September S&P 500 E-Mini futures (ESU25) are down -0.29%, and September Nasdaq 100 E-Mini futures (NQU25) are down -0.30% this morning, pointing to a lower open on Wall Street after U.S. President Donald Trump escalated his trade war.

President Trump said in letters shared on his social media platform on Saturday that the U.S. will impose a 30% tariff on goods imported from both the European Union and Mexico beginning August 1st. Mr. Trump also said that if the EU or Mexico retaliated by increasing tariffs on the U.S., the U.S. would add that figure to the 30% rate. In response, European Commission President Ursula von der Leyen said on Saturday that the EU was prepared to retaliate to defend its interests. “We will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required,” she said. However, the EU said on Sunday it would extend its suspension of countermeasures to U.S. tariffs until early August and maintain efforts to reach a negotiated settlement.

White House economic adviser Kevin Hassett said on Sunday that Trump had seen some trade deal offers and believes they need to be improved, adding that without that, he would move forward with the proposed tariffs on Mexico, the EU, and other countries. “Well, these tariffs are real if the President doesn’t get a deal that he thinks is good enough,” Hassett told ABC’s This Week program. “But you know, conversations are ongoing, and we’ll see where the dust settles.”

Adding to the negative sentiment, Trump and his allies intensified their criticism of Federal Reserve Chair Jerome Powell’s handling of the costly renovation of the Fed’s headquarters. Some administration officials are working to build a case to remove Powell from the Fed’s Board of Governors.

This week, investors look ahead to the release of key U.S. inflation data, comments from Fed officials, and the start of the second-quarter earnings season.

In Friday’s trading session, Wall Street’s major equity averages ended in the red. Albemarle (ALB) slid over -4% and was among the top percentage losers on the S&P 500 after UBS downgraded the stock to Sell from Neutral with a price target of $57. Also, airline stocks retreated, with American Airlines Group (AAL) falling more than -5% and United Airlines Holdings (UAL) dropping over -4%. In addition, Capricor Therapeutics (CAPR) plummeted about -33% after the U.S. Food and Drug Administration declined to approve the company’s cell therapy for a heart condition. On the bullish side, most members of the Magnificent Seven stocks advanced, with Alphabet (GOOGL) and Amazon.com (AMZN) rising more than +1%.

“The stock market is looking lower due to President Trump’s more hawkish stance on tariffs. With the market overbought and very expensive, the market is getting ripe for some sort of a pullback,” said Matt Maley at Miller Tabak.

Second-quarter corporate earnings season kicks off this week, with big banks such as JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) set to release their earnings reports on Tuesday, followed by Bank of America (BAC), Morgan Stanley (MS), and Goldman Sachs (GS) on Wednesday. Netflix (NFLX), PepsiCo (PEP), Abbott Labs (ABT), Johnson & Johnson (JNJ), American Express (AXP), and 3M (MMM) are among other major names scheduled to deliver quarterly updates during the week. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +2.8% increase in quarterly earnings for Q2 compared to the previous year, marking the smallest rise in two years.

On the economic data front, the U.S. consumer inflation report for June will be the main highlight this week. The report will be closely scrutinized for any indications of whether tariffs are already driving up prices and what implications this could have for U.S. interest rates. Investors will also keep an eye on June wholesale inflation data, which will offer insight into pipeline inflationary pressures. Other noteworthy data releases include U.S. Retail Sales, Core Retail Sales, Industrial Production, Manufacturing Production, the Empire State Manufacturing Index, the Export Price Index, the Import Price Index, Initial Jobless Claims, the Philadelphia Fed Manufacturing Index, Building Permits (preliminary), Housing Starts, and the University of Michigan’s Consumer Sentiment Index (preliminary).

Also, market participants will hear perspectives from a slew of Fed officials, including Waller, Bowman, Barr, Barkin, Collins, Logan, Williams, Kugler, Daly, and Cook, throughout the week.

In addition, the Fed will release its Beige Book survey of regional business contacts this week, which provides an update on economic conditions in each of the 12 Fed districts. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

Meanwhile, RBC Capital Markets strategists pushed back their forecast for the Fed to resume easing to December from September, citing the need for more time to evaluate inflation and labor market conditions.

U.S. rate futures have priced in a 93.3% chance of no rate change and a 6.7% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.

The U.S. economic data slate is empty on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.423%, down -0.05%.

The Euro Stoxx 50 Index is down -0.54% this morning as sentiment took a hit after U.S. President Donald Trump announced a 30% tariff on most European Union imports starting August 1st. Tariff-exposed automobile stocks led the declines on Monday. Still, the benchmark index’s losses were largely limited by hopes that trade negotiations would result in a less severe rate for the bloc. Trump said in his letter to European Commission President Ursula von der Leyen on Saturday that the 30% tariff was imposed to “move away” from trade deficits with the EU, which he blamed on the bloc’s own tariffs and other trade policies. EU trade commissioner Maros Sefcovic said on Monday that the bloc aims to reach a good trade deal with the U.S., while also preparing potential countermeasures in case the talks collapse. “I intend to speak with my U.S. counterparts again later today, as I cannot imagine walking away without genuine effort,” Sefcovic added. Italy’s Foreign Minister Antonio Tajani said in a newspaper interview on Monday that the EU has already drawn up a list of tariffs totaling 21 billion euros ($24.5 billion) on U.S. goods if the two sides fail to reach a deal. Investors will closely follow the EU’s Foreign Affairs Council meeting on trade later today, where ministers in Brussels are expected to discuss the current state of EU-U.S. trade relations and the path ahead. Investor focus this week is also on the final estimate of Eurozone inflation, Eurozone industrial production figures, and Germany’s ZEW index of investor sentiment. In corporate news, Lifco (LIFCB.S.DX) plunged over -8% after the company posted weaker-than-expected Q2 pre-tax profit.

