Wait and see. There is nothing else to do in the markets today with at least two key events scheduled today that could trigger turbulent movements: the US employment report and the launch of the US fiscal package. But in the background remain the trade agreements, with Vietnam and China at the forefront, but also the earthquake created in the United Kingdom that has triggered sales of long-dated government bonds.
US employment data to set pace for Fed rate cuts
Monthly data on Nonfarm Payrolls Expected for Today (a day earlier than usual because of a July 4 Independence Day holiday), could show a hiring slowdown and the highest unemployment rate since 2021, analysts say, starting to feel the effects of the Trump administration’s changes in trade and immigration policies. Analysts expect 110.000 jobs to be added in June, with the unemployment rate rising to 4,3%.
Labour market data already out yesterday in the private sector (ADP) have shown that employment in US companies is decreased for the first time in more than two years. Following this data, operators have increased bets on at least two rate cuts this year, the first of which was in September. If today's data shows further weakness, traders believe the Fed could increase cuts.
US signs trade deal with Vietnam, but China threatens retaliation
The talks continue between the US and its trading partners of the way, but not all are satisfactory. Yesterday Trump announced that he had reached a trade deal with the Vietnam after weeks of intense diplomacy between the two nations and ahead of next week's deadline (July 9), which would have meant higher tariffs on the country's imports. A 20% rate on Vietnamese exports to the United States, with a 40 percent tax on all goods deemed to have been transshipped through the country, Trump said in a social media post yesterday, adding that Vietnam had agreed to eliminate all duties on U.S. imports.
But China is not satisfied at all and the agreement with Vietnam risks causing retaliation from Beijing. The United States in fact, according to Bloomberg, are pushing for new trade agreements with Asian and European countries that would limit Chinese content and would counter China's unfair trade practices, making the China increasingly waryThe deal with Vietnam will hit products with components from China, and the US is in talks with other countries, including the'India, to conclude similar agreements. China has warned of the consequences that could result if its interests are threatened and is rejecting such attempts, which could lead to measures of retaliation and a broader shift in global trade, potentially isolating Chinese companies from global supply chains.
Other Asian countries complain about the difficulty of the talks with the United States, in part because it was not clear what the White House wanted. The president South Korean Lee Jae Myung said today he could not say whether the tariff negotiations could be concluded by next Tuesday, while the Japan he invoked national interests, given the fiasco of talks with the United States.
Wall Street: What it does
Trump's announcement of a trade deal with Vietnam helped the S&P 500 close at another all-time high yesterday. Wall Street closed the mixed session, reporting a -0,02% variation on the Dow Jones, while the S&P-500 jumped forward, reaching 6.227 points (+0,47%), on new records. In money terms, the Nasdaq 100 (+0,73%), also on new highs and the S&P 100 (+0,65%). On the podium of Nasdaq stocks, Moderna (+5,54%), Tesla Motors (+4,97%).
The Treasury market was tense yesterday ahead of the data release, as a weak jobs report could send yields lower. The 3-year Treasury yield fell 4,265 basis points to 2% yesterday, while the 3,772-year yield fell XNUMX basis points to XNUMX%. Some pressure came from the move seen in UK government bonds.
Investors have expressed concern about the bill Trump's economic reform, which stalled in the House yesterday as conservative Republicans delayed a key procedural vote. Trump later said on social media that the House was ready to vote tonight.
Asia
In Asia, investors do not seem to share Wall Street's optimism and Asian stock markets are mixed,
Of particular concern are Vietnamese stocks, which rose a modest 0,5% after the deal with the US, although this is the highest level since April 2022. The Vietnamese currency dong fell to a record low of 26.218 per dollar. News of the trade deal sent shares soaring. Nike stocks Inc. and some exporters, hoping the deal will avert a potential supply chain catastrophe.
