Markets whiplash as Trump denies imminent Powell sacking

Good morning. Here's what happened overnight and what you need to know today.

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1.

Power threat: Trump was forced to deny he plans to fire Fed Chair Jerome Powell after reports quoting an unnamed White House official said he was likely to do so soon. The reports followed Trump asking House Republicans if he should fire Powell, with several saying he indicated he would. The reports triggered a drop in stocks and the dollar and a rise in Treasury yields, before markets steadied after Trump said he is “not planning on doing anything.” He called a firing “highly unlikely unless he has to leave for fraud,” referencing fierce criticism from Trump supporters over cost overruns in the Fed’s USD2.5 billion ($3.83 billion) headquarters renovation project. The New York Times reported Trump drafted a letter firing Powell and then waived it around during the meeting with GOP lawmakers. Trump confirmed he asked Republicans about firing Powell but denied the letter existed. Meanwhile, Bloomberg reported Kevin Hassett and Kevin Warsh are currently the top contenders to replace Powell, with Trump mainly interested in a candidate who wants to cut interest rates.(Capital Brief)(CBS News)(Bloomberg)

2.

Bank earnings: Goldman Sachs led a broad surge in Wall Street trading revenue in the second quarter, with profit rising 22% to a historic USD3.72 billion ($5.71 billion) as market volatility from Trump’s tariffs drove record results in equities trading and financing. Equities revenue jumped 36% to USD4.3 billion, while financing revenue in both equities and FICC hit records. IB revenue rose 26%, driven by advisory fees, and Goldman remained the top M&A adviser by deal value. Morgan Stanley posted its best second quarter for equity trading, earning USD3.72 billion, while IB revenue fell 5%. Bank of America’s profit rose 3% to USD7.12 billion, though revenue missed expectations. In total, the five big banks earned nearly USD34 billion in markets revenue, up 17% from a year ago, as investors repositioned for Trump’s tariffs. Earlier ASML walked back its 2026 growth forecast, citing “increasing uncertainty driven by macro-economic and geopolitical developments.” And Johnson & Johnson beat expectations with USD23.7 billion in revenue and raised its full-year guidance, despite looming pharmaceutical tariffs and pricing pressure from the Trump administration. (Capital Brief)(BofA)(MS)(GS)

3.

US books: US economic activity increased slightly between late May and early July, the Federal Reserve said in its Beige Book, marking an improvement from the previous report where half of districts reported declines. All 12 districts cited price increases, with seven calling them “moderate” and five “modest.” Businesses faced “modest to pronounced” input cost pressures related to tariffs, particularly on raw materials for manufacturing and construction. Many passed on some costs to consumers, while others held back due to “growing price sensitivity,” compressing profit margins. Employment “increased very slightly,” with many expected to delay major hiring or layoff decisions. Earlier, data showed producer prices were unchanged from a month earlier, after an upwardly revised 0.3% gain in May. Wholesale prices rose 2.3% from a year earlier, down from 2.7% in May and the least since last September. The data suggest manufacturers are so far proceeding cautiously on the extent to which they can pass through higher US tariffs to their customers. (Capital Brief)(Fed Reserve)

4.

Epstein ties: Donald Trump lashed out at his own supporters for criticising his administration’s handling of the Jeffrey Epstein investigation, calling them “weaklings”. “Their new SCAM is what we will forever call the Jeffrey Epstein Hoax, and my PAST supporters have bought into this ‘bull—t,’ hook, line, and sinker,” Trump posted on social media. “I don’t want their support anymore!” The Justice Department last week said there was no Epstein “client list” and no plans to release more documents, sparking backlash from Trump’s base and several House Republicans, after Attorney-General Pam Bondi had earlier said the files were sitting on her desk, ready for release. Representative Thomas Massie, a Republican from Kentucky, filed a discharge petition to force a House vote on releasing the Epstein files, joined by Democrat Ro Khanna and other Republicans. Trump, who had previously promised to release additional material, is now calling the controversy the “Jeffrey Epstein Hoax” and says Democrats are using it to attack him. (Trump post)(WSJ)(SMH)(NYT)

5.

Betr bid: Betr Entertainment launched an all-scrip off-market takeover offer for PointsBet weeks after a $402 million takeover bid from Japanese entertainment company MIXI did not pass a shareholder vote. An ASX filing published after market close on Wednesday says that Betr’s offer of 3.81 Betr shares for every 1 PointsBet share not already held by Betr equates to $1.22 per PointsBet share (based on a $0.32 Betr share price), coming in above MIXI's offer of $1.20 cash per share. Betr said that as a 19.6% shareholder in PointsBet, its offer represents a superior proposal for all PointsBet shareholders compared to MIXI's bid. Betr said that the proposal offers $44.9 million of annual cost synergies, estimated to equate to up to $0.67 per PointsBet share if fully realised, adding that the combination of $1.22 per PointsBet share and the cost synergies equates to up to $1.89 in potential value per PointsBet share. (Capital Brief)(ASX)(ASX)

6.

Familiar faces: Warner Bros Discovery (WBD) is planning to ramp up its local content offering after launching HBO Max in Australia, despite ongoing delays to Labor’s plans to set local content quotas for global streaming platforms. The US entertainment juggernaut launched its standalone streaming platform HBO Max, formerly “Max”, in March. It is set to be captured by a Labor proposal to introduce minimum investment rules for global streamers in Australia. WBD, through a spokeswoman, would not be drawn on Australia’s plans to set minimum investment levels in local drama content for the company along with Netflix, Amazon Prime Video, Disney and others. However, she said WBD is planning to release more Australian content on its platform. “With regards to our own Australian offering…We very much believe in local content and plan to introduce more over time”, the Warner Bros Discovery spokeswoman told Capital Brief. (Capital Brief)

7.

Stale chips: Shares in Dutch supplier of chip-making equipment, ASML, slid as much as 11% on Wednesday after the company said that it cannot confirm that it will achieve growth in 2026 as tariff uncertainty weighs on its outlook. ASML posted second-quarter sales of €7.7 billion ($13.72 billion), a 23% increase which came in ahead of expectations. Net bookings, the metric used to gauge chipmaking orders that have been placed but not yet delivered, came in at €5.5 billion. ASML said it expects full-year 2025 net sales to grow 15%, slimming previous guidance to €30-€35 billion. Over the past two years, soaring demand for Nvidia’s AI chips drove growth at ASML’s largest customer, the Taiwan Semiconductor Manufacturing Company, but CEO Christophe Fouquet said “increasing uncertainty” means ASML “cannot confirm” growth in 2026. CFO Roger Dassen also said that ASML clients are more concerned about tariffs now than they were in April. (Capital Brief)(ASML)(FT)(CNBC)(Reuters)(Bloomberg)

8.

Israel-Syria conflict: Israel launched strikes on the Syrian Defence Ministry in Damascus on Wednesday, escalating its attacks on the country which it says are in defence of the Druze community. At least one person was killed and 18 others were injured in the attacks, the Syrian Health Ministry told CNN. The IDF confirmed that it targeted the gates of the Syrian military headquarters as well as parts of southern Syria. Israel has been intensifying its attacks across Syria since Monday, after violence broke out on the weekend between Druze forces and Bedouin tribes in the southern Syrian town of Suwayda, prompting the Syrian government’s involvement. In Gaza, at least 20 Palestinians were killed in a stampede on Wednesday as thousands of people were trying to reach food at a Gaza Humanitarian Foundation distribution centre. GHF said victims were “trampled and one stabbed amid a chaotic and dangerous surge.” (WSJ)(Capital Brief)(IDF)(Bloomberg)(CNN)(FT)