From the studio

Podcast: Investors Club: Semis tariffs, margin pressures, and tech's growth outlook (13 min)
Podcast:  (26 min)
վ:The AI Show: CIO's Sundeep Gantori on tech earnings (3 min)

Thought of the day

US equities are on track to post gains this week despite President Donald Trump’s sweeping “reciprocal” tariffs now being in effect, and looming levies on pharmaceuticals and semiconductors. While the S&P 500 dipped on Thursday, the benchmark index remains within 1% of its all-time high.

We believe stocks will stay supported amid solid fundamentals, but fresh headlines in the coming week may challenge investor sentiment that remains vulnerable to tariff, economic, and geopolitical risks.

Trade headlines are likely to stay top of mind for investors. Markets will likely need assurance that China can secure another 90-day reprieve from the trade war as the current truce expires on 12 August. President Trump’s comment earlier this week that he was “getting very close to a deal” with Beijing supported market optimism, but threats that the world’s second-largest economy could face new tariffs if it continues buying Russian oil remain. Further developments on the tariffs to which Indian and Swiss goods are subject will likely be a focus, while investors will pay close attention to details, if any, on semiconductors and pharmaceuticals. Additionally, gold traders will be grappling with the implications of previously unanticipated tariffs on 1kg gold bars, as the Financial Times . This could comprise the bulk of Switzerland's bullion exports to the US.

Geopolitical developments could add additional complexity. Given Trump’s increased pressure on Moscow to end the war in Ukraine, the reportedly imminent meeting between the US and Russian presidents could be key in shaping a potential ceasefire to the conflict. The situation is fluid, while tensions in the Middle East remain. Israel has approved a plan to take control of Gaza City, with Prime Minister Benjamin Netanyahu warning of taking military control of the entire Gaza Strip. While he said his country intends to hand over the territory to Arab forces, few details were available on the governance arrangements.

Economic data should keep fundamentals in focus. One reason markets have appeared to be taking Trump’s tariff threats in stride is the recognition of a still resilient US economy and expectation that the Federal Reserve will resume policy easing next month. Economic data including the consumer and producer inflation releases, retail sales, and industrial production could put these market assumptions to test. Longer term, markets will also watch out for the top candidates to succeed Fed Chair Jerome Powell next year, as well as the permanent replacement for former Fed Governor Adriana Kugler. Trump on Thursday nominated Council of Economic Advisers Chairman Stephen Miran as an interim replacement until January.

So, we think investors already allocated to equities in line with their strategic benchmarks should consider implementing short-term hedges, while those underallocated can prepare to add exposure on potential market dips.