Bank still has a number of key data points from now until the September meeting.

FX

• 
  USD - DXY higher the USD showed a mixed performance vs. peers. The USD remained underpinned in the wake of yesterday's FOMC policy announcement, which was viewed with a hawkish lens after Chair Powell said the FOMC will deploy its tools to make sure tariffs become inflationary. Focus for today's session was on the data slate with PCE and weekly claims data both on deck. For the former, core M/M PCE printed in-line at 0.3% (on an unrounded basis it was a "low" 0.3%, coming in at 0.2563%) with the core Y/Y a touch higher than consensus at 2.8% (exp. 2.7%). However, the data was ultimately not a gamechanger for the Fed with plenty of data due between now and September (now priced at under 50% for a 25bps cut); tomorrow's NFP report loomed large. On the trade front, Politico reports Trump could impose higher tariffs on nations that have been unable to reach a deal with the US; could include Canada, Mexico and Taiwan. DXY took out the 100 mark, next target comes via the 29th May peak @ 100.54.


• 
  EUR - EUR initially attempted to atone for recent losses, which have been driven by a combination of the fallout from the EU-US trade deal and yesterday's FOMC policy announcement. For the Eurozone, regional CPI metrics have continued to drip feed into the market ahead of the bloc-wide release tomorrow. Metrics from France printed 10bps firmer-than-expected Y/Y on a headline basis but 10bps weaker for the normalised print. German inflation held steady at 2% Y/Y and passed with little in the way of fanfare. In the near term, the USD may provide the greater source of direction for the pair, particularly as tomorrow's payroll print looms large. The Fed has also exerted a mechanical impact on ECB pricing with a less than 50% chance of another 25bps rate cut seen by year-end. EUR/USD faltered as the USD picked up in the second half of the session but managed to hold above the 1.14 mark. If the level gives way, the June 10th low sits @ 1.1373.


• 
  GBP - Softer vs. the USD with Cable almost entirely at the whim of the USD given how barren the UK docket has been this week. That is set to remain the case until next week's BoE policy announcement, which is 82% priced for a 25bps reduction. Within the vote split, Morgan Stanley expects a 1:7:1 outcome with Mann voting for a hold and Dhingra voting for a 50bp cut. Additionally, the desk expects unchanged messaging, and an uplift to near-term inflation forecasts. Cable briefly slipped onto a 1.31 handle for the first time since 13th May (1.3168 was the low that day).


• 
  JPY - Softer vs. the USD in the wake of the latest BoJ policy announcement. The BoJ maintained its short-term interest rate target at 0.5%, as expected with the decision made by unanimous vote. The policy statement was one of caution given the uncertainties provided by the trade war and as such, there was little reaction to the release. Elsewhere, the Bank raised its core CPI forecasts through 2027 and upgraded its near-term growth outlook. During the follow-up press conference, JPY upside vs. the USD was pared and USD/JPY made its way back onto a 149 handle after Ueda refrained from any hawkish overtures, whilst emphasising that in the near-term, growth is expected to slow and inflation is set to stall. He also noted that the current FX rate is not diverging far from BoJ assumptions. Overall, BoJ pricing was little changed with 17bps of hikes priced by year-end. USD/JPY eventually took out 150, venturing as high as 150.44 and approaching the Liberation Day high @ 150.54.


• 
  Antipodeans - Both flat vs. the USD after struggling to hold onto risk-led opening gains. For AUD, upside was restricted as better-than-expected Building Approvals and Retail Sales data for Australia were offset by disappointing official Chinese PMI data. AUD/USD remains on a 0.64 handle after hitting a MTD low yesterday @ 0.6426. NZD/USD failed to hold onto the 0.59 handle but held above yesterday's MTD trough @ 0.5888.

FIXED

• 
  JGBs the main mover of the day. Went into the Tokyo lunch break around opening levels of 137.85 and then fell on the resumption of trade to a 137.75 trough in reaction to the BoJ, as while rates were left unchanged the upgraded forecasts sparked a hawkish move.


• However, this proved fleeting as Ueda’s commentary was interpreted as pointing to less of a need to tighten. Following Ueda, and particularly the remark that “No large change to central outlook that growth pace will slow down and underlying inflation stalls”, a turnaround was seen with JGBs lifting to a 138.18 high.


