Copper, chips and jobs: markets kick off the third quarter

Summary

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Moving Markets Podcast Summary

Episode: Copper, chips and jobs: markets kick off the third quarter
Date: July 2, 2026
Host: Helen Frear (Julius Baer)
Guests: Roman Canciani (Market News), Carsten Menke (Commodities)

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Episode Overview

This episode of “Moving Markets” delivers a panoramic view of key financial markets as the third quarter begins, delving into recent activity across Europe, the US, and Asia, and spotlighting significant company news—particularly Meta’s AI push and developments among Chinese EV makers. The second half spotlights the copper market, with Carsten Menke analyzing the impact and likelihood of new US import tariffs. The US jobs report and its ramifications for monetary policy are also underscored as a pivotal upcoming event.

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Key Market Updates & Insights

1. European Markets: A Breather after the Rally

• Performance & Trends
  • Stoxx 600 finished down 0.4% after a “stellar quarter, the best since late 2020.” (00:45)
  • Technology, particularly semiconductor-related stocks, underperformed; notable declines in ASML and SOI Tech.
  • Bright spots: Saab won a fighter jet contract with Ukraine, boosting shares; SES rose on positive US regulatory news.

2. US Markets: Chip Weakness & Fed Watch

• Major indices edged lower: NASDAQ Composite down 0.7%, S&P 500 down 0.2%, while the equal-weighted S&P 500 held in the green.
• “Chip stocks were notably weak, with Micron and Intel taking substantial hits, losing over 10% and 9% each.” (01:36)
• The Dow, despite a new intraday high earlier, also slipped.
• Fed Chair Walsh, at the ECB Sintra forum, “deliberately sidestepped specific questions regarding guidance on interest rate movements.” (01:36)

3. Eurozone: Inflation Easing

• Headline inflation dropped to 2.8% y/y in June (from 3.2%).
• “A drop of 0.3% to 3.2% [in services inflation] suggests that disinflation isn't limited to volatile areas like energy, but has been becoming broader based.” (02:28)
• Money markets now price slightly above 50% probability of a rate hike by September.

4. Asian Markets: Ripple Effect from US Chip Sell-Off

• Asia saw significant declines, especially Korea, with the Kospi down 5.3% at the open and a resulting trading halt.
• The Japan Nikkei 225 dropped about 1.5%.
• Broader Japanese Topix and Hong Kong indices were up roughly 0.6%, indicating some resilience.
• “It was a challenging session for Asian markets.” (03:17)

5. Company Highlights

• Meta Platforms:
  • Shares surged almost 9% on news of a push into cloud AI infrastructure:

    “Meta shares climbed almost 9% after reports surfaced that they are actively building a cloud business designed to sell AI computing power.” (04:14)

• Chinese EV Makers (BYD & Xiaomi):
  • Both saw strong June deliveries; BYD shares up 9%, Xiaomi up 5%.

6. Upcoming US Jobs Report: All Eyes Watching

• Anticipation of a strong June jobs report, with significant implications for monetary policy and market volatility:

  “The US June jobs report is arguably the most important piece of economic data we’ll get this week…” (05:07)

• Strong hiring, particularly in leisure and hospitality, is anticipated.
• Fed Chair Walsh reemphasized the central bank’s inflation goal:

  “Remember, Chair Walsh emphasized just this week the importance of price stability, saying that 2% inflation and not 3 where it is right now remains the central bank’s goal.” (05:42)

• US bond markets close early today and are closed for Independence Day tomorrow—potentially amplifying any moves.

