TL;DR

Trump escalates global tariffs; China threatens retaliation; S&P 500 targets raised despite equity drop.

Highlights

• Trump announces 25–40% tariffs on imports from 14 countries, including Japan, South Korea, Indonesia, and South Africa, effective August 1 unless bilateral deals are reached 124.
• China warns of retaliation if U.S. reinstates tariffs on Chinese goods in August, risking collapse of June trade truce 3.
• German exports fell 1.4% in May; shipments to the U.S. dropped 7.7% to a three-year low amid tariff concerns 7.
• Equity markets declined on tariff news: Nasdaq -0.9%, S&P 500 -0.8% 1.
• Goldman Sachs raises S&P 500 targets to 6,400 (3M), 6,600 (6M), and 6,900 (12M), citing Fed easing and large-cap strength 15.
• Reserve Bank of Australia unexpectedly holds rates at 3.85%, sending AUD higher and bond futures lower 6.
• PBOC expands Bond Connect access, considering doubling southbound quota to $139B, supporting Hong Kong’s financial hub role 5.
• Tesla China sales rose 3.7% YoY in June, ending an eight-month decline, but Q2 deliveries still down 6.8% YoY 9.
• Trump says U.S. and Iran will hold talks next week after recent strikes on Iranian nuclear sites; U.S. lifts Syria sanctions 1020.
• Trump resumes and expands U.S. arms deliveries to Ukraine after brief Pentagon pause 12.
• UKMTO reports commercial ship hit by rockets off Yemen, highlighting ongoing Red Sea security risks 11.
• Jane Street to contest $567M Indian market-manipulation penalty; India faces major nationwide labor strike on July 9, likely to disrupt banking and transport 1419.

Commentary

Markets are opening with renewed trade policy risk as the Trump administration escalates tariffs on a broad group of U.S. trading partners, including Japan, South Korea, and several emerging markets 124. The move, which revives and increases tariffs previously paused in April, has already pressured U.S. equities and is raising the risk of further retaliatory measures, especially from China 13. Beijing’s warning of countermeasures if U.S. tariffs are reinstated in August signals that the fragile U.S.-China trade truce could unravel, which would have direct implications for multinationals, supply chains, and export-driven sectors 3.

German export weakness, particularly the 7.7% drop in U.S.-bound shipments, underscores the real impact of tariff uncertainty on global manufacturing and trade flows 7. Meanwhile, Goldman Sachs’ upward revision of S&P 500 targets suggests that expectations for Fed easing and large-cap earnings strength are helping to offset some of the macro headwinds 15. However, with equity markets already reacting negatively to tariff headlines, traders should be alert for further volatility, especially in sectors exposed to global trade 1.

In Asia-Pacific, the RBA’s unexpected rate hold has strengthened the AUD and dampened expectations for further near-term easing 6, while the PBOC’s expansion of Bond Connect and possible quota increase may support Chinese and Hong Kong asset markets 5. Tesla’s modest China sales rebound is notable but does not reverse the broader trend of declining deliveries amid intensifying competition 9.

Geopolitical risk remains present: U.S.-Iran talks are scheduled following recent military escalation 10, and the U.S. is resuming arms shipments to Ukraine 12. The Red Sea remains a security hotspot after a commercial vessel was attacked off Yemen 11. In India, a major labor strike tomorrow could disrupt banking and transport 19, with Jane Street’s regulatory dispute adding to cross-border compliance risks for U.S. trading firms 14.