Japan Trade Deal Sparks Equity Index Rally, But Earnings Knock Down Some Stocks

With the August 1st US tariff deadline approaching, the United States has entered into a new trade deal with Japan, under which Japan will invest $550 Billion in the US, open its market to US automobiles and agricultural goods, and a 15% tariff on Japanese goods, which, in fact, represents a tariff reduction for automobiles.

The Nikkei soared 3.5% overnight on this news, while the Hang Seng gained 1.6%. US index futures are up 0.1% to 0.5%. Over in Europe, the DAX is up 0.6% while the FTSE is up 0.5%. Commodities are mixed on the news, with Copper rallying 1.6% but Crude Oil falling 0.7%. Currencies remain quiet, with Bitcoin down 0.7%, Gold down 0.1%, the Euro down 0.2%, and the Loonie up 0.1%.

Continuing a recent trend of big beats on earnings being followed by big selloffs in stocks, as traders take profits against news, Texas Instruments is down 9.9% in premarket trading despite the company reporting better-than-expected earnings and sales. Attention now turns to Big Tech results with Alphabet, Tesla, and IBM all scheduled to report after the market close today.

Canadian National Railway has kicked off Canadian earnings season by beating the Street by a penny; however, its shares are down 4.8% in US premarket action. Rogers Communications and Suncor Energy are scheduled to report results later today. 

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