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Deep Dive: US Copper Tariffs & the Industrial Metals Market

Background: Why Copper Tariffs Matter

• Ongoing US Section 232 “national security” review; currently, 50% tariffs apply to some aluminum and steel.
• For copper, tariffs exist on products, but not yet on ores, concentrate, or refined metal.
• President Trump is now “set to decide on potential import tariffs on copper” following a scheduled review. (06:22)

Why Copper Differs from Steel/Aluminum

• The US is a net importer of refined copper due to insufficient refining capacity, not mining limits.
• Proposed tariffs aim to encourage domestic smelting investment.
• “The point is that they could produce more because they have the mines, but they lack the refining capacity.” (07:33)

Options on the Table

• Possibilities include 15% tariffs (from Jan 2027), 30% tariffs (from Jan 2028), a postponement, or no tariffs.
• No statutory deadline for the White House decision.

Menke’s View: Likelihood and Ramifications

• Carsten Menke (Julius Baer):

  “I would say that postponing or not imposing are more likely or most likely with a probability of 60%... Economically, the tariffs make very little sense.” (08:25)

• Rationale: High cost and unattractive margins for US smelting/refining; US mainly sources copper from friendly trade partners (Canada, Chile, Peru).

Notable Quote

“Trade deals are a much better option here than import tariffs.” (09:00, Carsten Menke)

If No Tariffs Imposed:

• Likely price dip as bullish expectations unwind.
• Excess copper imported in anticipation of tariffs could be re-exported, easing global supply and further weighing on prices:

  “So postponing the decision or not imposing them would be a disappointment for these traders and it would very likely weigh on prices.” (09:18)

If Tariffs Announced (40% probability):

• Expect a near-term spike in imports and a lifting of US copper premiums.
• “We would likely see more copper being imported into the US ahead of the tariffs, lifting the premium of US prices over international prices and also boosting price levels globally.” (10:09)
• Strategic stockpiling before tariffs would benefit those able to sell at higher prices post-tariff.

Timing Uncertain

• “There is no statutory hard deadline in this process.” (10:53)

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Notable Quotes & Memorable Moments

• On AI and Corporate Ambitions:

  “Meta shares climbed almost 9% after reports surfaced that they are actively building a cloud business designed to sell AI computing power.”
  — Roman Canciani (04:14)

• On Copper Tariffs Economic Rationale:

  “Economically, the tariffs make very little sense. Setting up a sufficiently large state-of-the-art smelting and refining complex in the US would be very costly... margins are very, very small due to global overcapacity.”
  — Carsten Menke (08:25)

• On US Jobs Data as a Policy Pivot:

  “The US June jobs report is arguably the most important piece of economic data we'll get this week.”
  — Roman Canciani (05:07)

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Timestamps for Key Segments

• European & US Markets Overview: 00:34 – 02:19
• Eurozone Inflation Update: 02:28 – 03:13
• Asian Markets Recap: 03:17 – 04:05
• Meta & Chinese EV News: 04:05 – 04:59
• US Jobs Report Preview: 04:59 – 06:09
• Copper Tariffs Context & Analysis (Carsten Menke): 06:18 – 10:58

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Closing Notes

The episode offers a concise yet detailed walkthrough of the shifting market landscape at the beginning of Q3 2026, blending short-term data points with thematic analysis. The nuanced discussion on US copper tariffs provides valuable investor context, while coverage of trending sectors (AI infrastructure, EVs) situates listeners within the fast-evolving macro environment.

For more information or legal disclaimers, visit: www.juliusbaer.com/legal/podcasts

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Transcript

[A]

Good morning, everyone, and welcome to Julius Baer's Moving Markets podcast. It's Thursday the 2nd of July, and my name is Helen Frear, filling us in on the latest in financial markets. I will speak first of all this morning to Roman Canciani and my second guest today will be Carsten Menke. And we'll be talking about the copper market and the topic of import tariffs. So that is coming up shortly. But over to you first of all, Roman, for the market news. Good morning.

[B]

Good morning, Helen.

[A]

Now, we saw a bit of a pause in the rally across European equities yesterday after a very strong second quarter. Can you walk us through how things played out, please?

