Key Takeaways
- Canada's July employment data significantly missed expectations, with a net loss of 40,800 jobs, intensifying market expectations for a Bank of Canada interest rate cut by year-end.
- The White House announced that President Trump will sign comprehensive agreements with Armenia and Azerbaijan, covering energy, technology, economy, border security, infrastructure, and trade, alongside a peace deal.
- The U.S. Customs and Border Protection Service (CBPS) has issued official guidance on the tariff classification for cast gold bars, specifying HS Code 7108.13.5500 for kilo and 100-ounce bullion bars.
- Thyssenkrupp (TKAG) shareholders have approved the spinoff of the company's naval unit, a move aimed at streamlining its operations.
Canadian Economy Signals Potential Rate Cuts
The Canadian economy delivered a surprise in July, with a net change in employment of -40,800 jobs, significantly underperforming the estimated gain of 10,000 and sharply reversing June's robust 83,100 increase. Despite the job losses, the unemployment rate held steady at 6.9%, contrary to expectations of a slight increase to 7.0%. Hourly wage growth for permanent employees saw a year-over-year increase of 3.5%, exceeding the 3.1% estimate.
Following the release of the jobs report, the Canadian dollar (CAD) experienced a slight dip, falling to 1.3755 USD. The Canadian swap market reacted by increasing the probability of a Bank of Canada rate cut in September to 38%, up from 33% prior to the data release. Traders are now fully expecting the Bank of Canada to cut interest rates by the end of the year, reflecting concerns over the labor market's deterioration.
Geopolitical Developments and Trade Tensions
In a significant diplomatic move, White House Spokeswoman Kelly announced that President Trump is set to sign agreements with Armenia and Azerbaijan. These comprehensive agreements will encompass energy, technology, economy, border security, infrastructure, and trade, alongside a peace deal aimed at ending decades of conflict. The U.S. has facilitated a breakthrough on a shared transit corridor, which will be known as the "Trump Route for International Peace and Prosperity."
Meanwhile, Brazil is grappling with the implications of President Trump's tariff increase, facing four key challenges in its response. The 50% tariff on many Brazilian imports took effect on Wednesday, though certain categories like Embraer aircraft, orange juice, and petroleum have been exempted. Brazil has formally requested consultations at the World Trade Organization (WTO) to seek relief from these tariffs, which are seen as partly retaliatory amid the ongoing prosecution of former Brazilian President Jair Bolsonaro.
Separately, updates from the Gaza Strip indicate that Israel's security cabinet has approved a plan for a partial operation, focusing on the occupation of Gaza City rather than a full occupation of the entire Strip. Some cabinet ministers reportedly believe this operation may not lead to a decisive victory.
Corporate News and Commodity Classification
Shareholders of German industrial conglomerate Thyssenkrupp (TKAG) have given their approval for the spinoff of the company's naval unit. This strategic move is expected to allow the naval business to operate more independently and potentially unlock value.
In the technology sector, OpenAI CEO Sam Altman reported "positive progress" in negotiations with Microsoft (MSFT). While details remain scarce, any deepened partnership between the artificial intelligence leader and the tech giant could have significant implications for the AI landscape. Microsoft's stock has seen recent gains and analyst price target upgrades following strong earnings, driven by AI and cloud investments.
Finally, the U.S. Customs and Border Protection Service (CBPS) has issued official guidance regarding the classification of cast gold bars for tariffs. The applicable subheading for gold kilo bullion bars and 100-ounce bullion bars will be 7108.13.5500 HS Code. This clarification provides important information for traders and importers of gold products.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.