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Wednesday, July 9

Noteworthy US mega-cap moves today: JPMorgan Chase & Co (JPM) +1.1%. 

Recent developments in U.S. trade policy have significantly influenced market sentiment, particularly with President Trump's announcement of new tariffs targeting various countries and sectors, including a 50% tariff on copper imports set to take effect within 30 days. This has led to notable increases in commodity prices such as copper while also raising concerns about the broader economic implications of these measures.

In addition, there is heightened anticipation surrounding the release of minutes from the Federal Open Market Committee's June meeting later today. These minutes are expected to provide insights into monetary policy direction amid ongoing inflation pressures and external risks associated with renewed tariff threats that could impact growth forecasts.

European markets have reacted positively amidst this uncertainty; major indices like Germany’s DAX saw gains due partly to an absence of immediate new tariffs affecting Europe directly and optimism regarding potential trade negotiations between the EU and U.S., which may extend deadlines for existing tariffs beyond August 1st.

iShares China Large-Cap ETF (FXI) [-0.9%]
China's producer prices saw a significant decline of 3.6% in June year-over-year, the largest drop since July 2023, while the consumer price index rose by 0.1%, exceeding expectations for no change. The core consumer price index also increased by 0.7% from a year ago. These figures suggest underlying challenges in China's economic landscape. Concurrently, US President Donald Trump announced substantial new tariffs, including a 50% tariff on copper imports, which may heighten uncertainty in global trade relations and affect sentiment towards Chinese equities like those represented by iShares China Large-Cap ETF (FXI). The ETF's current daily return reflects this sentiment, showing a decline of nearly 1%. Among its holdings, JD and YUMC posted negative returns, contributing to the overall performance drop. Additionally, the AUD/USD pair experienced a slight decrease, further mirroring broader market sentiment that may influence FXI.

Global X Copper Miners ETF (COPX) [-0.7%]
Global X Copper Miners ETF (COPX) experienced a daily return of approximately -0.68%, influenced by President Donald Trump's announcement of a 50% tariff on copper imports. This decision has raised concerns about inflationary pressures and potential disruptions in global copper supply chains. Among the ETF's holdings, Southern Copper Corp (SCCO) saw an intraday increase, while other contributors like Ero Copper Corp (ERO) received a favorable Buy rating from an analyst, supporting its upward movement. Notably, copper prices surged to record highs following the tariff announcement, with futures rising significantly. In related markets, silver prices declined, reflecting broader market sentiment that may also impact COPX.

WPP | -16.1% | -5.2B
WPP PLC | Advertising
WPP PLC has issued a second profit warning this year, citing a deteriorating economic environment. The company now projects a decline in comparable revenue of 3% to 5% for the year, a significant downgrade from its previous forecast of flat to down 2%. For the first half of 2025, WPP anticipates revenue, excluding pass-through costs, to be around £5 billion, reflecting a drop of 4.2% to 4.5%. The second quarter is expected to experience an even sharper decline of 5.5% to 6%. Additionally, operating margins are projected to decrease by 2.8 to 3.3 percentage points year-over-year. Social media discussions reveal that WPP shares have recently fallen sharply, with reports of a 19% drop following the profit warning and indications that the stock has reached a sixteen-year low amid concerns over client spending influenced by macroeconomic uncertainties.

OMC | -3.4% | -475.0M
Omnicom Group Inc | Advertising
Omnicom Group Inc. shares are under pressure following a significant premarket drop in WPP shares, which fell sharply after the company revised its full-year net sales guidance, projecting a decline of 3% to 5%. WPP also indicated a decrease in operating margin, contrasting with its previous forecast of stable sales and profit margins. This news has likely influenced market sentiment towards Omnicom and other advertising firms, given their historical correlation. WPP's recent profit warning, citing a deteriorating economic environment and revised revenue outlook, has contributed to a broader concern regarding challenges within the advertising sector, which may also affect Omnicom's performance.

AES | +15.2% | +1.4B
AES Corp | Independent Power Producers & Energy Traders
AES Corporation is witnessing a significant surge in its stock price following reports of potential acquisition interest. A Bloomberg article revealed that the company is exploring strategic options, including a possible sale, as large investment firms express interest. AES's enterprise value stands at approximately $40 billion, making any potential leveraged buyout noteworthy. As of this morning, AES shares are trading at 11.07, reflecting an increase of 1.70. Social media discussions emphasize the heightened activity surrounding AES, with notable bullish options trading observed, particularly in August call options, which have garnered substantial open interest. This market response underscores the growing enthusiasm regarding AES's exploration of a sale and its future prospects.

VRNA | +20.7% | +1.8B
Verona Pharma PLC | Pharmaceuticals
Merck has announced a definitive agreement to acquire Verona Pharma for approximately $10 billion, with a purchase price of $107 per American Depository Share (ADS), reflecting a 23% premium over its previous closing price. This acquisition is intended to enhance Merck's portfolio in respiratory treatments, particularly with the inclusion of Ohtuvayre, a first-in-class maintenance therapy for chronic obstructive pulmonary disease (COPD) that received FDA approval in June 2024. The transaction is expected to close in the fourth quarter of 2025, pending regulatory approvals and shareholder consent. Both companies' boards have unanimously approved the deal. In response to this news, Verona Pharma's stock price has increased significantly since Tuesday.

BABA | -2.2% | -45.8B
Alibaba Group Holding Ltd | Broadline Retail
Alibaba Group Holding Ltd has experienced a price decline of 2.2% since Tuesday. Jefferies analyst Thomas Chong has revised the company's price target down to 150 from 153 while retaining a Buy rating. He highlighted that market expectations regarding investments in instant commerce have formed, with strong momentum noted across various segments during the June quarter. Despite customer management revenue for Taobao and Tmall expected to surpass GMV growth, EBITA for these platforms is projected to decrease by 20% year-on-year due to these investments. Additionally, Alibaba has completed a private offering of HK$12.023 billion in zero coupon exchangeable bonds maturing in 2032, which can be exchanged for shares or cash, referencing shares of Alibaba Health Information Technology Limited.

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