The European economic data slate is empty on Monday.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.27%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.28%.

China’s Shanghai Composite Index closed higher today as investors digested positive trade data from the country. Energy and bank stocks outperformed on Monday. At the same time, property stocks slumped, extending the pullback from last week’s rally that was driven by speculation over possible stimulus measures. There has been some speculation that the central government may roll out new policies to stimulate markets nationwide, but “we believe that upcoming demand-side property market easing measures are likely incremental instead of large-scale,” analysts at Goldman Sachs said in a note on Monday. Meanwhile, customs data released on Monday showed that China’s exports rose at a quicker pace in June amid easing trade tensions with the U.S., delivering a much-needed boost for the world’s second-largest economy. Also, data showed that the country’s imports rebounded last month. Still, the latest round of tariff threats from U.S. President Donald Trump kept investors on edge. Analysts caution that Beijing could be indirectly affected by U.S. pressure on third countries widely used for transhipments of Chinese goods. The U.S. president has also threatened a 10% levy on imports from BRICS countries, of which China is a founding member, adding to the risks facing Beijing. Investors now await China’s second-quarter GDP data, scheduled for release on Tuesday, which is expected to influence expectations on whether the country can meet its 5% full-year growth target. Also on Tuesday, key June data will provide further clarity on household spending and industrial activity.

The Chinese June Trade Balance stood at $114.77B, stronger than expectations of $113.20B.

The Chinese June Exports rose +5.8% y/y, stronger than expectations of +5.0% y/y.

The Chinese June Imports rose +1.1% y/y, weaker than expectations of +1.3% y/y.

Japan’s Nikkei 225 Stock Index closed lower today as worries over an upcoming domestic election and lingering uncertainty surrounding trade talks with the U.S. dampened sentiment. Technology and electronics stocks led the declines on Monday. Japanese Prime Minister Shigeru Ishiba has said the country would continue negotiations with the U.S. to seek a mutually beneficial trade deal after President Trump last week increased tariffs on Japanese imports to 25% effective August 1st. At the same time, prospects of Ishiba’s ruling coalition retaining its majority in the upper house following the July 20th vote are fading. Nomura strategist Fumika Shimizu said, “If the ruling party were to lose its majority in the upper house, there is a risk that trade negotiations with the U.S. will be delayed, and market concerns about fiscal expansion will increase.” Meanwhile, Japanese government bond yields climbed on Monday, nearing levels last seen in May, as worries mounted that an upcoming election could open the door to increased fiscal spending. On the economic front, data released on Monday showed that Japan’s monthly industrial production unexpectedly fell 0.1% in May, defying flash estimates of a 0.5% increase. Separately, data showed that Japan’s monthly core machinery orders, a key gauge of capital spending, fell in May. Economists said that capital expenditure is expected to remain subdued for a while due to ongoing policy-related uncertainty and weak domestic consumption. In other news, Bloomberg reported that Bank of Japan officials are likely to consider revising up at least one of their inflation projections at a policy meeting later this month, after rice and food-related prices rose more than anticipated. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +4.72% to 23.96.

The Japanese May Core Machinery Orders came in at -0.6% m/m and +4.4% y/y, stronger than expectations of -1.4% m/m and +3.4% y/y.

The Japanese May Industrial Production fell -0.1% m/m, weaker than expectations of +0.5% m/m.

Pre-Market U.S. Stock Movers

Affirm (AFRM) slid over -2% in pre-market trading after BTIG downgraded the stock to Neutral from Buy.

CrowdStrike Holdings (CRWD) fell more than -1% in pre-market trading after Morgan Stanley downgraded the stock to Equal Weight from Overweight.

Boeing (BA) rose over +1% in pre-market trading after preliminary findings from India’s Aircraft Accident Investigation Bureau indicated that last month’s crash of Air India flight 171 was unlikely to be linked to aircraft design or manufacturing.

Cryptocurrency-exposed stocks are moving higher in pre-market trading after the price of Bitcoin hit a new all-time high of more than $123,000. MicroStrategy (MSTR) is up more than +2%. Also, MARA Holdings (MARA) is up over +4%, and Coinbase (COIN) is up more than +1%.

Synopsys (SNPS) advanced over +3% in pre-market trading after receiving regulatory approval from China for its $35 billion acquisition of Ansys.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - July 14th

Fastenal (FAST), FB Financial (FBK), Equity Bancshares Inc (EQBK), Simulations Plus (SLP), Jewett-Cameron Trading (JCTC).