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The Week In Markets – 6th September – 12th September 2025

The ECB met on Thursday, where it was widely anticipated they would maintain current interest rates. In the lead-up to the meeting, markets were grappling with several key questions; what does the political turmoil in France mean for the ECB? Is the ECB finished with its cutting cycle? And does the EU–US trade deal alter the economic outlook? All important questions — and ones that could shape the path ahead.

As expected, rates were left unchanged at the ECB’s meeting in Frankfurt, holding steady at 2.15%. President Christine Lagarde struck a positive tone, stating that inflation and the broader economy were broadly where the ECB wanted them to be. She acknowledged the challenges ahead; higher tariffs, set at 15% for EU countries, and a stronger euro are expected to weigh on growth for the remainder of the year. However, she predicted these headwinds could ease in 2026.

While often labelled either as a hawk or a dove, Ms Lagarde rejected both characterisations, preferring instead to be seen as an owl — with the ability to observe everything happening around her. Her focus will remain firmly on incoming data between now and the next meeting, with the integrity of European data notably praised at a time when the US and UK have faced challenges in this area.

We mentioned the French government’s turmoil at the start of this note, and to begin the week, Prime Minister François Bayrou lost a vote of confidence in parliament, with a resounding 364 votes against him and 194 in favour. Mr Bayrou becomes yet another casualty in a deeply fragmented French parliament, a legacy of President Macron’s snap parliamentary election in 2024. Just a day later, Macron appointed former Defence Minister Sébastien Lecornu as the new Prime Minister. Lecornu inherits the same challenges that plagued his predecessors; securing consensus on the budget and tackling a deficit that stands at nearly double the EU’s target of 3% of GDP.

On Sunday, Japan’s Prime Minister Shigeru Ishiba resigned, citing the need to take “responsibility” for a string of election defeats. His ruling coalition — the Liberal Democratic Party (LDP) and junior partner Komeito, lost its majority in both the lower and upper houses of parliament, marking the first time since 1955 that the LDP has lacked control of both chambers.

Ishiba’s final act in office was completing a landmark trade deal with US President Donald Trump, pledging $550 billion in Japanese investments in exchange for a reduction in tariffs to 15%.  A successor will be chosen on the 4th of October, but uncertainty played its hand in this week’s sell off in Japanese Yen and record high yields in the 30-year bond. While the currency and bond markets weakened in Japan, the equity market continued to advance and made new all-time highs throughout the week.  There is hope a new Prime Minister may implement pro-growth policies and further fiscal stimulus, while companies such as SoftBank have been strong performers due to their ties to AI infrastructure investments.

Midweek in the US, it was revealed that the economy created 911,000 fewer jobs over the past 12 months than previously estimated. This suggests the labour market has been far less resilient than portrayed, with job growth stalling well before the implementation of President Trump’s sweeping tariffs. The Producer Price Index (PPI) for August fell -0.1% month-on-month, a sharp reversal from July’s +0.7% rise. Despite ongoing trade uncertainty since the start of the year, the lack of strength in producer prices points to weak domestic demand.

US inflation rose in August to 2.9% year-on-year, up from the 2.7% level seen in June and July. Core inflation (excludes food and energy prices) remained steady at 3.1% for the second consecutive month, in line with market expectations. The US Federal Reserve is set to meet in exactly five days, and although it has refrained from cutting rates in 2025, investors are eagerly anticipating a 25bps (0.25%) rate cut, with the shift in policy stance confirmed by Fed Chair Jerome Powell at the Jackson Hole symposium last month. Unemployment data on Thursday was weaker than expected, with a higher number of initial jobless claims being recorded. This is likely to cement next week’s rate cut and there is a remote chance the US Fed could even cut by 0.5%. US equity markets reacted positively to the prospect of rate cuts, with the interest rate sensitive small cap index rallying close to 2% on Thursday. We saw the main US equity indices make new all-time highs on Thursday – it’s clear the old adage of “bad news is good news” is firmly in play for equity investors!

The mood in the UK has been bleak, marked by two high-profile Labour Party departures in the past week: Deputy Leader Angela Rayner and US Ambassador Peter Mandelson. Adding to the gloom, Britain’s GDP for July came in flat at 0% month-on-month, with the manufacturing sector posting the largest decline at -1.3%. While the economy performed better than expected in the first half of the year, the outlook for the second half remains decidedly pessimistic.