• 
  USTs and Bunds began the session with a modest bullish bias, but were contained to relatively narrow ranges. USTs remained near the post-Powell lows into PCE while Bunds were awaiting several of their own data releases.


• In brief, the day began with hotter-than-expected import prices from Germany (downside of a handful of ticks), French prelim. Inflation came in hotter-than-expected on a harmonised level while the headline figures were somewhat mixed but both dipped from the prior, lifting the benchmark by around 10 ticks. Thereafter, German unemployment was mixed with a lower rate but a smaller than expected change and an increase to the total. Finally, the mainland German CPI figures were hotter-than-expected for all but the harmonized Y/Y.


• 
  Overall, the day’s European data has a very modest hawkish skew. On the metrics, Pantheon’s Vistesen notes Friday’s EZ-wide HICP could put an end to September rate cut hopes (markets currently imply less than 10% chance of a move), particularly when elevated crude and softer EUR is accounted for.


• Nonetheless, Bunds trade in-line with peers and towards highs in a 110-31 to 111-04+ band.


• As mentioned, USTs spent the morning waiting for PCE. Overall, the series was in-line/marginally-higher to forecasts heading into it. Reaction to it was limited as such, and as we have NFP on Friday and then another full set of data before the September Fed. Set to enter the US afternoon at the upper-end of a 110-31 to 111-08+ band, with today’s action perhaps best characterised as a slight paring of the post-Powell move.


• Finally, Gilts once again outperformed peers with UK-specific newsflow essentially non-existent. Set to end the day at the upper-end of a 91.96 to 92.27 band with gains of just over 30 ticks at best.

COMMODITIES

• 
  Crude Futures - Softer trade overall for the crude complex following a few sessions of gains, with downside amid tariff angst and a firmer dollar. On the deals front, the South Korean Presidential Office confirmed US lowered tariffs on South Korean autos to 15% from 25%, while it added that chips and drug tariffs will not be worse than those applied to other countries and stated that USD 200bln of funds are allocated for chips, nuclear power, batteries, and bio sectors. Furthermore, it stated that the rice and beef market will not be opened and that South Korea demanded 12.5% auto tariffs, but President Trump insisted on 15%. This European morning has been largely focused on corporate earnings, although now attention shifts to any further deals announced by the US alongside any updates on the penalty imposed on nations importing Russian oil. In terms of China, there has been no news regarding Trump greenlighting an extension - thus, another risk for traders to monitor. All in all, markets are still awaiting trade updates regarding Canada, Mexico, China, and India. US data today had little impact on prices. WTI Sep resided in a USD 69.24-70.41/bbl while Brent Oct traded in a USD 71.60-72.82/bbl range.


• 
  Precious Metals - Mixed trade across precious metals with spot gold the marked outperformer despite a firmer Dollar, but with haven flows emanating from tariff woes as the August 1st US tariff negotiation deadline looms. Spot gold during the FOMC yesterday declined following a hawkish-leaning Powell, although those losses are almost entirely trimmed at the time of writing. Furthermore, there has been no news confirming the trade truce extension between the US and China - headline risk remains. Note, the truce expires on August 12th. Meanwhile, after Trump imposed a 25% tariff on India, and an additional penalty for importing Russian crude, India is reportedly mulling options to appease US President Trump following a "shock" 25% tariff level, according to Bloomberg sources; India reportedly mulling upping its natgas purchases from the US, and imports of communication equipment and gold. Spot gold resides in a USD 3,276.28-3,314.98/oz range at the time of writing, within yesterday's USD 3,268.12-3,334.09/oz parameter.


• 
  Base Metals - Comex copper prices slumped over 20% after the White House provided details on the copper tariff, with a universal 50% tariff on imports of semi-finished copper products and copper-intensive derivative products effective August 1st, while refined and concentrate imports will be excluded. Analysts at ING suggested, " Until the announcement, copper prices in the US had been trading at a 28% premium over the LME price, with the market front-running expected tariffs. However, the strong flow of refined copper into the US will come to an end with the Comex-LME arb collapsing. However, there is still the risk of tariffs on refined copper at a later stage, with the US Secretary of Commerce recommending a phased universal tariff on refined copper of 15% in 2027 and 30% in 2028." 3M LME copper prices resided in a USD 9,575.15-9,820.78/t range.


