Investors continue to pour billions into emerging markets, even as Wall Street rides another bullish wave that saw Nvidia hit a $4 trillion market cap. However, the next round of tariffs are causing concern, with South Africa and copper squarely in Trump’s firing line – it’s not good news for two key sectors.
In other news, Britian’s banking on a building boom as the Labour party looks to cement economic growth with a bold infrastructure plan.
Build the economy
British infrastructure firms are expected to benefit from the Labour government’s spending plans for roads, railways, and energy projects, with strong order books anticipated to improve outlooks during the upcoming earnings season.
EM flows
Investors continue to divert capital into US-listed emerging market ETFs. According to Bloomberg, inflows totalled $2.46 billion in the week ended July 3, with $12.9 billion in inflows so far this year.
Bullish S&P view
Goldman Sachs has made another upward revision to its targets for the S&P 500 (VOO-NASQ), less than two months since its last adjustment. The bank anticipates more interest rate cuts by the Fed, and the strength of large US companies will buoy the bourse.
Tech resurgence
The S&P 500 (VOO-NASQ) rallied close to its all-time highs as traders brushed off tariff angst. The world’s largest tech companies led the rebound, with Nvidia Corp. (NVDA-NASQ) hitting a $4 trillion market cap – the first company in history to achieve that milestone.
Top tobacco
British American Tobacco (BATSL-TRQX) shares climbed after Jefferies Global Research & Strategy named it a top pick in tobacco. Jefferies confirmed that it is now regularly monitoring BAT’s financial performance, industry trends, and other factors that could affect its stock price (assumed coverage), assigning the stock a buy rating and a 4,800 GBp price target. The firm also assumed coverage of global tobacco with a positive view.
Tariffs cut profits
European stocks that are exposed to US tariffs have noted sharp earnings downgrades, according to Goldman Sachs strategists. Bloomberg reports that estimates have dropped more than 12% for a Goldman basket of European companies exposed to US duties.
Coal to the rescue
A Trump administration report predicts that blackouts in the US could double by 2030 due to an expected increase in power demand brought on by AI, according to Bloomberg. The report blames the expected energy shortfall on the closures of coal and natural gas power plants and overreliance on renewable energy, warning of a 100% “surge in power outages” within five years if planned power plant closures remain on schedule. The report supports President Trump’s pro-coal and anti-renewable approach to energy generation, citing concerns about electricity shortages and the need to “unleash American energy” to keep up with growing demand.
US consumer caution
US consumer borrowing increased in May at the slowest pace in three months on a pullback in credit card and other revolving debt outstanding. Bloomberg reports that total credit outstanding rose $5.1 billion after a revised $16.9 billion gain in April, citing Federal Reserve data. The median projection in a Bloomberg survey of economists called for a $10.5 billion rise. Credit card and other revolving debt outstanding declined $3.5 billion, the first decrease since November. Non-revolving debt, such as loans for vehicle purchases and school tuition, increased $8.6 billion.
Slowing spend
Amazon (AMZN-NASQ) Prime Day sales fell almost -14% in the first four hours of the event compared with the start of last year’s sale, according to Momentum Commerce, adding further support for a slowdown in US consumer spending.
Copper cop-out
A Bloomberg News report that cited people familiar with the matter suggests that Glencore (GLENL-TRQX) has reportedly agreed to sell the copper refinery it manages in the Philippines. The news comes as President Trump announced a 50% tariff on copper imports, reportedly taking effect 1 August. If the 50% copper tariff is applied to all refined metal coming into the US, the biggest victims would be US manufacturers.
SA ready to exit grey list
South Africa is on the brink of being removed from the Financial Action Task Force (FATF) “grey list” after a major prosecutions push, said Reserve Bank governor Lesetja Kganyago, despite concerns about the backlog of white-collar crime cases. The Financial Times reported that last month, the FATF determined that South Africa
“substantially completed its action plan”, showing a “sustained increase in investigations and prosecutions of serious and complex money laundering cases”.
Kganyago said the last remaining step to removal from the grey list would be an on-site assessment by October to check that “the necessary political commitment remains in place”.
Trump triggers tariffs
In a clear blow for SA Inc., President Trump announced that he would subject imports from South Africa to new 30% tariffs, alongside Japan and South Korea, effective from 1 August. Car and farm product exports will likely experience the hardest hits. There is also potential for further levies, as Trump warned he’d add extra tariffs on any country that aligns with “the Anti-American” policies of BRICS. While leaving the door open to negotiations, investors will likely ascribe a modest probability to our ability to negotiate out of this quandary.
Last Mile hustle
Cellular provider Vodacom’s (VOD-JSE) long-delayed R13 billion fibre joint venture with Maziv has taken a significant step forward after the Competition Commission finally greenlighted the potential deal following years of delays, boosting the mobile operator’s Last Mile hustle plans.
Sector focus: Mining
Mining emerged as a top-performing sector, lifted by stronger metals prices after Goldman Sachs predicted that tight supply would send copper prices as high as $10,050 a ton in August. Platinum rose to its highest level since 2014 on solid demand from Chinese jewellery buyers who are favouring the metal over gold. Platinum gained as much as +3.3%, while palladium +4.4% also rallied.