Stellar performers gold and silver continued to advance further this week, which has once again fed through to strong performance from the miners. Staying with miners, there was major M&A news this week with UK listed Anglo American agreeing a mining mega merger with Canadian rival Teck Resources. The deal will create a £40bn global copper group. Both companies have been the target of takeover bids recently and the merger should help protect against this. In a blow to the UK the head office for the new company will be in Canada, which could lead to job losses at Anglo’s London HQ.

It’s been a busy week, with equities advancing, while economic data is beginning to slow. Central banks will be watching data closely and there is now the expectation the US Fed will be cutting rates regularly as we head into 2026 to support the jobs market. Precious metals continue to be in high demand with both central banks and retail investors. Our portfolios have meaningful exposure to physical gold and precious metals miners and they have been major contributors to performance in 2025.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 30th August – 5th September 2025

The first Monday of September represents the Labor Day in the US. Dating back to 1894, Labour Day commemorates the struggles and achievements of the labour movement including the fight for fair working conditions. For many, it also marks the unofficial end of summer.

The Labor Day festivities didn’t last long, as by Tuesday it was reported that US manufacturing had contracted for the sixth consecutive month in August. The ISM Manufacturing PMI rose slightly from July’s figure of 48.0 to 48.7 but still fell short of market expectations of 49. A reading below 50 signals contraction in the sector. Manufacturers described current economic conditions as “worse than the Great Recession” of 2008–09, due to the instability caused by President Trump’s tariff policies. His “Made in the USA” initiative has been poorly conducted, as plans to relocate production domestically would require companies to justify significantly higher costs.

Staying with the US, Non-Farm Payrolls jobs data was released today, with the data showing only 22,000 jobs had been created, against an expectation of 75,000. This data is further evidence of a cooling labour market and will increase the probability of imminent rate cuts from the US Fed, with a cut later in September now almost guaranteed. It will be interesting to see how data evolves over the rest of 2025, with the impact of tariffs beginning to flow through the economy. On the back of the data, we saw a big fall in the US 10-year yield, which is now approaching 4%, while the US Dollar weakened considerably. The moves in the bond and currency market show more interest rate cuts are now expected.

Inflation in the Eurozone edged up slightly in August, rising from the European Central Bank’s (ECB) achieved target of 2% in June and July to 2.1%. The ECB has stormed ahead of other central banks in the rate-cutting cycle, having reduced rates eight times over the past 12 months. The ECB will meet again next week to discuss policy, and while it is widely expected they will continue to pause, markets remain optimistic that a further rate cut could be on the cards before year-end.

UK retail sales were released this Friday morning, rising by a positive 0.6% over the month of July. It may feel like a distant memory given this week’s poor weather, but sunny conditions and England’s Women’s Euros football success contributed positively to sales. Clothing and online purchases also provided a boost.

It seems neither the US nor the UK can effectively calculate economic data, as June’s strong figure of 0.9% growth for the UK was revised down to 0.3%—a much softer look.

A worrying trend that continues in the UK is the rise in cyber-attacks affecting businesses. This year alone, we’ve seen attacks disrupt operations at Harrods, the Co-op, and most recently Marks & Spencer. Just this week, automaker Jaguar Land Rover was hit by an attack that forced a shutdown of all IT systems, impacting both car sales and production. The timing is particularly unfortunate for the firm, as September marks a pivotal sales period with the release of new registration plates and the delivery of new vehicles to customers.

Gold has been a source of outperformance over the past 12 months, underpinned by the drive towards safe-haven assets amidst trade and geopolitical uncertainties, as well as broad US dollar weakness. Gold is up 2.5% for the week, surging to another all-time high above $3,540.

We’ve previously highlighted our bullish stance on silver, which has now broken through the $40 per ounce mark—a level not seen since September 2011. Silver mining companies have seen extremely strong share price performance over the last month, with earnings rising rapidly.

With mixed economic data out of the world’s biggest economy, we continue to believe it is important to be diversified at a country level, particularly when factoring in near-record high equity valuations in the US.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Baked in Alaska

August is typically a quiet month for the financial markets, however, this year it has been filled with market-moving news. Our European Strategist, Jeremy Batstone-Carr, examines key economic and geopolitical events of the last few weeks.

