🗓 Monday, August 4
► Europe opens higher amid Fed optimism; Swiss stocks trail on tariff concerns
European equities rebounded modestly as traders looked past tariff worries and focused on the growing prospect of Fed rate cuts. The Stoxx 600 rose +0.60%, with the Italian FTSE MIB +1.70%, DAX +1.05%, CAC +0.75%, and FTSE 100 +0.3% all higher. In contrast, Switzerland’s SMI -0.7% trades significantly lower as investors priced in Trump’s 39% tariffs and renewed pressure on drugmakers. Yields on 10-year German government bonds fell to 2.67%, while EUR/USD fell slightly to 1.156, reflecting the eurozone's underperformance vs. the US (markets).
► US futures recover as rate cut bets rise despite policy uncertainty
Wall Street futures climbed after sharp losses as dismal jobs data at least boosted hopes for imminent Fed cuts. S&P 500 +0.65%, Nasdaq 100 +0.75%, and Dow +0.65% reversed some of Friday’s sharp losses. Fed swaps now price in ~57bps of easing by year-end, with some traders eyeing even a potential 50bp rate cut in September. Treasury yields nudged higher after Friday’s plunge, with the 10Y at 4.24%. Meanwhile, Trump announced upcoming appointments to the Fed, making the central bank's future path even more uncertain. Technology and cyclical stocks led the pre-market gains, although political uncertainty and the impact of tariffs remain the main risks.
► Asia mixed as US data boost sentiment, but Japan and Taiwan underperform
Asia-Pacific markets traded mixed amid shifting global narratives. Hang Seng +0.92%, Kospi +0.91%, and Shanghai +0.66% gained on US rate cut hopes and improved risk appetite. However, Nikkei -1.25% fell as exporters slumped, and Taiwan -0.24% edged down alongside a weaker NZX -0.36%. In FX, USD/JPY rose to 147.75, and USD/CNY eased to 7.175. JGB yields dropped as Japanese bond investors brace for a soft auction and reassess global monetary trends amid Trump-era trade friction including the significantly higher US tariffs.
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