Global Markets Shrug Off Tariffs, Propelled by Strong Tech Earnings

Global financial markets demonstrated remarkable resilience on Thursday, largely dismissing new tariffs imposed by President Donald Trump on key trading partners India and South Korea. This unexpected market buoyancy was primarily fueled by robust corporate earnings reports, particularly from major technology companies, alongside the steady hand of central banks navigating evolving trade dynamics.

• US equity futures (S&P 500, Nasdaq 100, Dow Jones) surged, driven by stronger-than-expected earnings from Microsoft and Meta Platforms.
• President Trump introduced new tariffs, including a 15% rate on imports from South Korea and 25% duties on goods from India, plus an unspecified “penalty.”
• Asia-Pacific markets largely experienced declines, with India’s Nifty 50 and BSE Sensex dropping significantly in response to the new tariff measures.
• The Bank of Japan maintained its short-term interest rate at 0.5% for the fourth consecutive meeting, leading to a 0.49% appreciation of the Japanese yen against the US dollar.
• European markets opened with optimism, anticipating a heavy schedule of second-quarter corporate earnings reports from major firms.
• The Federal Reserve held its benchmark interest rate unchanged in the range of 4.25% to 4.50%, with Fed Chair Jerome Powell remaining non-committal about potential future adjustments.

United States Market Performance Amid Tech Boom

In the United States, futures tied to the S&P 500 and Nasdaq 100 surged, climbing 0.94% and 1.34% respectively, while Dow Jones Industrial Average contracts rose 0.3%. This notable upturn followed stronger-than-expected earnings announcements from tech behemoths Microsoft and Meta Platforms, which were released after Wednesday’s close. Microsoft shares climbed 8% as its Azure cloud unit’s annual revenue surpassed $75 billion, underscoring its significant growth trajectory. Concurrently, Meta advanced 11% in extended trading, fueled by an optimistic third-quarter forecast.

Both companies, integral constituents of the influential “Magnificent Seven” group of technology leaders, demonstrated the enduring strength and profitability of the technology sector. Their robust performance provided a significant counterweight to the geopolitical uncertainties introduced by the new trade policies, reassuring investors about the resilience of core market drivers.

Asia-Pacific Navigates New Tariffs and Central Bank Moves

Conversely, markets in the Asia-Pacific region largely experienced declines as investors digested the implications of President Trump’s new tariff measures and the Bank of Japan’s (BoJ) latest policy decision. President Trump’s new tariff structure introduces a 15% blanket rate on imports from South Korea and 25% duties on goods from India, augmented by an additional, unspecified “penalty.”

In response, India’s Nifty 50 index dropped 0.56%, and the BSE Sensex slid 0.97%, reflecting immediate market apprehension. South Korean auto stocks were particularly impacted, although Samsung Electronics saw its shares rise despite second-quarter profits missing projections, indicating selective investor confidence. Meanwhile, Japan’s Nissan Motor reported a $530 million operating loss for its fiscal first quarter, yet its stock increased—a reaction analysts attributed to improved forward guidance that outweighed the immediate financial setback.

Concurrently, the Bank of Japan maintained its short-term interest rate at 0.5% for the fourth consecutive meeting. This widely anticipated move saw the Japanese yen appreciate 0.49% against the US dollar to 148.77, while Japanese Government Bond (JGB) yields saw slight increases across maturities, with the 10-year yield rising 1 basis point to 1.571%.

European Outlook and Central Bank Policy

European markets, however, opened with optimism, signaling a resilience akin to their U.S. counterparts. Futures data indicated modest gains, with London’s FTSE 100 projected to open up 0.1%, Germany’s DAX up 0.2%, and Italy’s FTSE MIB aiming for a 0.3% rise, while France’s CAC 40 was expected to open flat. This positive sentiment emerged ahead of a heavy schedule of second-quarter corporate earnings reports from major European firms, including Unilever, Shell, BMW, Sanofi, and Renault, which are closely watched for insights into the region’s economic health.

Concurrently, investors closely monitored the Federal Reserve’s stance, which held its benchmark interest rate unchanged in the range of 4.25% to 4.50%. The decision was not unanimous, with Governors Michelle Bowman and Christopher Waller dissenting in favor of a more aggressive approach to monetary policy. During a press conference, Fed Chair Jerome Powell remained non-committal regarding future rate adjustments, stating, “We’ve made no decisions” about a potential move in September, underscoring the central bank’s data-dependent approach and adding a layer of uncertainty to future rate trajectory.