US markets closed mixed on Friday after reports emerged that President Donald Trump is pushing for steep new tariffs on European Union goods.
The Dow Jones Industrial Average fell 142 points, or 0.32%, to finish at 44,342. The S&P 500 ended fractionally lower at 6,296 after touching a record high earlier in the session. The Nasdaq bucked the trend, edging up 10 points to 20,895.
Earnings season gets off to a strong, if choppy, start
The latest corporate earnings also drove sentiment. Netflix tumbled 5% after warning its operating margin would shrink in the second half of the year. 3M shed over 3% after narrowing its sales growth forecast, and American Express dropped 2% following its results.
Still, the broader earnings season is tracking well. With 12% of S&P 500 companies reporting so far, 83% have topped expectations. Strong results earlier in the week from PepsiCo, United Airlines, and the big banks helped fuel optimism.
Consumer sentiment strengthens despite global uncertainty
There was some encouraging economic data. The University of Michigan’s July survey showed consumer sentiment rose to 61.8, its highest reading since February, matching forecasts. Consumers also reported the lowest concern about inflation in five months.
ASX to open lower, but RBA minutes and Bullock speech in focus
Back home, the ASX is set to open lower after climbing 2.1% last week to close at 8,757, its best weekly gain since May, with SPI 200 futures pointing to a 0.56% fall.
Investors are now looking ahead to the Reserve Bank of Australia’s meeting minutes on Tuesday and a key speech from Governor Michele Bullock on Thursday, which could pave the way for a rate cut in August.
RBA under pressure as unemployment rises
The central bank surprised markets by holding rates at 3.85% earlier this month. But a surprise jump in the unemployment rate, from 4.1% to 4.3% in June, has added to expectations that a cut is now likely.
Economists at NAB and Westpac see multiple cuts ahead, while others caution that quarterly inflation data will be crucial to the RBA’s decision.