The Week In Markets – 23rd August – 29th August 2025

With only three days left of the football transfer window, we are accustomed to waking up to a constant stream of rumours around potential last-minute transfers. However, this week’s swirl of rumours were about potential tax changes in the upcoming Labour budget, creating notable unease across financial and property markets.

Reports suggest Chancellor Rachel Reeves is considering extending National Insurance to rental income, potentially raising £2-£3bn annually. Simultaneously, murmurs of a windfall tax on bank profits have surfaced, echoing previous moves to target sectors perceived as benefiting disproportionately from macroeconomic conditions. As with football transfer gossip, the mere suggestion of these measures, whether or not they materialise, can influence investor behaviour, pricing dynamics and strategic positioning. UK domestic equities are suffering from tax uncertainty, with the mid cap index lagging the large cap index by over 3% in Q3, a reversal of the second quarter of the year where UK mid-cap stocks outperformed by close to 10%.

Over recent weeks we have witnessed a pick up in bond volatility, with long-term borrowing costs increasing for many developed nations, not just the UK. This is despite shorter-term borrowing costs being lowered (through interest rate cuts). Yield-curves continued to steepen this week, likely driven by a combination of persistent inflation concerns, diminishing demand from institutions and foreign central banks and quantitative tightening, with central banks (including the Bank of England) actively selling off its bond holdings. The trend of higher long-term yields will be a concern for governments as it increases their debt servicing costs.

There was a raft of Japanese data on Friday morning. Unemployment came in lower than expected, at 2.3%. Despite such low unemployment, retail sales remained anaemic, only growing 0.3% year-on-year. Tokyo inflation data was in line with expectations at 2.5%. Tokyo is Japan’s most populated city and therefore this inflation data normally provides guidance for national inflation data, which is released later.

Precious metals have seen a modest rebound in pricing this week, with the price of gold and silver moving higher, approaching year-to-date highs once more. Concerns around US Fed independence helped push up prices, with President Trump looking to dismiss Fed Governor Lisa Cook for allegations of mortgage fraud. It’s no secret that Trump wants lower interest rates in the US and this move is seen as an attempt to replace committee members who may not be aligned with his views.

It has been a terrific August for gold and silver producers (companies) who have seen their share prices rise far above the pace of the underlying precious metals. These companies are experiencing very strong earnings growth on the back of high commodity prices and stable costs.

Preliminary GDP data for the US showed the economy grew at an annualised rate of 3.3% in the second quarter. The finalised figure will be released next month. This data underlines current strength in the US economy and was released alongside unemployment claims data which was slightly better than expected. As the year progresses it will be interesting to see if the impact of tariffs begins to show up in company earnings and profit margins.

At a company level all eyes were on Nvidia’s Q2 earnings, released on Wednesday. Nvidia is now the world’s largest company by market capitalisation at over $4 trillion and is over 8% of the main US equity index. Revenue and earnings per share for the quarter beat expectations and revenues are expected to be over $50bn for the third quarter. Interestingly three customers, referred to as customers A, B and C, accounted for a combined 34% of total Nvidia revenue over the past year. It is widely believed these customers are Amazon, Microsoft and Meta. While it may feel comfortable having such a large part of revenue from three prestigious companies, it does carry risks for Nvidia. Within portfolios we look to reduce risks like this through diversification; no over reliance on any one country, company, sector or theme.

Andy Triggs, Head of Investments

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 16th August – 22nd August 2025

The UK saw inflation reach its highest level in 18 months in July, rising to 3.8%. The Bank of England (BoE) forecasts inflation to continue to nudge higher, reaching 4% by September — double its 2% target. In a blow to the Chancellor, longer-dated government bond yields rose to 27-year highs, increasing UK borrowing costs and eroding some of the £9.9bn fiscal headroom that Rachel Reeves gave herself.

Interestingly, core inflation (which excludes energy and food prices) also rose to 3.8%, in line with market expectations. However, the month-on-month inflation figures tell a different story, slowing to 0.1% in July from 0.3% previously. Transport costs led the increase, with airline fares seeing their largest July rise since records began. Other sectors such as electricity, fuel prices and soft drinks also contributed to the upward pressure on inflation. Previous Taylor Swift tours in the UK have had a measurable impact on inflation figures. Although beloved by many, the Oasis tour didn’t quite manage to leave the same economic imprint.

