Meanwhile Trump sends Copper sky high with 50% tariff threat

EU mid-market update: EU looks next to ink a framework trade deal with US; Meanwhile Trump sends copper sky high with 50% tariff threat.

Notes/observations

- Sentiment is treading water until more trade deals are secured or details unveiled. Latest developments were from Tues as Trump reiterated new deadline on Aug 1st is firm with ‘no exceptions’. Trump also suggested copper tariffs of 50% and pharma tariffs of 200%. EU seems close on framework that locks in 10% tariff with some exceptions (similar to UK).

- Elsewhere, little to bite on as economic data was very light during the morning and a lack of central bank speak. RBNZ paused easing cycle for first time in 7 decisions.

- With Q2 earnings season approaching, traders will look at banks first to gauge consumer health and whether valuations are appropriate or too high.

- Notable UK corporate news: WPP falls ~15% after cutting FY25 guidance, noted WPP Media and Ogilvy hit by lower client spend and weak new business. Jet2 FY25 results pushing stock 5% lower with lower load factors and ticket yields. CMA resolved homebuilder probe.

- Asia closed mixed with Hang Seng underperforming -1.1%. EU indices +0.1-1.3%. US futures mixed. Gold -0.4%, DXY flat; Commodity: Brent +0.6%, WTI +0.6%; Crypto: BTC +0.1%, ETH +2.2%.

Asia

- China Jun CPI Y/Y: +0.1% v -0.1%e; PPI Y/Y: -3.6% v -3.2%e.

- New Zealand Central Bank (RBNZ) left Official Cash Rate (OCR) unchanged at 3.25% (as expected) for its 1st pause in 7 decisions under the current easing cycle. Statement noted that it had reached a consensus to keep policy steady at 3.25% but did discussed the options of hold or 25bps cut. Outlook for medium-term inflation pressures evolved broadly in line with the May MPS projections. If medium-term inflation pressures continue to ease projected, the committee expected to lower OCR further.

- RBA Dep Gov Hauser reiterated 'enormous' amount of global economic uncertainty; very, very focused on global trade developments.

- China NDRC [state planner] Chair expected the size of China's economy to exceed CNY140T in 2025.

- BOJ's Koeda noted that the recent rises in Japan's food, rice prices were stronger than expected at the time of BOJ's May policy meeting; We're watching developments carefully.

Americas

- US May Consumer Credit: $5.1B v $10.5Be.

- Agriculture Sec Rollins: USDA will be limiting farmland purchases by 'foreign adversaries' including China.

- Pres Trump: Fed Chair Powell should resign immediately; Appears to tell US Treasury Sec Bessent he prefers him better for the role than Powell.

- White House NEC Dir Hassett said to have met with Trump "at least twice" in June about US Fed job.

Trade

- Pres Trump noted that trade measure involving at least 7 countries to be announced Weds morning, additional countries would be revealed later in afternoon.

- At a cabinet meeting, Trump teased upcoming tariff announcements for pharmaceuticals (“200%”), semiconductors and a likely 50% tariff on copper imports.

- Treasury Sec Bessent noted that tariff revenue could reach $300B this year.

- EU said to be ready to sign a "temporary framework" accepting US Pres Trump's 'reciprocal" 10% tariff, while talks continued.

Energy

- Weekly API Crude Oil Inventories: +7.1M v +0.7M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.5% at 548, FTSE +0.1% at 8858, DAX +0.8% at 24392, CAC-40 +1.0% at 7840, IBEX-35 +1.0% at 14199, FTSE MIB +1.3% at 3981, SMI +0.1% at 11972, S&P 500 Futures +0.0%].

Market focal points/key themes: European indices opened higher across the board and remained upbeat through the early part of the session; positive news around US-EU trade talks seen supporting risk appetite; among better performing sectors are financials and energy; lagging sectors include communication services and materials; oil & gas subsector supported after attack on ship in the Red Sea; mining subsector under pressure after Trump announces copper tariffs; reportedly Renk considering sale of its civilian industrial business; reportedly Apple in talks to buy US rights to show F1; reportedly Merck is close to deal to acquire Verona; focus on release of FOMC minutes later in the day; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: WPP [WPP.UK] -15% (cuts FY guidance), Jet2 [JET2.UK] -5.0% (results).

- Energy: Hunting [HTG.UK] +10.0% (H1 trading update).

- Healthcare: Gensight Biologics [SIGHT.FR] +2.5% (reports cash position).

- Industrials: Kongsberg Gruppen [KOG.NO] -9.0% (results), Galliford [GFRD.UK] +3.0% (trading update).