In Japan Tokyo's Nikkei 225 index is around parity. The yen is little changed at 143,7 to the dollar while the 10-year government bond yield is 1,43% just before the auction of ultra-long-dated bonds. The Bank of Japan's rate-hike cycle will resume after "only" a temporary pause, board member Hajime Takata warned.
The bag of Shanghai is unchanged. Down 0,9%, the biggest decline in the past two weeks, the Hang Seng Hong Kong. Fears are growing that the United States is seeking another way to isolate China commercially. Among the big names in Chinese tech, the smartphone and car maker Xiaomi, is down 3,7%. Tencent -1,2%. China's largest manufacturer and exporter of household appliances, Midea Group reports a 0,5% decline. The e-commerce leader Alibaba Group is the most significant drag, -3,4%. The company announced a major subsidy program to incentivize users and merchants: the measure further intensifies competition in a sector crowded with players aggressive on prices and fees. Among them, there are JD.com and Meituan.
Il dollar is trading just above its major counterparts' three-year low at 96,872, up 0,1% on the day. GBP was little changed against the dollar at $1,3626, after a sharp decline in the European session yesterday amid government turmoil. Gold lost 0,3%, its first decline in four days. The Petroleum after yesterday's rise of nearly 3%.
The English bond earthquake
Members of Starmer's ruling Labour Party have forced the government to cancel cuts to social spending worth £5bn, making it even more difficult for Reeves manage the government's budget deficit. Government bond yields thirty years rose 19 basis points on Wednesday, the biggest jump since April and big enough to send shockwaves through US Treasury securities. British stocks slipped. And the pound tumbled. The pound was virtually unchanged against the dollar in Asian trading today.
Long-dated government bonds were hit hardest during the market turbulence, with yields Thirty-year gilts which closed the session up 19 basis points at 5,42%. Sterling was the worst-performing currency yesterday, falling to around 1%. UK domestic shares also fell, with the FTSE 250 also falling 1,3%.
European stocks seen opening slightly higher. Eyes on the risk
European stock markets expected to rise slightly at the start of the session (+0,13% the futures on the Eurostoxx50)
Unicredit continues to push the Commerzbank dossier and to this end last month sent letters to the German Chancellor, Friedrich Merz, and two other representatives of the Berlin executive to support his proposal.
Mps/Mediobanca. Consob has approved the offer document of Mps for Mediobanca. The acceptance period will start on July 14 and will end on September 8. The unconditional green light from the Antitrust has also been obtained.
Pop Sondrio. The AGCM has authorized the acquisition of Banca Popolare di Sondrio by Bper subject to the sale of six branches to banking operators within ten months.
Eni. Kazakhstan's Energy Ministry has abandoned plans to build a gas processing plant at the Karachaganak field. The field is operated by the Karachaganak Petroleum Operating (KPO) consortium, which includes Eni (29,25%), Shell (29,25%), Chevron (18%), Lukoil (13,5%) and KazMunayGaz (10%).
stmThe United States has lifted export restrictions to China for chip design software companies, in a further sign of easing trade tensions.
Stellantis. HSBC raised its target price from 9 to 9,5 euros (hold rating).
Bialetti. Consob has approved the offer document of the takeover bid launched by Nuo Capital on Bialetti, which will start on July 7 and end on July 25.
Sole24ore. The offeror Zenit (a Confindustria company) has announced the final results of the acceptances to the voluntary public purchase offer launched on the special shares of Il Sole 24 Ore: it holds 53.536.240 special shares, equal to 95,014% of the share capital of Il Sole 24 Ore. Confindustria also holds 9 million ordinary shares, equal to 100% of the share capital represented by ordinary shares and, therefore, also taking into account the 330.202 special shares held by the issuer, the offeror and the persons acting in concert will hold a total of 62.536.240 ordinary shares and special shares, equal to 95,700% of the share capital. The offeror will now fulfill the right to purchase and the obligation to purchase by starting the joint procedure, having as its object all the residual shares. Following the completion of the joint procedure, Borsa Italiana will order the suspension of the shares and the delisting.