Earlier in the month, the Bank of England’s split decision resulted in a 25bps (0.25%) rate cut. Following this latest inflation data, markets are likely to anticipate a slightly longer wait for the next rate cut, as elevated inflation persists. The BoE certainly has a tough job, trying to tackle sticky inflation, while also faced with a deteriorating labour market.

The European Central Bank (ECB) has led the way globally, cutting interest rates eight times over the past year. Despite these rate cuts, inflation has not reaccelerated in the region. Inflation for July held steady at the 2% target for the second consecutive month. The ECB plans to keep rates unchanged in a “wait and watch” stance, maintaining a steady eye on how trade uncertainties may impact the broader economy.

US President Trump has had a busy week, meeting first with Russian President Vladimir Putin and then with Ukrainian President Volodymyr Zelenskyy in an effort to broker a ceasefire deal. The tone of the meeting with Zelenskyy was a far cry from their tense first encounter at the Oval Office back in February, as guarantees are now expected to be formalised over the coming weeks. Ukraine is set to purchase $90 billion worth of US weapons, a move largely backed by several European countries. Despite these developments, a peace deal still appears distant. Putin has refused to agree to a ceasefire, maintaining Russia’s opposition to any short-term truce while both sides continue working towards a broader peace agreement.

US Federal Reserve Chair Jerome Powell is set to speak later today at his eighth and final Jackson Hole Symposium ahead of his term conclusion in May 2026. Markets will be listening closely to his views on the upcoming Fed decision regarding interest rates, and whether we might see the first rate cut of the year.

Sentiment around a potential rate cut at the next meeting remains somewhat lukewarm, as policymakers weigh signs of weakness in the labour market against persistent inflation. The latter is expected to continue rising, partly due to President Trump’s tariffs, which are increasingly impacting import prices and feeding through to producer and consumer costs. Despite this a rate cut is likely but it could be the only one of the year, subject to labour market weakness.

Spare a thought for WH Smith, who saw their share price fall over 40% yesterday after an accounting error had overstated their North American profit by £30m. It’s a reminder about the volatility that can come from direct equities, and why we prefer to remain well diversified, ensuring stock specific risk is kept to a minimum in portfolios.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 9th August – 15th August 2025

UK jobs data continues to show signs of weakness, with the number of payrolled employees declining for the sixth consecutive month, as well as a drop in job vacancies. Just last week, we noted that the Bank of England’s Monetary Policy Committee was divided over the decision to cut interest rates. This uncertainty played out in real time with mixed messages from the labour market, as the signs of cooling were partially offset by resilient wage growth of 5% (excluding bonuses).

This dilemma was, in many ways, always likely to unfold. UK employers are feeling the squeeze following Chancellor Reeves’ decision to increase National Insurance contributions for businesses — a move that’s impacting staffing and wage decisions. In addition to this fiscal pressure, firms are contending with persistent inflation. While markets had been optimistic about the prospect of another rate cut at either the September or November meetings, attention will now turn to how the data evolves in the coming weeks, with additional rate cuts in 2025 by no means guaranteed.

There was some good news for the Chancellor this week. Britain’s economy grew more than expected in Q2, with GDP rising by 0.3%, outperforming the 0.1% forecast. Economists had anticipated a weaker figure due to the lagged effects of the national insurance increase and weak consumer sentiment. Meanwhile, preambles have begun around what Chancellor Reeves may or may not include in her upcoming Autumn Budget, with expectations leaning towards her going back on her word and introducing further tax hikes.

Ten days after dismissing the previous head of the Bureau of Labor Statistics (BLS), President Trump has nominated economist E.J. Antoni as the new commissioner. The appointment has raised eyebrows, as Antoni has been an outspoken critic of the BLS, previously describing its data as “phoney baloney” and calling for a suspension of the agency’s monthly jobs reports due to what he sees as flawed methodology.

He steps into the role at a turbulent time; the BLS is grappling with sharply declining survey response rates, with some key surveys seeing participation drop below 50% and increasingly volatile data revisions. Antoni’s nomination, which still requires Senate confirmation, signals a potentially significant shift in how US labour market data may be collected and reported going forward.