• Kazakhstan Energy Minister says it plans to supply 1.7mln T oil via BTC pipeline in 2025; Russia wants to increase oil transit to China via Kazakhstan by 2.5mln T.


• Russian Deputy PM Novak says discussed situation on the oil market and prospects for cooperating between the two countries within the OPEC+ framework with Saudi Energy Minister.


• 
  India is reportedly mulling options to appease US President Trump following a "shock" 25% tariff level, according to Bloomberg sources; India reportedly mulling upping its natgas purchases from the US, and imports of communication equipment and gold.


• 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.


• EU Commission spokesperson says "we are ready to aggregate demand from EU companies to buy US LNG".


• 
  Reuters poll: WTI to average USD 64.61/bbl in 2025 (June poll USD 64.51/bbl), Brent to average USD 67.84/bbl in 2025 (June poll USD 67.86/bbl).

TRADE/TARIFFS

• US President Trump posts "Tariffs are making America GREAT & RICH Again".


• US President Trump posts, ahead of hearing of arguments at the Court of Appeal, "To all of my great lawyers who have fought so hard to save our Country, good luck in America’s big case today".


• 
  US Treasury Secretary Bessent says they pulled down a lot of the non-tariff trade barriers in South Korea, via CNBC interview. We have the makings of a deal with China. We pushed back on them quite a bit. Will speak to Trump Thursday about August 12th deadline, says he is confident it will be done.


• 
  Brazil sees 35.9% of its exports to the US facing 50% tariff, via Reuters citing sources; sees 44.6% of exports to the US facing 10% tariff; remaining 195% to fall under global rates ranging from 25-50%.


• Brazil Finance Minister Haddad says US Treasury Secretary Bessent's team told them they will schedule a new round of talks. Trump admin in recent days showed more openness to Brazilian arguments. Starting point is better than expected with the US, but still needs to negotiate.


• 
  Brazil VP Alckmin says Trump excluded around 45% of what they export to the US from 50% tariffs, 35.9% of total exports to the US will face the 50% tariff, around 20% fall under global rates.


• 
  China has reportedly stopped the approval of outbound investment for firms who are seeking to create/expand operations within the US, via Nikkei citing sources; local governments, state planner and NDRC have reportedly ceased approvals since April.


• Indonesia's Chief Economy Minister says they could receive tariffs below 19% from the US for refined copper.

EUROPEAN DATA

• German CPI Prelim YY (Jul) 2.0% vs. Exp. 1.9% (Prev. 2.0%); Core 2.7% (prev. 2.7%)


• German CPI Prelim MM (Jul) 0.3% vs. Exp. 0.2%


• German HICP Prelim YY (Jul) 1.8% vs. Exp. 1.9% (Prev. 2.0%)


• German HICP Prelim MM (Jul) 0.4% vs. Exp. 0.4% (Prev. 0.1%)


• The state CPI’s from Germany saw the M/M conform to the mainland skew (uptick from the prior) while the Y/Y figures were more mixed.


• German Import Prices YY (Jun) -1.4% vs. Exp. -1.6% (Prev. -1.1%); MM 0.0% vs. Exp. -0.2% (Prev. -0.7%)


• French CPI (EU Norm) Prelim YY (Jul) 0.9% vs. Exp. 0.8% (Prev. 0.9%); MM NSA (Jul) 0.20% vs. Exp. 0.10% (Prev. 0.40%)


• German Unemployment Change SA (Jul) 2.0k vs. Exp. 15.0k (Prev. 11.0k); Unemployment Rate SA (Jul) 6.3% vs. Exp. 6.4% (Prev. 6.3%); Unemployment Total SA (Jul) 2.97M (Prev. 2.972M); Unemployment Total NSA (Jul) 2.979M (Prev. 2.914M)


