EU Warns of Retaliation as Trump Presses Fed, Tariff Tensions Rise

Global Sentiment: Risk-on
Factors: Earnings Optimism, Trade Tension

TODAY’S WATCHLIST
- China April-June GDP Data 
- India June Trade Data 
- US June CPI Data

THE BIG STORY
The European Union on Monday warned of potential retaliation if President Donald Trump follows through on his threat to impose sweeping 30% tariffs on most EU imports starting August 1. EU officials accused the US of stalling trade talks and said preparations for countermeasures were underway. Trump, however, signalled openness to continued discussions, saying EU negotiators would arrive in Washington soon. The warning to Europe follows a flurry of similar tariff threats aimed at Mexico, Japan, and South Korea as Trump broadens his global trade offensive.

Amid rising trade tensions, Trump also renewed pressure on the Federal Reserve, calling for a drastic interest rate cut to 1% to ease federal borrowing costs and stimulate growth. “The Fed is killing growth,” he said, as government debt servicing burdens soar. Meanwhile, Fed Chair Jerome Powell requested an independent review of the central bank’s $2.5 billion renovation project, which has come under scrutiny from Trump allies. Though the president cannot fire Powell over monetary policy, critics believe the cost overruns may offer a political opening for Trump to push for his removal ahead of the 2026 end of Powell’s term. 

DATA
UK retail sales rose by 2.7% year-on-year on a like-for-like basis in June 2025, a marked improvement from May’s 0.6% growth and well above expectations of just 0.2%. The surge was driven by warmer weather and major sporting events like Wimbledon, which lifted high street footfall and boosted demand for items such as fans and sportswear. Food sales jumped by 4.1%, largely due to continued price inflation, while non-food sales increased by 2.2% as shoppers took advantage of summer promotions. The figures suggest resilient consumer spending despite ongoing cost pressures. 

WHAT HAPPENED OVERNIGHT
US stocks indices closed slightly higher on Monday as investors looked past President Trump’s renewed tariff threats and held steady ahead of a packed week of economic data and corporate earnings. Most sectors ended in positive territory, led by a 0.7% gain in communication services, helped by strength in Netflix and Warner Bros. Discovery. 

US Treasury yields were mixed on Monday as markets digested fresh political pressure on the Federal Reserve and speculation over Chair Jerome Powell’s future. White House economic adviser Kevin Hassett suggested Trump could have grounds to dismiss Powell over cost overruns linked to the Fed’s Washington headquarters renovation, fuelling unease in bond markets. Trading was notably choppy, with longer-dated yields touching multiweek highs as investors weighed the potential implications of a leadership shake-up at the Fed, even as Powell maintains a patient stance amid ongoing tariff uncertainty.

The US dollar index held steady on Monday, maintaining its recent upward momentum as investors weighed escalating trade tensions and awaited key inflation data due Tuesday. President Trump’s announcement of a 30% tariff on imports from the EU and Mexico, effective 1 August, added to global trade uncertainty, though currency markets showed a muted reaction. 

Brent crude oil prices fell on Monday after President Trump refrained from imposing new sanctions on Russian oil, underwhelming markets that had been bracing for more aggressive measures. Although Trump warned of potential 100% secondary tariffs on Russia if no ceasefire is reached within 50 days, the lack of immediate action led to a pullback in crude prices as traders reassessed the near-term geopolitical risk premium.

Day’s Ledger
Economic Data:

• China June Unemployment Rate
• China April-June GDP data
• China June Industrial Production Data
• German July ZEW Economic Sentiment Index
• Eurozone May Industrial Production Data
• India June Trade Data
• US June CPI Data
• US NY Empire State July Manufacturing Index
• US OPEC Monthly Report
• Corporate Actions:
• Apr-Jun earnings: AWL Agri, Bank of Maharashtra, Geojit Financial Services, GM Breweries, Hathway Cable, HDB Financial, HDFC Life Insurance, Himadri Speciality, ICICI Lombard, ICICI Prudential, Just Dial, Kamadgiri Fashion, Key Corp, Network18 Media, Nureca, Plastiblends India, RR Financial, Swaraj Engines, Tokyo Finance, VK Global.
• Allcargo Terminals to consider fund raising 
• Anupam Rasayan to consider interim dividend
• Centrum Capital to consider fund raising 
• JTEKT India to consider right issue 
• Kretto Syscon to consider final dividend, bonus share issue
• Osia Hyper to consider fund raising 
• Tembo Global to consider fund raising  
• Policy Events
• ECB Buch Speaks
• Fed Vice Chair for Supervision Barr Speaks  
• FOMC Member Bowman Speaks 
• TICKERS
• ASTRAZENECA PHARMA gets CDSCO nod to market cancer drug Imfinzi for new indication in muscle invasive bladder cancer; expands label after recent endometrial cancer approval.
• AUTHUM INVESTMENT June quarter profit drops 14% YoY to ₹9.41 bln on lower revenue; finance costs more than double, while board names Amit Dangi as chairman.
• BRIGADE ENTERPRISES board approves raising up to ₹15 bln via non-convertible debentures in one or more tranches through private placement.
• HCL TECH June quarter net profit drops 10% YoY to ₹3,843 crore, revenue up 8% to ₹30,349 crore; declares ₹12 interim dividend, maintains FY26 guidance.
• INOX WIND to consider fundraising proposal on Jul 18 via rights issue or other instruments; size not disclosed.
• LIC names R. Doraiswamy as CEO and MD for three years starting Jul 15; replaces Siddharth Mohanty post-superannuation.
• PATANJALI FOODS board to meet Jul 18 to consider bonus share issue; details on ratio or record date yet to be announced.
• RAILTEL bags ₹2.64 bln order from East Central Railway to implement Kavach train collision avoidance system across 607 route km.
• RAIL VIKAS NIGAM secures ₹4.47 bln Delhi Metro contract for 7.3-km viaduct and station works under Phase IV project; timeline set at 36 months.
• SUN PHARMA settles US Leqselvi litigation with Incyte; signs licensing deal for deuruxolitinib in non-oncology indications like alopecia areata.
• TATA TECHNOLOGIES June quarter revenue down 3.1% QoQ to ₹12.44 bln, net profit drops 9.7% QoQ to ₹1.70 bln on weak services business; EBITDA margin narrows to 16.1%.
• TEJAS NETWORKS June quarter net loss widens to ₹1.94 bln as revenue plunges 89% QoQ to ₹2.02 bln; tax write-back cushions some impact, but outlook weak.

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