US CPI data released on Tuesday showed month-on-month inflation for July easing to 0.2%, in line with market expectations. Equity markets responded positively, with the S&P 500 rising 1.1% and the small-cap Russell 2000 index gaining over 2%. However, beneath the headline figures, there were some concerning developments. Airline fares rebounded by 4%, dental costs recorded a record monthly increase of 2.6%, and healthcare costs rose by 0.7% — all signs that tariffs are continuing to filter through supply chains and exert upward pressure on prices.

The Federal Reserve has yet to deliver its first rate cut of 2025, but by the time of its next meeting in September, they will have had the opportunity to assess August’s data more fully.

China and the US have been on a turbulent tariff journey, with retaliatory tariffs reaching as high as 145% earlier this year. However, both sides have now agreed to extend their tariff truce by another 90 days, pushing the deadline to 10 November 2025. This extension maintains the current tariff structure, a 30% US tariff on Chinese imports and a 10% Chinese tariff on American goods. The extension offers companies a valuable window to front-load shipments ahead of the year-end spending surge and prepare for any worst-case scenarios.

Brazil was among the nations hardest hit by President Trump’s recent tariff hikes, with key exports rising to 50%. The move, widely seen as politically motivated, was linked to what Trump called a “witch hunt” against his ally, former President Jair Bolsonaro, who is currently on trial for allegedly attempting to overturn the 2022 election results. In response, Brazil’s government announced an immediate aid package worth $5.55 billion in the form of credit lines and direct government purchases of impacted goods including coffee, beef, footwear and fruit.

Later today, President Trump will meet with President Putin in Alaska, marking their first face-to-face meeting since Trump returned to the Oval Office. The summit will focus on efforts to broker a ceasefire in the ongoing Russia–Ukraine conflict. Trump has stated he will push for peace, and suggested that a second summit, potentially involving Ukrainian President Zelenskyy may be needed to reach a substantive agreement. Earlier in the week Trump spoke with Zelensky and other European leaders ahead of today’s meeting.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 2nd August – 8th August 2025

The big news coming out of the UK this week was that the Bank of England (BoE) lowered interest rates. This move was largely expected but the vote to cut was anything but straightforward. For the first time in its history, the BoE required a second round of voting to determine their decision. During the first round, four members voted to hold rates steady, four voted for a 0.25% cut and one member voted for a 0.5% cut. With no clear outcome, a second round was required and here we saw five members voting for a 0.25%, enough to cement the decision. This unexpected development surprised markets, as estimates had suggested that seven out of nine policymakers would support a rate cut.

Interest rates were cut from 4.25% to 4%, a move markets had widely anticipated from the BoE. However, the real focus has been the internal division within the Bank itself. The split stems from differing views on how best to respond to the reacceleration in inflation and the rise in unemployment. Governor Andrew Bailey acknowledged there was “genuine uncertainty” regarding the future path of interest rates but reaffirmed the Bank’s commitment to a “gradual and careful” approach. The pound strengthened following the meeting and bond yields surprisingly moved higher, driven by less certainty of future rate cuts from the BoE.

Data reporting plays a crucial role in central banks’ decisions during their rate-cutting cycles. In a dramatic move, US President Donald Trump dismissed the head of the Bureau of Labor Statistics following a weaker-than-expected non-farm payrolls report for July. He accused her, without providing evidence of manipulating the figures, fuelling growing concerns about the reliability of government-released economic data and the frequency of subsequent revisions. Net downward revisions revealed that 258,000 fewer jobs had actually been created in May and June than initially reported, highlighting just how inaccurate recent jobs data has proved to be.

There was further movement within US government departments as Federal Reserve Governor Adriana Kugler announced her immediate retirement at the end of last week. President Trump acted swiftly, appointing Council of Economic Advisers Chairman Stephan Miran to serve out the remainder of Kugler’s term. Trump has repeatedly attempted to pressure Fed policymakers into lowering interest rates this year. By appointing Miran, who has been an outspoken critic of the Fed previously, accusing it of losing focus and accountability—the President appears to be gaining his influence over monetary policy.

Apple CEO Tim Cook visited the Oval Office following President Trump’s announcement that companies committing to US-based manufacturing would be exempt from a proposed 100% tariff on chips and semiconductors. In response, Apple pledged an additional $100 billion investment in US manufacturing over the next four years, bringing its total commitment to $600 billion and creating 20,000 new jobs. Despite needing to reassess its operations in India and facing market concerns over its lag in the AI race, Apple still beat Q2 earnings expectations. The company’s share price rose more than 6% over the week.

