Market News

Signs of a delayed, piecemeal approach to USMCA renegotiation add to the uncertainty already weighing on North American trade flows, particularly for autos, steel and aluminum exporters awaiting relief from Section 232 tariffs. Markets are likely to view an interim deal with Mexico as more achievable near term, given Mexico's direct engagement in bilateral talks, while a genuine breakthrough with Canada looks harder to square with Trump's freshly imposed 50% tariff on a swathe of Canadian goods this same week. That escalation raises real questions over how credible Greer's timeline for a Canada arrangement by year end actually is, and whether Ottawa's exclusion from the Mexico talks leaves it with little leverage to negotiate better…

A steady headline unemployment rate would offer only limited reassurance to the RBA given both banks' emphasis on broader signs of labour market slack building beneath the surface. Westpac's focus on a corrected underemployment series showing a material rise, rather than the previously reported sideways trend, points to a softer underlying jobs picture than earlier data suggested. CBA's flagged risk of a downside surprise to 4.3% could briefly support the case for a more dovish RBA reading, though both banks agree the medium term trend is toward gradually higher unemployment.

For the Australian dollar, a steady headline print is likely to be a non-event, but any softer than expected outcome, particularly a dip toward 4.3% or weaker…

The attack marks a significant escalation in the Houthis' campaign against Saudi shipping and threatens to further disrupt tanker traffic through the Bab el-Mandeb Strait, a critical chokepoint linking the Red Sea to the Gulf of Aden. A declared closure of the strait to Saudi flagged tankers, combined with reports that nearly ten vessels have already diverted, points to rising freight and insurance costs and could prompt shippers to reroute around the Cape of Good Hope. The threat to strike Saudi oil refineries directly raises the stakes considerably, given the kingdom's role as the world's largest oil exporter, and is likely to add a fresh risk premium to crude prices. Markets will be watching closely for any Saudi response and whether…

The military buildup raises the risk of further escalation in a conflict that has already disrupted tanker traffic through the Strait of Hormuz, a chokepoint for roughly a fifth of global oil flows before the war began. Continued Iranian attacks on commercial vessels transiting the strait, combined with Houthi threats in the Red Sea, keep a geopolitical risk premium embedded in oil prices and elevate freight and insurance costs for shipping through the region. Any move toward strikes on Iranian infrastructure, as floated by President Trump, would likely trigger a sharper reaction in crude markets given the potential for direct retaliation against energy assets or further disruption to the strait. Congressional approval of additional war…

Oil remains underpinned by ongoing escalation in the Middle East. 

• UK military report yet another tanker has been struck, this time in the Red Sea

Centcom announcement:

Paulson's comments add a prominent voice to the case for continued gold strength, reinforcing a narrative already supported by sustained central bank buying and diversification away from the US dollar. His view that gold is emerging as a de facto reserve currency could encourage further institutional allocation, particularly among reserve managers looking to reduce dollar concentration. The remarks also follow gold's push above $5,000 an ounce and its subsequent pullback, framing the recent retracement as a pause within a longer uptrend rather than a shift in trend. High profile bullish commentary of this kind tends to support sentiment among gold investors and can influence positioning in both bullion and mining equities.

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Gold surged…

Yemen said it would be attacking Saudi vessels. And here we are. Report via UKMTO. 

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The United Kingdom Maritime Trade Operations (UKMTO) is a Royal Navy-run maritime security centre, based in Bahrain, that has served as a trusted authority in the maritime security sector for more than 25 years, helping protect crucial trade routes by providing mariners, shipping companies, and regional authorities with essential, verified and corroborated security information. Its remit centres on the Middle East and Indian Ocean region, spanning key chokepoints like the Strait of Hormuz, the Bab el-Mandeb Strait and the wider Red Sea, Gulf of Aden and Gulf of Oman. UKMTO's core function is acting as a liaison between merchant shipping and naval and…

The labour market report from Australia features today. The unemployment rate is expected to remain steady at a low, by historical standards, 4.4%. Its risen over past months as the three Reserve Bank of Australia rate hikes in succession have weighed on jobs growth, at the margin, but unless its some sort of blow up higher, or jobs added shunt substantially into the negative, the data today is unlikely to impact the RBA, or AUD, too much. 

Formalising nuclear cooperation with Saudi Arabia extends Washington's strategic footprint in the Gulf and could reshape the kingdom's longer term energy mix by adding a civilian nuclear component alongside its oil and gas base. The agreement is likely to be watched closely by regional rivals and nonproliferation advocates given Saudi Arabia's stated ambitions around uranium enrichment. For oil markets, the deal reinforces the broader US-Saudi strategic relationship at a time when Gulf energy and security ties remain closely linked to production policy within OPEC+. Congressional review introduces an element of political risk to the timeline, with lawmakers likely to scrutinise the safeguards provisions before the partnership can move…

• US stock indices give up their gains and close lower on the day
• Alphabet beats Q2 estimates as cloud revenue surges and Gemini usage grows
• Tesla, Alphabet, ServiceNow, IBM, Texas Instruments all report after the close
• Iran broadens its threats as the rhetoric turns increasingly dangerous
• ECB expected to hold, but EURUSD is nearing a breaking point after being confined.
• US has informed Israel of its intention to use bombers in bombing Iran
• US treasury auctions off $13 billion of 20 year bonds at a high yield of 5.163%
• The major European indices close higher the 3rd day in a row.
• Microsoft: AI adoption is "accelerating at an incredible pace", but stock is not impressed.
• USTR Greer testifies in the Senate: We are moving with all due speed on USMCA…

The earnings miss on margin compression could weigh on sentiment in early trading, even as the revenue beat and a narrower than expected cash burn offer investors some offset. A gross margin of 16.8%, well below the 19.4% forecast, is likely to renew scrutiny of pricing and cost pressure in the core automotive business. Progress on Cybercab, the Robotaxi rollout and the Optimus production timeline may bolster the longer term growth narrative that underpins Tesla's valuation beyond traditional vehicle sales. A return to growth in energy storage and continued expansion in FSD subscriptions could help balance near term concerns over profitability.

--- Tesla's profit slipped on thinner margins, but revenue growth, narrower cash burn and…

The major US stock indices gave up their gains and are closing lower on the day:

• Dow industrial average fell -6.0 points or -0.01% to 52224.23. The index was up 286.02 points at the session highs.
• S&P index fell -10.24 points or -0.14% to 7498.97. At session highs the index was up 16.73 points.
• NASDAQ index fell -146.30 points or -0.57% to 25690.90. At session highs, the index was up 4.10 points,
• The Russell 2000 fell -27.45 points or -0.92% to 2959.93.

After the close, Tesla, Alphabet, ServiceNow, IBM and Texas Instruments all reported. 

• Alphabet (GOOGL): EPS $9.11 vs. $2.88 est. (Beat); Revenue $119.8B vs. $117.0B est. (Beat) — The EPS was influence by one time gains. The stock is  up 0.68% after the close. 
• Tesla (TSLA): Adjusted EPS $0.33…