• Italian CPI (EU Norm) Prelim YY (Jul) 1.7% vs. Exp. 1.6% (Prev. 1.8%); Consumer Price Prelim MM (Jul) 0.4% vs. Exp. 0.1% (Prev. 0.2% CPI (EU Norm); Prelim MM (Jul) -1.0% vs. Exp. -1.0% (Prev. 0.2%); Consumer Price Prelim YY (Jul) 1.7% vs. Exp. 1.5% (Prev. 1.7%)


• EU Unemployment Rate (Jun) 6.2% vs. Exp. 6.3% (Prev. 6.3%, Rev. 6.2%)

CENTRAL BANKS

• 
  BoJ Governor Ueda says: rising wages at Japanese firms are becoming the norm in recent years. No large change to central outlook that growth pace will slow down and underlying inflation stalls. Moves to pass on rising costs to prices continue. Underlying inflation could slow down in line with slowdown in economic growth. Underlying inflation is gradually rising; not in phase of stalling due to tariffs. Wage impact on prices not picking up too fast. Even if economy and prices undershoot BoJ projections, need to keep in mind that policy rates are low at 0.5%. Current FX rate not diverging far from BoJ assumptions. Will continue to raise policy rate if economy and prices move in line with forecasts, in accordance with improvement in economy and prices. Policy decision would not depend solely on new CPI forecasts.


• Barclays no longer expects the ECB to deliver a rate cut in September, reiterates one 25bps cut in December 2025; Barclays raises 2025 EZ GDP growth forecast to 1.1% (prev. 0.8%).


• 
  US President Trump says "too late" Powell has done it again, he is too late, too angry, too stupid and too political, to have the job of Fed Chair.


• 
  CBRT Minutes: Leading indicators suggest a temporary rise in monthly inflation in July due to month-specific factors; leading indicators suggest that the disinflation process continues.


• 
  SARB cuts its Repo Rate by 25bps to 7.00%, as expected; decision unanimous.


• 
  US President Trump and Mexico's President Sheinbaum are scheduled to speak this morning, Mexico is set to present its tariff proposal, a day ahead of Trump's Aug. 1 deadline, according to CBS' Jacobs.

GEOPOLITICS

• Ukraine parliament has backed bill to restore anti-graft powers (as expected).


• "CNN quotes White House officials: Trump remains committed to fully supporting Israel in its efforts to end its war with Hamas", via Al Jazeera.

NORTH AMERICAN DATA

• US Core PCE Price Index MM (Jun) 0.3% vs. Exp. 0.3% (Prev. 0.2%); 0.2563% (prev. 0.1788%)


• US Core PCE Price Index YY (Jun) 2.8% vs. Exp. 2.7% (Prev. 2.7%, Rev. 2.8%)


• US PCE Price Index MM (Jun) 0.3% vs. Exp. 0.3% (Prev. 0.1%, Rev. 0.2%); 0.2805% (prev. 0.1358%)


• US PCE Price Index YY (Jun) 2.6% vs. Exp. 2.5% (Prev. 2.3%, Rev. 2.4%)


• US Personal Income MM (Jun) 0.3% vs. Exp. 0.2% (Prev. -0.4%)


• US Consumption, Adjusted MM (Jun) 0.3% vs. Exp. 0.4% (Prev. -0.1%)


• US Personal Consump Real MM (Jun) 0.1% (Prev. -0.3%, Rev. -0.2%)


• US Initial Jobless Claims 218.0k vs. Exp. 224.0k (Prev. 217.0k)


• US Continued Jobless Claims 1.946M vs. Exp. 1.955M (Prev. 1.955M, Rev. 1.946M)


• US Employment Costs (Q2) 0.9% vs. Exp. 0.8% (Prev. 0.9%)


• US Employment Wages QQ (Q2) 1.0% (Prev. 0.8%)


• US Challenger Layoffs (Jul) 62.075k (Prev. 47.999k)


• US Chicago PMI (Jul) 47.1 vs. Exp. 42.0 (Prev. 40.4)


• BofA institute Total Card Spending (w/e July 26th) +0.9% Y/Y (prev. +1.8%) (June avg. +0.2%).

NOTABLE APAC NEWS

• Chinese Cabinet Meeting is to enhance effectiveness of macro policies; to resolutely prevent systemic risks; China will increase policy support for AI development.

31 Jul 2025 - 15:00- MetalsResearch Sheet- Source: Newsquawk