Morning Bid: Tariff toll yet to deter stock bulls

A look at the day ahead in European and global markets from Stella Qiu

From economic data to corporate earnings, the anticipated impact of President Donald Trump's tariffs is finally showing up for all to see, but stock investors don't seem too concerned.

Data showed the U.S. service sector hit stalling speed in July as employment further weakened and input costs climbed by the most in nearly three years. Combined with a brutal jobs report on Friday, that rekindled stagflation fears and put the Federal Reserve in a tough spot.

U.S. earnings results, though they have been generally upbeat in the second quarter, are starting to show clearer tariff impact. Caterpillar warned that U.S. tariffs would cost it up to $1.5 billion this year and Taco Bell parent Yum Brands cautioned against higher costs and muted consumer demand.

Even AI chip stock Advanced Micro Devices reported disappointing data center revenue, sending its shares down 6.6% after the bell.

That is one reason that equity markets have turned cautious, with investors caught in the tug of war between still robust earnings and tariffs. Judging by the impressive bounce in shares following U.S. jobs figures, it seems buying the dip still wins for now.

The other big news of the day is ChatGPT maker OpenAI, which is in early talks for a potential secondary stock sale, valuing the company at around $500 billion, Reuters reported.

In Asia, most shares were in the red but Japan and Australia outperformed with a gain of about 0.6%. Wall Street futures recovered from an earlier dip, with the Nasdaq futures up 0.1% and S&P 500 futures rising 0.2%.

European stock futures are bracing for a higher open, with EUROSTOXX 50 futures up 0.3%.

Currencies have moved little, with the dollar struggling to recover from the jobs-induced slump on Friday. All eyes are on Trump's pick to fill a coming vacancy on the Federal Reserve's Board of Governors.

Trump said the decision will be made by the end of the week, while ruling out Treasury Secretary Scott Bessent as a contender to replace the current chief Jerome Powell, whose term ends in May 2026.

The Treasury market braced for a $42 billion auction of 10-year notes after a three-year auction went poorly on Tuesday.

Key developments that could influence markets on Wednesday:

-- Euro zone retail sales for June

-- U.S. 10-year Treasury bond auction

-- Earnings results from Disney, Uber, McDonald's

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(Editing by Jacqueline Wong)