Morning in New York: focus on US trade policy and Trump's conflict with Musk

Daily review and forecast of events on the US stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The news agenda related to the US foreign trade policy remains in the center of attention of market participants. In the coming days, Washington plans to conclude several new trade agreements and send letters to partner countries about the increase in import tariffs no later than July 9. At the same time, the new import duties will come into force on August 1, and the Ministry of Finance threatens the states that have not concluded mutual trade agreements with the United States by that date to raise duties to the levels announced on April 2 (about 50%).

Donald Trump announced his intention to raise duties for BRICS-oriented countries by another 10%. In a joint communiqué, the members of this alliance protested against "unilateral protectionist measures" and the increase in mutual tariffs, warning of risks to the global economy and increased economic inequality.

Investors are also following the development of the conflict between Donald Trump and Ilon Musk. Trump has called Musk's creation of his own party absurd, accused his ally Jared Isaacsman of a conflict of interest when nominated to head NASA, and threatened to withdraw contracts and subsidies for Tesla (TSLA) and SpaceX in response to criticism from their founder. Investors fear that the escalation of this standoff will increase volatility in technology stocks, especially Tesla, and lead to a reassessment of risks in the space industry.

Futures on American indices are trading in the negative. Before the opening of the main session there is a negative balance of risks with increased volatility, the probability of correction is increasing. We focus on S&P 500 movements in the range of 6190-6300 points (from -1.5% to +0.4% to the closing level of July 3).

- Boeing (BA) has been awarded a $2.8 billion contract to develop and manufacture satellites as part of the U.S. Space Force program. This will strengthen the position of the defense segment of the air concern. The first vehicle is to be delivered into orbit by 2031.

- Capgemini (CAP) has agreed to buy India's WNS for $3.3 billion in cash ($76.5 per share), up 17% from the closing price on July 3. Capgemini estimates the deal will immediately boost its revenue and operating margin. WNS shares reacted to the news by rising about 17%.

- Nissan (NSANY) plans to raise $4 billion in debt to refinance outstanding debt. The company is also in talks with Taiwan's Foxconn to produce electric cars at its Oppama plant to prevent its closure.

- Participants of the OPEC+ agreement at the meeting on August 3 will discuss the increase in production in September by about 550 thousand barrels per day. Thus, the voluntary reduction in production by 2.17 million barrels per day will be gradually canceled. This will allow the UAE to increase daily production by 300 thousand barrels.

- Independent publishers, led by the Independent Publishers Alliance, have filed a complaint with the European Commission accusing Google AI Overviews of driving traffic and revenue away from content providers. Action has been requested against Alphabet (GOOGL) to prevent "irreparable harm".

July 3 trading on American stock exchanges ended on the positive territory. The S&P 500 added 0.83%, the Nasdaq 100 rose 0.99%, the Dow Jones rose 0.77%, and the Russell 2000 gained 1.02%. All of the "Magnificent Seven" stocks traded in the plus column except Tesla (TSLA: -0.1%). Nine of the 11 sectors included in the broad market index rose. High-tech companies were the leaders (XLK +1.32%). The commodities sector (XLB: -0.07%) looked worse than the market.

The One Big Beautiful Bill Act (OBBBA) was the center of attention in the House of Representatives. The bill was signed into law by the President on U.S. Independence Day on July 4. The Congressional Budget Office estimates that the scope of the law's measures, including the extension of the 2017 personal tax cuts, tax cuts for households and businesses, will increase the national debt by about $3.3 trillion over the next decade (excluding interest costs).

Employment statistics looked mixed. As follows from the Labor Ministry report, the number of new jobs outside agriculture amounted to 147k in June (consensus: 118k), while the May and April figures were raised by 16k, but the number of vacancies in the private sector rose by only 74k. Unemployment fell to 4.1% with average expectations suggesting an increase to 4.3%. Together with the slowdown in growth of hourly wages to 0.2% mom and 3.7% yoy, this eased inflationary concerns. Against this background, the yields of two-year treerries increased, and the assessment of the probability of a Fed rate cut in July fell to almost zero.Tesla

- Cadence Design Systems (CDNS: +5.9%) and Synopsys (SNPS: +4.9%) reacted with gains on news that the U.S. lifted restrictions on exports of chip design software to China, reducing the companies' risk of losing an important market.

- Shares of TripAdvisor (TRIP: +13.6%) went up on the back of Reuters' report that activist investor Starboard Value disclosed information about owning a stake of more than 9% in the company. The market also positively perceived his statements about the undervaluation of this service.

- Olo (OLO: +5.1%) has agreed to be bought out by the Thoma Bravo fund for $10.25 cash per share at a valuation of about $2 billion. The deal is expected to close by the end of the year.

This article was AI-translated and verified by a human editor