Stocks Fall on Weak PMI Data; Palantir Shines Amid Earnings Reports

The EUR/USD pair ended the session with minor losses on Tuesday, showing resilience despite a mixed set of Eurozone services PMI figures and a disappointing US ISM Services report. Market participants are closely monitoring upcoming Federal Reserve commentary and key economic data out of the Eurozone.

The latest HCOB Flash Services PMI data from the Eurozone offered a mixed picture. While Germany and Spain showed modest improvements in service sector activity, France and Italy disappointed. The Eurozone-wide Services PMI dipped slightly from 51.2 in June to 51.0 in July, signaling slowing momentum. France's PMI fell to 48.5, below the prior 49.7 and into contraction territory, while Italy posted a mild rise to 52.3, though missing expectations.

On the US side, the ISM Services PMI fell more than expected, slipping to 50.1 in July from 50.8 in June, below consensus forecasts of 51.6. This points to stagnation in the services sector, raising concerns about the strength of domestic demand.

However, the US trade deficit narrowed sharply, coming in at $60.2 billion in June—its lowest level in nearly two years and below expectations of $61.6 billion.

In political developments, President Donald Trump confirmed that US Treasury Secretary Scott Bessent declined to be considered for a position on the Federal Reserve Board, following the resignation of Fed Governor Adriana Kugler, effective August 8.

Market focus now shifts to upcoming remarks from Federal Reserve officials, including Boston Fed President Susan Collins, Governor Lisa Cook, and San Francisco Fed President Mary Daly. Across the Atlantic, traders will keep a close eye on Germany’s Factory Orders and Eurozone Retail Sales for additional insight into the bloc’s economic trajectory.

Gold prices extended their gains on Tuesday, climbing to their highest level in nearly two weeks as markets continue to price in upcoming U.S. interest rate cuts. Investor attention is also turning to pending Federal Reserve appointments, with President Donald Trump expected to announce decisions soon.

The U.S. dollar edged lower on the day, helping boost demand for dollar-denominated bullion among foreign buyers. A weaker dollar, combined with growing bets on monetary easing, has continued to support gold prices.

Following Friday's surprisingly weak June jobs report, markets have fully priced in two Federal Reserve rate cuts by year-end, starting in September.

Gold, traditionally viewed as a hedge against economic instability and inflation, tends to perform well in low-interest-rate environments as it offers no yield.

Trump has indicated that he will soon announce a temporary replacement for Fed Governor Adriana Kugler, who resigned last week, as well as his nominee for the next Federal Reserve Chair. These developments are being closely watched by markets for potential shifts in future policy direction.

Oil prices edged higher during Asian trading on Wednesday, recovering modestly from five-week lows as the prospect of tighter U.S. sanctions on Russian oil buyers lent some support to crude markets. However, concerns over rising OPEC+ output and weakening global demand continued to cap the upside. The modest rebound followed a steep sell-off earlier in the week that dragged oil prices to their lowest levels since late June.

The recovery was helped by American Petroleum Institute (API) data showing a larger-than-expected drawdown in U.S. crude inventories. Stockpiles fell by 4.2 million barrels last week, compared to expectations for a 1.8 million barrel decrease, signaling improving domestic demand or tighter supply conditions.

Adding a layer of geopolitical risk, President Donald Trump renewed threats to impose tariffs on countries that continue to import Russian oil. On Tuesday, Trump said he would escalate trade penalties against India, following last week’s implementation of 25% reciprocal tariffs.Trump accused New Delhi of indirectly financing Russia’s war in Ukraine by continuing to purchase discounted Russian crude.

China, another key buyer of Russian crude, was also threatened with increased tariffs as Trump seeks to clamp down on financial flows to Moscow. The potential for reduced Russian oil sales to India and China could tighten global supply, offering some upside support to prices. However, diplomatic developments may temper this risk.

Despite early Wednesday’s uptick, oil prices continue to nurse significant losses amid broader concerns over market fundamentals. Adding to bearish sentiment are a string of soft economic data releases from both the U.S. and China, which have stoked worries about slowing demand in the world’s top two oil-consuming economies. With global growth appearing increasingly fragile, traders remain cautious about the sustainability of oil’s recovery.

U.S. stocks closed lower on Tuesday, with the US 500 retreating after weaker-than-expected data on the services sector raised fresh concerns about the health of the U.S. economy. The disappointing figures added to speculation that the Federal Reserve may begin cutting interest rates as early as September.

The Institute for Supply Management (ISM) reported that its Non-Manufacturing PMI fell to 50.1 in July, down from 50.8 the previous month and below expectations for a rise to 51.5.

The unexpected weakness reinforced concerns that the economy may be cooling more quickly than anticipated, especially as the Federal Reserve prepares for its next policy decision. Fed rate cut expectations have increased following last week's soft payrolls report and dovish remarks from San Francisco Fed President Mary Daly, who indicated potential support for a cut in September.

Separately, data from the U.S. Census Bureau and Bureau of Economic Analysis showed the U.S. trade deficit shrank by 16% to $60.2 billion in June, from $71.7 billion the previous month. The decline was sharper than anticipated, driven largely by a drop in imports following a tariff-fueled surge earlier in the year.

Despite macroeconomic jitters, corporate earnings continued to provide some support to equity markets.

Palantir Technologies surged after reporting its strongest quarterly revenue since going public, driven by robust demand for its AI-powered software from both government and commercial clients. The company’s performance has also been buoyed by Washington’s push to expand AI adoption and the Pentagon’s increasing interest in sourcing software from non-traditional vendors.

Pfizer shares gained after the pharmaceutical giant beat Wall Street estimates for both earnings and revenue and raised its full-year profit forecast, signaling resilience amid a shifting healthcare landscape.