[B]

Absolutely. Well, European markets took a breather yesterday with the Stoxx 600 finishing down 0.4%. It follows what was truly a stellar quarter, the best since late 2020. While the overall mood across the markets yesterday remained relatively calm and positive. Within the sectors, technology underperformed, specifically semiconductor related stocks, dragging down the overall indices. ASML and SOI Tech both experienced strong declines. But there were some bright spots too. Saab secured a fighter jet contract with Ukraine, boosting their share price. And ses, the satellite operator, really, after positive news from regulators in the U.S.

[A]

okay, interesting mix of drivers there. And let's talk about the US as well. How did things unfold across the pond?

[B]

The picture in the US Mirrored some of the caution we saw in Europe. Major stock indices edged lower, with the NASDAQ composite and the S and P 500 down 0.7% and 0.2%, respectively. But then broader indices like the equal weighted S&P 500 closed in the green. Chip stocks were notably weak, with Micron and Intel taking substantial hits, losing over 10% and 9% each. And the Dow, which had reached a new intraday high earlier in the week, ultimately finished slightly lower. Interestingly, Fed Chair Walsh addressed the ECB forum in Sintra, but deliberately sidestepped specific questions regarding guidance on interest rate movements.

[A]

And speaking of central banks, let's turn to the eurozone. We received inflation data yesterday. How did that impact market market sentiment?

[B]

While the inflation numbers were encouraging, headline inflation in the Eurozone came in at 2.8% year on year in June, down from 3.2% previously. But the real story lies within the details. We're seeing a welcome moderation in services inflation, a crucial metric for the ecb, as it indicates whether underlying price pressures are easing. A drop of 0.3% to 3.2% suggests that disinflation isn't limited to volatile areas like energy, but has been becoming broader based. Some analysts believe this strengthens the case for a less aggressive approach from the ECB. Money markets are now pricing in just over a 50% probability of a rate hike by September.

[A]

And moving our focus eastward, what happened overnight in Asia?

[B]

Overnight action in Asia was decidedly negative, heavily influenced by the sharp sell off in US chip stocks. A more than 6% slide in the Philadelphia semiconductor index in the US really set the tone. Korea bore the brunt of the selling, with The Kospi plummeting 5.3% at the Open, triggering a temporary trading halt to manage volatility. This weakness in chip stocks spread across the region, with the Japan's Nikkei 225 also declining about 1.5%. However, the broader Japanese Topics index is up just like Hong Kong. Both indices trade about 0.6% higher and also the tech related indices are off their intraday lows, but it's fair to say that it was a challenging session for Asian markets.

[A]

All right, now turning to individual company news, Meta platforms stood out yesterday. Their shares jumped. What was behind this?

[B]

Meta shares climbed almost 9% after reports surfaced that they are actively building a cloud business designed to sell AI computing power. This signals a serious push into the rapidly expanding AI space, positioning them as a competitor to established players like Amazon, Amazon and Microsoft. Investors clearly see the potential for significant revenue streams from this venture and the news of BYD and Xiaomi. The Chinese EV makers also lifted spirits overnight, with both EV makers reporting strong June delivery figures, bolstering investor optimism. Shares of BYD gained around 9% and Xiaomi climbed about 5%.

[A]

Finally then, looking ahead, all eyes are on the US jobs report due later today. Why is this so critical this time?

[B]

Well, the US June jobs report is arguably the most important piece of economic data we'll get this week. Analysts anticipate a robust print potentially exceeding May's already strong gain. Strong hiring, particularly in leisure and hospitality, is expected. This report will provide vital clues about the health of the US economy and crucially influence the Fed's thinking on future interest rate decisions. Remember, Chair Walsh emphasized just this week the importance of price stability, saying that 2% inflation and not 3 where it is right now remains the central bank's goal. So a strong jobs report could reignite fears of further rate hikes. Plus, keep in mind that US Bond markets will be closing early today and fully closed tomorrow for the Independence Day holiday, so there's a fair chance for strong moves into one or the other direction. Equity market futures for the US do not currently factor in strong moves in either direction. They are trading fairly flat. That's it from me.

