Global Stocks Dip Ahead of Trump's Tariff Deadline and Key Central Bank Decisions
Markets are now focused on several significant events next week. Investors are getting the jitters over President Trump's August 1 deadline for new trade tariffs with Europe and China. Meanwhile, central banks, including the U.S. Federal Reserve and the Bank of Japan, have meetings scheduled where policy moves are expected.
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Inflation and Tariffs Worry Investors
While American economic data is strong, the positive benefits of both high inflation and tariffs, it's said, could dissipate soon. "If prices remain high, we might get some surprising behavior from people who choose to spend less," said UBS economist Dean Turner. Others, such as Van Luu of Russell Investments, think the recent strength may be just spending ahead of time before prices increase as a result of tariffs.
U.S. government bond yields were little changed, with 4.41% on 10-year Treasuries and 3.92% on 2-year Notes. These rates show that investors are waiting for hints from the Fed about future interest rate cuts.
President Trump unexpectedly visited the Fed on Thursday, which is seen as an unusual move. While he has said that he does not intend to fire Fed Chair Jerome Powell, tensions persist.
Company Earnings and the Central Banks
American companies, including Alphabet (Google's parent company), helped lift the Nasdaq to a record high on Thursday. But stock futures are indicating that Wall Street may hold steady at the start of trading today. Big earnings from Amazon, Apple, Meta, and Microsoft are expected next week and could lift markets.
Meanwhile, the European Central Bank (ECB) held off on cutting interest rates this week, also to evaluate the impact of U.S. trade policy. Germany Bond yields climbed to their highest level since March in Germany. Government bond yields in Japan remained near 1.6%—their highest level since 2008—as pressure grows on Prime Minister Ishiba following his party's electoral defeat.
Oil rises, and gold slips
Commodities: Oil prices rose as optimism increased for additional trade agreements that would bolster the global economy. Brent crude added 0.7% to $69.65 a barrel. Gold, meanwhile, dipped 0.3% to $3,356 an ounce as appetites for safe assets moderated.
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Straits Times
11 hours ago
- Straits Times
‘US needs China's fireworks': No alternative for some Chinese goods amid trade uncertainty
LIUYANG/YIWU - Fourth of July celebrations in the United States might have just passed, but Chinese businessman Marx Wu is already prepared for a dampening effect of tariffs on sales of his fireworks to American customers for the festivities in 2026. This is due to the additional 30 per cent tariffs that US President Donald Trump has been imposing on China – since the outbreak of a trade war between the two countries in April – in a bid to bring back manufacturing to the US. 'Customers will be more cautious because their costs have increased significantly,' Mr Wu told The Straits Times. His company, Magnus Fireworks, is based in Liuyang, Hunan province, which is dubbed China's 'fireworks' hometown' for its expertise in manufacturing pyrotechnics. The US government now collects a 35.7 per cent tax from American importers for fireworks from China. The bulk of these sales are meant for the annual US Independence Day celebrations synonymous with fireworks displays. Such orders are typically made a year in advance. But Mr Wu, who sells mainly to the US, remains optimistic about his business' viability in the longer-term, because the strengths of the Chinese industry in Liuyang cannot be easily replicated elsewhere, he said. When unpacking the impacts of Trump's aggressive tariff strategy on Chinese manufacturers, it is a mixed picture on the ground. Top stories Swipe. Select. Stay informed. Singapore Almost half of planned 30,000 flats in Tengah to be completed by end-2025: Chee Hong Tat Asia Death toll climbs as Thai-Cambodia clashes continue despite calls for ceasefire Multimedia Lights dimmed at South-east Asia's scam hub but 'pig butchering' continues Singapore Black belt in taekwondo, Grade 8 in piano: S'pore teen excels despite condition that limits movements Asia Where's Jho Low? Looking for 1MDB fugitive in Shanghai's luxury estate Asia Thousands rally in downtown Kuala Lumpur calling for the resignation of PM Anwar Life SG60 F&B icons: Honouring 14 heritage brands that have never lost their charm Business Can STI continue its defiant climb in second half of 2025? Mr Marx Wu with some of his company's firework products for US Independence Day celebrations at his office in Liuyang, Hunan province. ST PHOTO: LIM MIN ZHANG On the one hand, Mr Trump's move to impose tariffs across the board on Chinese goods in April has led to factory closures and worker lay-offs in certain sectors such as the garment industry, and accelerated moves to diversify away from the US market for other exporters. On the other hand, there are other products which simply have few to no alternatives to 'made in China', because the country's manufacturers are overwhelmingly competitive, say experts. When Mr Trump proclaimed 'Liberation Day' on April 2 with 'reciprocal tariffs' on the US' trading partners, Beijing and Washington engaged in a tit-for-tat tariff war. At one point, American importers had to pay a 145 per cent tax on Chinese goods. But bilateral trade talks since May 12 have de-escalated the situation. US and Chinese officials are set to meet in Stockholm next week (from July 27) to discuss a possible extension of a 90-day truce. The fireworks industry presents a case study showing how, despite trade tensions and strategic competition, the US and China remain economically intertwined. While US businesses now adopt a cautious approach in placing orders, the deals have continued to flow as Chinese manufacturers remain competitive. Liuyang has over decades accumulated the technical know-how, the quality of its raw materials, proper regulatory oversight and strict transportation requirements, Mr Wu said. Factories dot the surrounding mountainous terrain of the city, about an hour's drive from the inland Hunan capital of Changsha. Production has to stop for about a month for safety reasons every summer because of the heat. 