U.S. "Reciprocal Tariffs" Take Effect, Disney and AMD Set to Release Earnings Reports, Bank of England Poised to Cut Interest Rates【The week ahead】

TradingKey - Last week, all three major U.S. equity indexes posted losses, with the S&P 500 falling 2.4%, its worst weekly performance since May 23. The Dow Jones Industrial Average dropped 2.9%, marking its weakest week since April 4, while the Nasdaq Composite declined 2.2%.Economic data this week is relatively light, with the July ISM Services Index, due Tuesday, expected to take center stage. More than halfway through the Q2 earnings season, key Dow components including Disney (DIS.US), McDonald’s (MCD.US), and Caterpillar (CAT.US) will report results. Additionally, high-profile companies such as Advanced Micro Devices (AMD.US), Super Micro Computer (SMCI.US), Pfizer (PFE.US), Uber (UBER.US), AppLovin (APP.US), and Tempus AI (TEM.US) are set to release their latest earnings.The Bank of England will announce its interest rate decision on Thursday, with markets widely expecting policymakers to lower the benchmark rate from 4.25% to 4%. Further cuts before year-end are also anticipated.

Preview of major events

U.S. Q2 Earnings Season Passes Midpoint as Disney and AMD Results Draw Focus

More than half of companies in the S&P 500 have now reported second-quarter earnings, with approximately 81% surpassing analyst expectations—above the 76% average seen over the past four quarters. This week, Dow Jones components Disney, McDonald’s (MCD.US), and Caterpillar (CAT.US) are set to release their earnings, offering investors a key window into the broader economy and potentially reigniting volatility in financial markets.

High-profile companies including Palantir (PLTR.US), Advanced Micro Devices (AMD.US), Super Micro Computer (SMCI.US), Pfizer (PFE.US), Uber (UBER.US), AppLovin (APP.US), and Tempus AI (TEM.US) are also set to release their earnings in the coming days. Additionally, pharmaceutical giants Novo Nordisk (NVO.US) and Eli Lilly (LLY.US) will report financial results, drawing significant investor attention.

Bank of England to Announce Interest Rate Decision, Expected to Cut by 25 Basis Points

On August 7, the Bank of England will release its policy interest rate decision. According to UBS, compared to the central bank’s assumptions in May, energy prices and the effective sterling exchange rate are likely to be revised upward, while the policy rate path may remain largely unchanged. Given that June’s inflation data came in above expectations, the BoE may slightly raise its 2025 inflation forecast for the UK from 3.3% to 3.5%. Growth projections could also be modestly upgraded following stronger-than-expected first-quarter GDP growth.

Notably, Bank of England Governor Andrew Bailey has previously signaled a dovish tone, suggesting that if the labor market deteriorates faster than anticipated, the central bank could opt for more aggressive rate cuts.

U.S. "Reciprocal Tariffs" Take Effect August 7!

On July 31 local time, the White House issued an executive order revising the "reciprocal tariff" rates for certain countries. Under the order, nations listed in Annex 1 will be subject to individual tariff rates, while all other countries not specified will face a uniform 10% rate. Goods from countries or regions found to be circumventing tariffs through transshipment via third-party jurisdictions will be subject to a 40% transshipment penalty. According to the White House, the new tariffs will not take effect until August 7, providing additional time for countries to engage in negotiations aimed at securing lower rates.

Sam Stovall, Chief Investment Strategist at CFRA Research, warned that the combination of the U.S. tariff policy and weakening labor market conditions could prompt another downturn in the U.S. stock market.

Selected Economic Data

Tuesday: U.S. July ISM Non-Manufacturing PMI

Thursday: Bank of England Monetary Policy Announcement (August 7)

Friday: China July M2 Money Supply Year-on-Year

This week's featured events

Thursday: 2027 FOMC voter and San Francisco Fed President Mary Daly delivers a speech

Thursday: U.S. "reciprocal tariffs" take effect

Friday: 2025 FOMC voter and St. Louis Fed President Alberto Musalem delivers a speech

Company Financial Report

Tuesday: AMD (AMD.O), Pfizer (PFE.N), Advanced Micro Devices (AMD.US)

Wednesday: Disney (DIS.N), Novo Nordisk (NVO.US), Uber (UBER.US)

Thursday: Eli Lilly (LLY.US), Vistra Energy (VST.US)