Swiss President Karin Sutter made a last-minute trip to Washington in an effort to prevent the enforcement of a 39% tariff on Swiss exports. However, she left empty-handed, having failed to secure a meeting with President Trump or his trade officials. Sutter had hoped to negotiate a reduction to 10%, given that the US is the largest importer of Swiss watches, chocolate, and machinery. While further negotiations between the two countries is expected, the tariffs came into effect on Thursday. Swiss officials have warned of a significant economic blow, with tens of thousands of jobs potentially at risk.

Gold rose to a two-week high on Thursday, after a period of price consolidation. With question marks lingering over US policy and Fed independence, investors are likely flocking to the safe haven asset. We continue to see strong demand for the precious metal from central banks who are increasing their holdings. In a world of uncertainty and inflationary pressures the case for gold continues to remain strong.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 26th July – 1st August 2025

After months of threats, negotiations, and reversals, we’ve now reached the August 1st Trump tariff deadline. The executive order issued by the US President imposes tariffs on goods from over 90 countries, with the majority facing a 15% rate, however, there are a few notable exceptions.

To start the week, the US and EU reached a trade agreement imposing a 15% import tariff on EU goods. According to European Commission President Ursula von der Leyen, this was “the best we could get,” as it’s half the rate that had been threatened to take effect today. Much to President Trump’s satisfaction, the deal surpassed last week’s $550 billion agreement with Japan, with the EU committing to invest $600 billion in the US and significantly increase its purchases of U.S energy and military equipment.

Despite the agreement, there was pushback from several key politicians, including French President Emmanuel Macron. He criticised the deal, arguing that the EU was not “feared” enough by President Trump and suggesting that this was only a first step, with room for further negotiations. There had been faint hopes that Europe might secure a zero-for-zero tariff agreement.

Earnings season continues, and European drugmaker Novo Nordisk surprised markets by issuing a profit warning and acknowledging headwinds for its blockbuster drugs, Ozempic and Wegovy. Shares plunged down 30% over the week, wiping more than $70 billion off its market cap. Once seen as the leader in the weight-loss industry, Novo’s results appear to have opened the door for competitors like Eli Lilly. The company also announced the successor to former CEO Lars Jorgensen: Maziar Doustdar, previously VP of international operations. He is now tasked with reigniting sales, combating knock-off versions of Novo’s drugs, and reassuring investors that Novo remains a dominant force in the space.

Germany’s GDP contracted by 0.1% in Q2, marking a slowdown from the growth seen in Q1, which had been driven by strong purchases ahead of anticipated US tariffs. Germany is expected to be hit hardest by the newly agreed 15% tariffs due to its heavy reliance on exports. Further economic pain is likely before the planned fiscal stimulus takes effect in 2026.

The US Federal Reserve held its fifth meeting of the year and, as expected, kept interest rates unchanged. The policy decision concluded with a 9–2 vote, with governors Michelle Bowman and Christopher Waller advocating for a rate cut—marking the first time in 30 years that two governors have opposed the majority. What disappointed markets most was the post-meeting commentary from Fed Chair Jerome Powell, who poured cold water on growing expectations of a rate cut in September. Powell stated it was too early to determine whether a cut would be appropriate at the next meeting, noting that the unemployment rate remains low and the labour market resilient, suggesting that current rates have not hindered economic activity.

US Non-Farm Payrolls, released on the first Friday of each month, surprised markets with only 73,000 jobs created in July—well below the forecast of 110,000. This slowdown aligns with broader market expectations and reflects the impact of trade tensions, tariffs, and growing caution among businesses when it comes to hiring, as pressures continue to mount. The news helped increase the probability of a rate cut in September, with US government bond yields tumbling on the news.

US stocks pulled back following the Federal Reserve meeting and in anticipation of the 1st August tariff deadline. However, Meta (formerly Facebook) reported Q2 revenue of $47.5 billion, exceeding expectations and offered a strong outlook for Q3, with capital expenditure showing no signs of slowing. This led to shares rising by 11% on Thursday, bringing the year-to-date gain to over 32%. Microsoft also delivered strong results, highlighting the artificial intelligence (AI) boom is still well in motion and shows no sign of slowing just yet.