'America needs fireworks – this will not change,' said Mr Wu. 'At the very most, they will buy fewer, but they will not stop buying completely. In addition, we have good relations with our customers who trust in our products, and they also believe that this (tariffs issue) is temporary.' Screenshot from a video Mr Wu took of a Fourth of July fireworks celebration in Ohio earlier in July. His company's products were used. PHOTO: MARX WU According to the American Pyrotechnic Association, 90 per cent of professional display fireworks used in the US are imported from China. Reports say that US companies import close to US$400 million worth of consumer fireworks from China each year. More than 200 other imported products depend on China for more than 90 per cent of their supply, including baby carriages, vacuum flasks, umbrellas and artificial plants. Mr Stephen Olson, a visiting senior fellow at the ISEAS-Yusof Ishak Institute in Singapore who specialises in international trade, said that despite all the conflicts and tension, trade between the US and China has remained remarkably resilient. Although China's exports to the US declined in the first half of the year, China remains among the US' largest trade partners and will continue to be so for the foreseeable future, he said. China's exports to the US declined by 10.7 per cent in the first half of 2025, compared to the same period in 2024, a drop of US$25.7 billion. 'Trump's tariffs have undoubtedly dented China's cost competitiveness but the resilience of China's exports reflect the simple fact that China is the world's preeminent manufacturer and is overwhelmingly competitive in a host of consumer products and industrial inputs. It's simply not possible to cut China entirely out of US consumer markets or supply chains,' Mr Olson said. Mr Steve Houser, president of Missouri-based Red Rhino Fireworks who was on a work trip to China, said he has already placed his orders for 2026, but added that he – like other major importers – is doing so much more cautiously. 'I'm being very particular on what I order. I'm ordering only what I really, really need. I'm not really taking chances on other things because of the tariff rates; the goods are costing me a lot more,' he told ST. He said that the National Fireworks Association in the US was recently in Washington DC to make the case that fireworks should be exempt from the across-the-board tariffs of 30 per cent, as there are no viable alternative suppliers from other countries. Apart from the fireworks business, the US-China trade war has resulted in uncertainty for many exporters, such as those in Yiwu, of Zhejiang province, which is home to the world's largest wholesale market for small commodities. The sprawling Yiwu International Trade City hosts more than 70,000 shops selling products from cosmetics to stationery, backpacks and Christmas decorations. Most shops that stocked Halloween and Christmas decorations at the trade city declined to speak with ST in early July, when it is usually the peak sales season for these products. A few shop owners would only say that business is slower in 2025, while others said they were not authorised to speak with the media. Rows of dozens of shops at Yiwu International Trade City in Zhejiang province selling Christmas decorations were largely empty when ST visited in early July. ST PHOTO: LIM MIN ZHANG Ms Guo Xiabing, an entrepreneur in Zhejiang who runs a factory making Christmas trees in Yiwu, said that typically, US customers are more able to afford higher-priced products, such as those with more fanciful ornaments. She shared about her factory's race to ship orders in the 90-day trade truce between the US and China in a documentary aired in June. 'Customers also do not want to give up on the orders. But that also means that we are left hanging, not knowing when we can resume production and shipping. This type of uncertainty causes a lot of anxiety. Should we let go of the workers? How would we find jobs for them?' she said. Yet others have taken a longer-term view, and have long made efforts to diversify away from the US market. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, who has been in the industry for 30 years, counts the South American and African markets as his major customers - at about 50 per cent and 20 per cent respectively - with the US market accounting for only about 5 per cent. Chief executive of Aokai Sporting Goods in Yiwu, Mr Wu Xiaoming, inspecting a football bound for Nicaragua at his factory in Yiwu city, Zhejiang province. ST PHOTO: LIM MIN ZHANG He recalled that there was one American customer who called him to resume an order on May 13, shortly after news of successful US-China trade talks in Geneva was announced, as well as to place a new order for 90,000 footballs. His orders from the US are mainly for supermarkets. 'For the US market, the volume is still there. But it is US consumers who have to bear the cost (of the tariffs). If you force us to lower our costs, it means the quality of the product suffers, so ultimately it's still the consumers who pay the bill,' Mr Wu said. He believes that diversification is necessary for his company's viability, not only because of trade frictions, but also due to other sources of instability. He cited examples such as a Croatian client that halted a shipment because of the Kosovo War in 1998, and how demand from Russia has plummeted because of the Ukraine war. 'There has not been a period where the entire world was completely at peace... In Yiwu, we engage in global trade. If the West doesn't shine, the East will.'
