Weekly market commentary

Market review

The week began with the news that a US federal appeals court had ruled tariffs introduced under International Economist Emergency Powers Act (IEEPA) were illegal, upholding an earlier ruling by the Court of International Trade. However, in its 7-4 ruling the court left the tariffs in place until October 14, giving the administration time to appeal the case to the Supreme Court. Were IEEPA tariffs illegitimised, this would invalidate most levies introduced this year, including the “reciprocal” country rates and the “fentanyl” tariffs on China, Mexico and Canada, though the administration could look to implement similar levies via other statutes.

Bond markets took centre stage, however, with government bond yields experiencing volatility as investors weighed up the concerns around the Federal Reserve’s independence and growing fiscal deficits in developed markets. Softer labour market data in the US has increased expectations of further interest rate cuts, with markets now pricing in 0.6% points of easing by year end. This sentiment buoyed equity markets, with the S&P500 and Magnificent 7 stocks reaching new all-time highs. There was additional support for shares in AI related companies – Alibaba (+17%) reported a substantial triple digit increase in AI related product revenue, while a report from the Financial Times suggests that Open AI are partnering with Broadcom to produce new AI chips to rival Nvidia.

UK Government bonds appear to have detached from their US counterparts, however, as the 30yr gilt yield hit 5.69% on Tuesday – its highest since 1998. This underscores the challenges Chancellor Rachel Reeves faces ahead of the Autumn budget, as a £20-25bn gap in public finances needs to be filled by November for the government to comply with its own fiscal rules.

Outlook

Markets remain reactive to a mix of economic and geopolitical signals, with recent moves reflecting uncertainty around inflation, growth, and policy direction. While corporate earnings have held up in many regions, investor sentiment has become more cautious. As inflation trends diverge and labour markets evolve, central banks may take increasingly different paths—raising the potential for greater dispersion across asset classes and regions in the period ahead. 

Movers table