While tariff uncertainties linger ahead of an Aug 1 deadline, investors are pinning their hopes on resilient corporate earnings from Wall Street and European bellwethers to keep stocks and sentiment aloft.
Investors will parse through quarterly results for any clues on the impact trade uncertainty has had on profitability and consumer demand, with the earnings so far described by RBC Capital Markets as “fine but not fabulous”.
SAP, which has been riding a boom in demand for its cloud-based offerings spurred by artificial intelligence, will report later today, as will UniCredit and Julius Baer.
Focus will be on just how much the euro’s rise has eaten into profits of the firms in the bloc’s export-reliant economy after the single currency surged 9% in the April-June quarter.
The euro is up 13% so far in the year as investors looked for alternatives to US assets and to lower their dollar exposure in the wake of US President Donald Trump’s erratic trade policies.
SAP had predicted back in April that for every 1 cent rise in the euro, its annual revenue could decline by around 30 million euros.
The euro was last at US$1.1688 compared to US$1.1329 at the end of April.
Earnings from luxury behemoth LVMH and drugmaker Roche this week will also be of interest.
Tariffs and where they are headed remain on the agenda after diplomats said the EU is exploring wide-ranging “anti-coercion” measures which would let the bloc target US services or curb access to public tenders in the absence of a deal.
Trump has threatened 30% duties on imports from Europe if no agreement is signed before the Aug 1 deadline.
Meanwhile, the ‘will-he-won’t-he’ saga over Trump possibly firing Federal Reserve chair Jerome Powell rumbles on.
US treasury secretary Scott Bessent said yesterday the entire Federal Reserve needed to be examined as an institution and whether it had been successful, further exacerbating worries about the independence of the US central bank.
Key developments that could influence markets today include earnings from SAP, UniCredit and Julius Baer.