“Despite the rhetoric to the contrary, this dynamic looks alive and well,” the strategists wrote in a report. “In our view, beyond the market reaction, if negative impacts of tariffs on growth, earnings or inflation start to materialise, we will get further relents.”
On Wall Street, Oracle’s 4.7 per cent rise was one of the strongest forces lifting the S&P 500. CEO Safra Catz said the tech giant “is off to a strong start” in its fiscal year and that it signed multiple large cloud services agreements, including one that could contribute over $US30 billion in annual revenue two fiscal years from now.
Bank stocks were also strong after the Federal Reserve said on Friday that they are financially strong enough to survive a downturn in the economy. JPMorgan Chase climbed 1 per cent, Wells Fargo rose 0.8 per cent and Citigroup gained 0.6 per cent.
GMS’ stock jumped 11.8 per cent after the supplier of specialty building products said it agreed to sell itself to a Home Depot subsidiary in a deal that would pay $US110.00 per share in cash. That would give it a total value of roughly $US5.5 billion ($8.4 billion), including debt.
Less than two weeks ago, another company, QXO, said it was offering to buy GMS for $US95.20 per share in cash. After the announcement of the Home Depot bid, QXO’s stock rose 4 per cent, and Home Depot’s stock slipped 0.6 per cent.
Hewlett Packard Enterprise rallied 11.7 per cent and Juniper Networks climbed 8.4 per cent after saying they had reached an agreement with the US Department of Justice that could clear the way for their merger go through, subject to court approval. HPE is trying to buy Juniper in a $US14 billion deal.
In the bond market, Treasury yields fell ahead of major economic reports later in the week. The highlight will be Thursday’s jobs report. It’s often the most anticipated economic data of each month, and it will come a day earlier than usual because of the Fourth of July holiday.
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The job market has remained relatively steady recently, even in the face of tariffs, but hiring has slowed. Economists expect Thursday’s data to show another slowdown in overall hiring, down to 115,000 jobs in June from 139,000 in May.
Such data has kept the Federal Reserve on hold this year when it comes to interest rates. Fed Chair Jerome Powell has said repeatedly that it’s waiting for more data to show how tariffs will affect the economy and inflation before resuming its cuts to interest rates. That’s because lower rates can fan inflation higher, along with giving the economy a boost.
Trump, meanwhile, has been pushing for more cuts to rates and for them to happen soon. Two of his appointees to the Fed have said recently they could consider cutting rates as soon as the Fed’s next meeting in less than a month.
The yield on the 10-year Treasury slipped to 4.23 per cent from 4.29 per cent late on Friday.
In stock markets abroad, indexes dipped modestly in Europe following a more mixed finish in Asia.
Stocks fell 0.9 per cent in Hong Kong but rose 0.6 per cent in Shanghai after China reported its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others’ exports, though manufacturing remained in contraction.
AP