CNA
11 hours ago
- CNA
Australia, Britain sign 50-year AUKUS submarine partnership treaty
SYDNEY: Australia's government said on Saturday (Jul 26) it signed a treaty with Britain to bolster cooperation over the next 50 years on the AUKUS nuclear submarine partnership. The AUKUS pact, agreed upon by Australia, Britain and the United States in 2021, aims to provide Australia with nuclear-powered attack submarines from the next decade to counter China's ambitions in the Indo-Pacific. US President Donald Trump's administration announced a formal review of the pact this year. Defence Minister Richard Marles said in a statement that the bilateral treaty was signed with Britain's Defence Secretary John Healey on Saturday after a meeting in the city of Geelong, in Victoria state. "The Geelong Treaty will enable comprehensive cooperation on the design, build, operation, sustainment and disposal of our SSN-AUKUS submarines," the statement said. The treaty was a "commitment for the next 50 years of UK-Australian bilateral defence cooperation under AUKUS Pillar I", it said, adding that it built on the "strong foundation" of trilateral AUKUS cooperation. Britain's ministry of defence said this week that the bilateral treaty would underpin the two allies' submarine programmes and was expected to be worth up to 20 billion pounds (US$27.1 billion) for Britain in exports over the next 25 years. AUKUS is Australia's biggest-ever defence project, with Canberra committing to spend A$368 billion over three decades on the programme, which includes billions of dollars of investment in the US production base. Australia, which this month paid A$800 million to the US in the second instalment under AUKUS, has maintained it is confident the pact will proceed. The defence and foreign ministers of Australia and Britain held talks on Friday in Sydney on boosting cooperation, coinciding with Australia's largest war games. As many as 40,000 troops from 19 countries are taking part in the Talisman Sabre exercises held from Jul 13 to Aug 4, which Australia's military has said are a rehearsal for joint warfare to maintain Indo-Pacific stability. Britain has significantly increased its participation in the exercise co-hosted by Australia and the US, with aircraft carrier HMS Prince of Wales taking part this year.
Business Times
12 hours ago
- Business Times
Nasa says thousands of employees set to resign from space agency
[WASHINGTON] National Aeronautics and Space Administration (Nasa) will lose roughly 3,870 employees through a voluntary resignation programme, part of a broad push from US President Donald Trump's administration to reduce the federal workforce. The numbers are subject to change as Nasa reviews applications, including if an employee withdraws from the programme or a resignation is not approved, the US space agency said on Friday (Jul 25). 'Safety remains a top priority for our agency as we balance the need to become a more streamlined and more efficient organisation and work to ensure we remain fully capable of pursuing a Golden Era of exploration and innovation, including to the Moon and Mars,' Nasa said. Nasa has offered employees two separate opportunities in 2025 to leave through the government's Deferred Resignation Programme. The agency said its expected remaining civil servant workforce would be about 14,000 people, following both resignation programmes, as well as normal attrition of about 500 people over the same time period. The first round came during the start of the Trump administration when federal workers received e-mails offering them the opportunity to take a buyout, an effort spearheaded by the Elon Musk-helmed Department of Government Efficiency. About 870 people, or 4.8 per cent of the Nasa workforce, took the offer then. Nasa initiated its own second round of deferred resignation beginning in early June, with a deadline to opt in by Jul 25. About 3,000 personnel, or 16.4 per cent of the workforce, took it up, the agency said on Friday. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Executives at the space agency, who have been working to reduce headcount to comply with the Trump administration's goal of shrinking the federal workforce, have spearheaded deferred resignation as a way to avoid layoffs. 'The reason we are doing this is to minimise any involuntary workforce reductions in the future,' Nasa's former acting administrator Janet Petro said during an agency town hall on Jun 25, according to an audio recording obtained by Bloomberg. 'That is our whole goal, minimising that.' Nasa had sought a 'blanket waiver' in February to save all of the agency's probationary employees from layoffs. The prospect of a mass exodus of employees from Nasa has raised alarm bells within the industry and at the agency, with some experts arguing that the cuts will cause Nasa to lose some of its best talent. In a letter to newly appointed Nasa interim administrator Sean Duffy titled The Voyager Declaration, hundreds of former and current employees warned Duffy, who is also the head of the Transportation Department, that workforce reductions could jeopardise the safety and efficiency of operations. 'Thousands of Nasa civil servant employees have already been terminated, resigned or retired early, taking with them highly specialised, irreplaceable knowledge crucial to carrying out Nasa's mission,' they wrote in the letter to Duffy. BLOOMBERG
