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 ( CAT ) warned that U.S. tariffs

would cost it up to $1.5 billion this year and Taco Bell parent

Yum Brands ( YUM ) cautioned against higher costs and muted

consumer demand.

Even AI chip stock Advanced Micro Devices ( AMD ) 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)