Weekly market commentary

Market review

It’s been a roller coaster week regarding the global trade war and the US’s intended imposition of tariff policy. In the space of just a few days, investors have had to untangle: an immediate 1-week-forward 50% tariff on the European Union – then a delay to that tariff by 5 weeks, a US Court of International Trade ruling that most of the US government’s tariffs are illegal, the Court of Appeal granting a temporary reprieve that leaves the tariffs in force while the case is considered and lastly, news reports that US policymakers are assessing alternative powers should they lose that court appeal. There is certainly much more to come, but the magnitude of announcements, speed of change in the narrative and potential size of the ramifications are doing little to dampen uncertainty. 

Despite volatility in response to geo-politics and data releases, it has been a positive week for equities, with US equities boosted by strong earnings from Nvidia, who delivered upbeat sales guidance despite restrictions on shipments of its AI chips to China which are expected to cost c.$8bn in sales. 

Mixed data from the US this week may suggest that the US economy’s robustness is starting to be tested. Initial jobless claims rose to 240,000 last week, the highest level since February, while a rise in continuing claims (to 1,919,000) left this measure at its most elevated since 2021, indicating that a growing number of newly laid-off workers are struggling to find new roles quickly. Bonds rallied off the back of this, combined with a lower than expected personal consumption figure, with the market now pricing in 2 full interest rate cuts from the Federal Reserve by the end of the year, with investors feeling the central bank may have to cut rates to loosen financial conditions.

Outlook

The economic environment has been resilient so far. The recent 90-day pause in targeted tariff implementation, now reinforced by a partial rollback of US-China tariffs, has offered a temporary reprieve for world leaders and policymakers. We expect markets to remain volatile as more countries look to pivot their efforts to negotiate and strike deals with the US.

Movers table