Markets Rebound as Tariff Fears Stir, Fed Cuts Eyed

Market Summary – Tuesday, August 5

• US Stocks Rebound: US equities rose on Monday, recovering from last week’s losses. The small-cap Russell 2000 outperformed, while Communication, Utilities, and Technology sectors led gains. Energy stocks lagged due to falling oil and gas prices, though crude bounced slightly after President Trump threatened steep tariffs on India for reselling Russian oil.
• Tariff Alert: President Trump pledged to "substantially" raise tariffs on India in response to its Russian oil trade. The announcement pressured energy markets early in the session before a partial recovery.
• US Dollar Strengthens: The dollar firmed broadly, especially against the Swiss franc, Australian dollar, and New Zealand dollar, weighing on global market sentiment.
• Fed Outlook: Fed’s Mary Daly reiterated two rate cuts are still likely this year, though a September cut remains uncertain. Goldman Sachs also sees a potential 50bps cut if unemployment rises sharply. Labor market data remains the key driver for Fed policy decisions.
• Japan & BoJ: The Bank of Japan minutes confirmed a cautious tone despite inflation overshooting forecasts. While they’re open to more hikes if data supports it, they're monitoring risks. Japan’s services PMI rose to 53.6, driven by domestic demand, though hiring slowed due to tight budgets.
• China Services Sector Grows: China's July Services PMI climbed to 52.6—highest since May 2024—boosted by domestic demand and tourism. Companies raised prices amid rising input costs, and employment also increased. However, overall economic momentum slowed slightly, with the composite PMI dipping to 50.8.
• Commodities:
  • Oil: Crude futures were subdued after recent declines and the OPEC+ output hike, though they recovered from lows on tariff headlines.
  • Copper: Copper prices held steady, helped by risk-on sentiment and China's stronger services data.
  • Gold: Spot gold traded flat, capped by a firmer US dollar.
  • Libya: Libya's NOC signed an MoU with ExxonMobil, restarting exploration activity after a decade.
• Crypto & Regulation:
  • Bitcoin edged lower, slipping below $115,000.
  • The CFTC will allow spot crypto contracts to trade on registered futures exchanges.
  • The US Genius Act will enable businesses to integrate stablecoins, and some brokers have already adopted this feature.
• Key Data Today (US):
  • 15:45 – S&P Global Services PMI (Jul): Expected 55.2 (prev. 52.9)
  • 16:00 – ISM Non-Manufacturing PMI (Jul): Expected 51.5 (prev. 50.8)
  • 16:00 – ISM Non-Manufacturing Prices (Jul): Previous 67.5
• Earnings on Watch:
  • AMD (EPS est. $0.48, Revenue $7.41B)
  • Arista Networks
  • SMC
  • Snap Inc.
  • Pfizer
  • Caterpillar
• Dax Technical Analysis 4 hours

• The DAX is showing a continuation of the recovery that began after the sharp breakdown from the symmetrical triangle. Price action has rebounded strongly from the 23,300 area and is now approaching the key 23,900–24,000 resistance zone. This area also overlaps with the 20-period EMA and prior breakdown level, which could act as short-term resistance.
• Momentum indicators suggest bullish traction is still in play. The RSI has reclaimed the midline near 50 and is heading upward, while the Stochastic RSI has entered overbought territory, hinting that the upside may be facing near-term exhaustion. For bulls to regain full control, a close above 24,000 would be essential, confirming a potential false breakdown and opening the door for a move toward the upper 24,300s. Conversely, failure to clear this area could trigger renewed downside pressure.