Weekly Market Update (Aug 03, 2025)

Market Hedwig
Aug 3
2 min read

HIGHLIGHTS

The disappointing job reports have increased the likelihood of rate cuts, while inflation would still be a concern for Fed.

New Tariff: Trump announced new reciprocal tariff rates for most countries that had not yet reached a deal. Overall, the new rates are still lower than April’s ones. It is likely that some of these will be negotiated down in the coming weeks.

Earnings: Most of the S&P500 companies (~70% market cap) reported positive Q2 earnings. The downward revision of forecast earlier this year has set a low bar for this season, causing these earnings beats. The implication of the positive corporate guidance is optimism in mitigating tariff headwind.

Dovish: The hawkish market interpretation of Wednesday’s FOMC announcement faded quickly after the job reports on Friday indicated a clear path to cuts. The cut pricing implies a gradual Fed path.

MARKETS

Nasdaq	20,650.13	-2.17%
S&P 500	6,238.01	-2.36%
Dow	43,588.58	-2.92%
10-Year	4.22%	-17bps
Brent	69.67	+2.97%
DXY	98.68	+1.03%

*Data as of market close. 5-day change ending on Friday.

VIEW FROM THE STREET

Equity

Morgan Stanley: The current backdrop is favorable for the recovery of the equity markets. Oversold, derisking and strong earnings, combined with the One Big Beautiful Bill are going to improve the market sentiment, suggesting a cyclical recovery and capex boom in the second half of the year.

UBS: Earnings are supported by the capital pending and weaker US dollar. Strong AI capex is expected to continue supporting the profit growth in tech. Monetization trends are also positive for tech sector.

Fixed Income

Goldman Sachs: Markets continue to reduce marginal allocation to the US, leading to further depreciation of US dollar. Fed is expected to be more dovish.

Morgan Stanley: The rapid depreciation of dollar has discouraged foreign US Treasury buyers. With the dollar stabilizing recently, foreign buyers have returned to the market.

Economy

Goldman Sachs: We believe US will bear most of the cost of tariffs. As the breadth of the tariff increases, it will be harder for US companies and consumers to find substitutes.

Barclays: The US-EU deal is likely to wipe out the worst-case scenario of 30% tariffs, but the terms are still unclear. We believe the eurozone real GDP growth to be revised upward

KNOWLEDGE TRANSFER

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DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.