It was an eventful week for copper, with the price plunging a staggering 20% on Wednesday. Trump surprised the market by announcing that the 50% import tariff on copper would exclude refined copper cathodes, which are the most commonly traded form of copper.

There was further tariff meddling from Trump on Thursday, as he increased tariffs on a range of countries, including a 35% tariff on Canada and 50% tariff on Brazil. Interestingly, only nine countries were able to strike trade-deals with the US in the run up to today’s deadline, however, many countries have vowed to continue to negotiate. Countries such as Brazil, Canada and India were denied extensions.

It has been a tougher week for markets, with concerns over tariffs weighing heavily over global equities. After a very strong run over recent weeks, where seemingly news flow around trade agreements was positive, this week was a reminder of the fragility of global trade and the unpredictability of US President Trump.  

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Letter from America

With US tariff negotiations still featuring heavily in the news, Raymond James European Strategist, Jeremy Batstone-Carr, considers recent developments and their potential effects on the global economy.

The Week In Markets – 19th July – 25th July 2025

On Sunday, the ruling coalition led by Japanese Prime Minister Mr Ishiba and the Liberal Democratic Party (LDP) lost its majority in the Upper House of Parliament. This marks the first time since 1955 that the LDP has failed to maintain control of at least one chamber.

Premier Ishiba’s days may well be numbered, having already lost control of the Lower House in elections just nine months ago. Momentum is also shifting towards opposition parties, which have pledged to cut taxes and tighten immigration policies. Intriguingly, the Sanseito party, a far-right populist group founded in 2020, has gained significant traction through YouTube, increasing its representation from one seat to fifteen.

Mr Ishiba is brushing off internal party pressure over his leadership, vowing to remain in office. He reaffirmed his commitment to overseeing tariff negotiations with the United States and tackling high inflation, a relatively new phenomenon for Japan who battled deflationary headwinds for most of this century.

Despite a rocky start to the week, sentiment in Japan improved on Tuesday following an announcement by US President Trump that he had signed the “largest trade deal in history” with Japan. Japan, the fifth-largest trading partner of the United States in goods, currently runs a trade surplus of approximately $70 billion. Key elements of the deal include Japan’s purchase of 100 Boeing aircraft and an increase in defence spending with US firms to $17 billion. The country’s automotive sector—which accounts for over a quarter of its exports to the US—will also benefit from a reduction in tariffs to 15%, sending shares in leading automakers Toyota and Honda up by 14% and 8% respectively over the week.

Continuing on the road of automakers, electric vehicle manufacturer Tesla reported a decline in both revenue and profits in its second-quarter earnings. Revenue fell short of market expectations, coming in at $22.50 billion compared to the forecasted $22.74 billion. Tesla shares have dropped nearly 20% year to date, with much of the volatility attributed to CEO Elon Musk’s four-month tenure as head of the Department of Government Efficiency (D.O.G.E), which ended in a public fallout with President Trump. The company is expected to face a few “rough quarters” ahead, following the withdrawal of US subsidies for electric vehicle manufacturers. However, Musk remains optimistic around future revenue streams, particularly from self-driving services anticipated to launch next year.

The European Central Bank (ECB) met on Thursday and, as expected, left interest rates unchanged at 2.15%. The ECB has diverged notably from other central banks in their rate-cutting cycles, making this pause timely, especially with inflation holding steady at 2% in June. ECB President Christine Lagarde expressed satisfaction with the outcome, stating that the Eurozone is in a “good place” and emphasised the importance of looking ahead. Her comments refer to the anticipated trade deal between the United States and the European Union, which negotiators hope to finalise before the 1st of August deadline.

After three years of negotiations, the UK and India have signed a free trade agreement, agreeing to cut tariffs on goods ranging from motor vehicles to whisky. The deal marks Britain’s largest trade agreement since leaving the EU in 2020—at least until the pending trade deal with the United States is signed and finalised. Aimed at boosting trade by £25 billion, the agreement has lifted sentiment, helping the UK large cap index reach a record close for the fourth consecutive day.

Silver prices continue to surge, reaching their highest level in nearly 14 years—just shy of the $40 per ounce mark. The metal previously hit a record high of $49 in 1980, a level it last approached in 2011.

 

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

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