[A]

Very good. Thank you very much, Roman, Great to speak to you today.

[B]

Thank you very much, Helen, for having me. Always a pleasure.

[A]

And now on to you. Carsten, good morning. Firstly, hello.

[C]

Good morning.

[A]

The topic of US Tariffs seems to have sort of stopped being a threat for financial markets more broadly, but it remains top of mind in the industrial metal markets because after a review by the Commerce Department, President Trump is now set to decide on potential import tariffs on copper. To start with, Maybe could you please give us a bit more of the background information, Carsten?

[C]

Of course. So the US has done an investigation of various industrial metal markets based on national security considerations, so called section 232 investigation. And according to this, they are already charging 50% import tariffs on aluminium and steel for some time. For copper, it is a bit more complex. The US also charges 50% on copper products, but ores, concentrates and refined metal are thus far exempt. This is based on an investigation that was concluded last summer and this week a review of the copper market was due. And President Trump needs to make up his mind about refined metal tariffs.

[A]

Why is it more complex for copper?

[C]

Well, first of all, the US Is a net importer of refined copper. They use more than what they produce. The point is that they could produce more because they have the mines, but they lack the refining capacity. So the idea would be to impose tariffs to incentivize the expansion of the domestic smelting and refining industry.

[A]

Okay, and what options are on the table then?

[C]

According to last year's investigation, there is the possibility to impose 15% import tariffs on refined metal from January 2027 and or 30% from January 2028. Other options Trump has, of course, is to postpone the decision or to not impose the tariffs at all.

[A]

From your point of view then, Carsten, which options are most likely, do you think?

[C]

Well, I would say that postponing or not imposing are more likely or most likely with a probability of 60%. This is because economically the tariffs make very little sense. Setting up a sufficiently large state of the art smelting and refining complex in the US Would be very costly, a couple of billions of US dollars. But this business would not be very attractive at the moment as margins are very, very small due to global overcapacity. Furthermore, the US Primarily sources its refined metal from friendly countries in the Americas. So 90% come from Canada, Chile and Peru. Meaning from my perspective, trade deals are a much better option here than import

[A]

Tariffs, what would it mean for the price of copper if Trump doesn't impose any tariffs?

[C]

So what we need to consider is that the mood in the copper market is very bullish. And I would say, in part, this reflects the expectation of import tariffs. So postponing the decision or not imposing them would be a disappointment for these traders and it would very likely weigh on prices. Plus the metal that was already imported into the US in anticipation of these tariffs that will be exported again, which would ease the international market balance, which is another negative. So this is very significant as the US had been massively over importing copper during the past few months. So overall, based on these assumptions, we are still cautious on copper in the short term.

[A]

Okay. And the likelihood of tariffs being imposed, then you see as 40%, what would that mean for the market?

[C]

Correct. From our point of view, it's a fairly high risk. Reflecting the political nature of the decision and President Trump's focus on strategic autonomy in terms of market impact, we would likely see more copper being imported into the US Ahead of the tariffs, lifting the premium of US Prices over international prices and also boosting price levels globally. And the rationale for these imports, I think that is very, very important, would be to buy copper cheaply, so before the tariffs are active, and then to sell this metal to manufacturers in the US Once the tariffs are introduced at

[A]

a higher price, just before you go, then do we know when Trump needs to make up his mind?

[C]

Well, no, unfortunately not. There is no statutory heart deadline in this process.

[A]

All right, very good. Thanks a lot, Karsten. Very interesting update, as always.

[C]

Thanks for having me.

[A]

So that's it for today. Thank you again to Roman and Carsten and to you, our listeners, for tuning in. I hope you enjoyed the show. If you did, then make sure you subscribe if you haven't already. And please join us again tomorrow when I'll be back with more of my colleagues to talk about what is moving markets. Until then, though, have a great day, everyone, and bye for now.

[D]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.