(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, July 25 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

A buoyant week for world markets driven by emerging U.S. trade

deals with major economies has gone a bit flat into Friday, with

the corporate earnings season throwing up a series of high

profile disappointments.

The interest rate backdrop also turned a shade darker, with the

European Central Bank holding its 2% rate steady as expected but

with some officials signalling that the bar was high for further

easing. Federal Reserve rate cut expectations also continued to

tick lower despite relentless political pressure, with futures

markets now pricing in just 42 basis points of additional easing

this year.

* The S&P 500 and Nasdaq eked out marginal gains to new records

on Thursday, with Alphabet leading the way after its earnings

beat. But Tesla's troubles continued, as it dropped more than

8%. Meanwhile, IBM clocked an 8% earnings day drop, American

Airlines fell 10% and Honeywell was off 6%. UnitedHealth lost 5%

after a probe into its Medicare practises, and Intel lost 5%

overnight on its update. Wall Street futures were flat ahead of

Friday's bell.

* The European earnings season was also pockmarked with some

negative reactions to corporate updates, with shares in German

sportswear maker Puma sliding 15% on Friday and French car parts

maker Valeo down 9% as both cut full-year outlooks. European

stock indexes were down about 0.5%. A rebound in British retail

sales last month came in below forecasts too.

* A packed diary next week includes the August 1 U.S. tariff

deadline, Federal Reserve and Bank of Japan meetings, key U.S.

labor market updates, megacap earnings and a heavy Treasury debt

auction schedule. Treasury yields were steady to a bit higher on

Friday and the dollar nudged up too.

Market Minute

* Investors cashed out of highly valued global stocks on Friday

and the dollar headed for its biggest weekly drop in a month

ahead of a crucial week for markets that includes Donald Trump's

tariff deadline and key central bank meetings.

* U.S. President Donald Trump's trade deal with Tokyo opens

scope for the Bank of Japan to raise interest rates again this

year, sources say, a prospect the central bank may start to

telegraph by offering a less gloomy view on the economic

outlook.

* South Korea's Industry Minister Kim Jung-kwan met U.S.

Commerce Secretary Howard Lutnick on Thursday and reaffirmed a

commitment to reach a deal on tariffs by the August 1 deadline,

South Korea's industry ministry said on Friday.

* The optimism sweeping world stock markets following news of

emerging and expected U.S. trade deals is undeniable and

understandable. But, writes ROI markets columnist Jamie

McGeever, it is also puzzling.

* U.S. President Donald Trump sprang a double surprise on the

copper market when he announced import tariffs of 50% effective

next month. ROI metals columnist Andy Home notes that the market

was betting on a different outcome.

Weekend reads

* GEN AI AND PRODUCTIVITY: The Generative AI boom shows

encouraging signs of raising the productivity level of the wider

economy, according to a Federal Reserve Board discussion paper.

But the researchers conclude that GenAI's contribution to

productivity growth will depend on the speed with which its

benefits are obtained, and notes that historically it takes time

for revolutionary technologies to be integrated into the

economy.

* SUBNATIONAL DEBTS: Debates about debt sustainability often

only focus only on "sovereign" or central government balances

and ignore a complex, growing role of subnational governments.

In a piece on CEPR's VoxEU site, economists Sean Dougherty,

Acaua Brochado and Pietrangelo de Biase point out how

subnational government accounts for nearly 40% of public

investment and more than a quarter of public spending. They

argue these entities face tighter borrowing conditions,

increasing investment responsibilities and market structures

that often fail to price risk accurately. Left unaddressed,

these dynamics could undermine both macro stability and

government priorities.

* DIGITAL SOVEREIGNTY: Europe's systemic dependency on Big

Tech's social-media platforms threatens the continent's digital

sovereignty as policymakers argue there's little alternative.

But, as developer Sebastian Vogelsang argues on Project

Syndicate this week, this ignores the potential for building

apps on open-source frameworks like the AT Protocol, the

foundation for Bluesky.

* 'SPY COCKROACHES'?: For Gundbert Scherf - the co-founder of

Germany's Helsing, Europe's most valuable defence start-up -

Russia's invasion of Ukraine changed everything. As Reuters'

Supantha Mukherjee, Sarah Marsh and Christoph Steitz report, the

Munich-based company more than doubled its valuation to $12

billion at a fundraising last month. Scherf - a former partner

at McKinsey - says Europe may be on the cusp of a transformation

in defence innovation akin to the Manhattan Project.

* SYRIA'S ECONOMICS: A Reuters investigation found that Syria's

new leadership is secretly restructuring an economy broken by

corruption and years of sanctions against Assad's government,

under the auspices of a group of men whose identities have until

now been concealed under pseudonyms. Away from public scrutiny,

the committee obtained assets worth more than $1.6 billion. That

tally is based on accounts of people familiar with its deals to

acquire business stakes and cash seizures, including at least

$1.5 billion in assets taken from three businessmen and firms in

a conglomerate once controlled by Assad's inner circle.

Chart of the day

With Fed policy under a microscope, attention switches to the

labor market next week - culminating in the release of the

national employment report on Friday. Economists polled by

Reuters expect the economy added 102,000 non-farm payrolls this

month - which would be the lowest monthly tally since February.

However, the U.S. Labor Department on Thursday showed jobless

claims last week fell to 217,000 - well below estimates -

signaling continued resilience in the job market.

Today's events to watch

* U.S. June durable goods orders (8:30 AM EDT)

* U.S. corporate earnings: Aon, HCA Healthcare, Charter

Communications, Phillips 66, Centene

* South Korea's Finance Minister Koo Yun-cheol and Minister

for Trade Yeo Han-koo meet U.S. Treasury Secretary Scott Bessent

and Trade Representative Jamieson Greer in Washington

* U.S. President Donald Trump makes private visit to Scotland

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Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

(by Mike Dolan; editing by)