Speakers

- EU Commission Pres Von der Leyen stated that EU was getting ready for all scenarios on US trade deal. Working closely with US admin to get an agreement.

- Malaysia Central Bank Policy Statement noted that the rate cut was pre-emptive measure aimed at preserving steady growth path amid moderate inflation prospects. Inflation was expected to remain moderate. Balance of risks to growth outlook remained tilted to the downside. MYR (ringgit) performance would continue to impacted by external factors.

- Indonesia Econ Min Hartardo noted that the latest tariff proposal was praised by US government; Hoped ASEAN could get favorable deal on tariffs.

Currencies/fixed income

- USD was steady/firmer with focus continued to be on the trade front. President Trump continued various trade threats. Dealers also focused on the upcoming release of Jun FOMC Minutes.

- EUR/USD staying above the 1.17 level in quiet trade. Little impetus for fresh positions with little data released during the session.

- USD/JPY moved away from its Asian session highs of 147.18. New BOJ Board member Koeda noted of the recent rise in Japan's food, rice prices being stronger than expected at the time of BOJ's May policy meeting.

- 10-year German Bund yield at 2.67% and 10-year Gilt yield at 4.63%. 10-year Treasury yield: 4.39%.

Economic data

- (NO) Norway Jun PPI (including oil) M/M: -0.3% v -3.0% prior; Y/Y:-1.0% v -0.1% prior.

- (DK) Denmark May Current Account Balance (DKK): 28.3B v 29.9B prior.

- (JP) Japan Jun Preliminary Machine Tool Orders Y/Y: -0.5% v +3.4% prior.

- (MY) Malaysia Central Bank (BNM) cut Overnight Policy Rate by 25bps to 2.75% (as expected) to move into easing mode.

- (GR) Greece Jun CPI Y/Y: 2.8% v 2.5% prior; CPI EU Harmonized Y/Y: 3.5% v 3.3% prior.

Fixed income issuance

- (IN) India sold total INR200B vs. INR200B indicated in 3-month, 6-month and 12-month bills.

- (RO) Romania opened its book to sell USD-denominated 5-year, 10-year and 14-year bonds.

- (DK) Denmark sold total DKK3.3B in 2035 and 2052 DGB Bonds.

- (UK) DMO sold £4.5B in 4.5% Mar 2035 Gilts; Avg Yield: 4.635% v 4.588% prior; bid-to-cover: 2.89x v 2.89x prior; Tail: 0.2bps v 0.3bps prior.

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 9-month bills.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:25 (CH) Switzerland to sell 2030 and 2035 Bonds.

- 05:30 (UK) BOE Financial Stability Report (FSR).

- 05:30 (DE) Germany to sell combined €2.0B in 2041 and 2044 Bunds.

- 06:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2031 and 2052 OT bonds.

- 05:30 (PL) Poland to sell Bonds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:45 (IE) ECB’s Lane (Ireland, chief economist).

- 07:00 (ES) ECB’s De Guindos (Spain).

- 07:00 (US) MBA Mortgage Applications w/e July 4th: No est v +2.7% prior.

- 08:00 (HU) Hungary Central Bank (MNB) Jun Minutes.

- 08:00 (MX) Mexico Jun CPI M/M: 0.3%e v 0.3% prior; Y/Y: 4.3%e v 4.4% prior.

- 08:00 (MX) Mexico Jun Core CPI M/M: 0.4%e v 0.3% prior; Y/Y: 4.2%e v 4.1% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (DE) ECB’s Nagel (Germany).

- 08:30 (UR) Ukraine Jun CPI M/M: No est v 1.3% prior; Y/Y: 14.1%e v 15.9% prior.

- 10:00 (US) May Final Wholesale Inventories M/M: -0.3%e v -0.3% prelim; Wholesale Trade Sales M/M: 0.2%e v 0.1% prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 US) Treasury to sell 17-Week Bills.

- 13:00 (US) Treasury to sell 10-Year Notes Reopening.

- 14:00 (US) Jun FOMC Jun Minutes.

- 18:45 (NZ) New Zealand May Net Migration: No est v 1.8K prior.

- 19:01 (UK) Jun RICS House Price Balance: -9%e v -8% prior.

- 19:50 (JP) Japan Jun PPI M/M: -0.1%e v -0.2% prior; Y/Y: 2.9%e v 3.2% prior.

-21:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to leave 7-Day Repo Rate unchanged at 2.50%.

- 22:00 (JP) Japan Jun Tokyo Avg Office Vacancies: No est v 3.6% prior.

- 23:35 (JP) Japan to sell 20-year JGB Bonds.