It’s a US-heavy market roundup this week. Major US tech giants have been releasing their latest earnings reports, while tariff news continues to impact not just the news, but the decision-making of the Fed.
Here’s our Head of Investments, Andrew Prosser, to run through the biggest stories moving markets this week.
In summary
Earnings season ramps up
This week saw a crucial phase of the latest earnings season – the period after each quarter where companies publish results.
Performance from the ‘Magnificent 7’ pushed markets up, with Meta and Microsoft in particular beating expectations. Shares of Meta closed 11% up on Thursday, while Microsoft closed 4% up.
AI spending has boomed in both companies, with billions more in investment expected to come in the coming years.
‘Liberation Day’ marks key point in Trump’s trade war
Since early April, Donald Trump’s proposed trade tariffs have consistently made financial headlines.
Markets were sent tumbling after the initial announcement and, since then, it’s been difficult to keep up with developments as deals are discussed.
The initial deadline of 9th July was eventually pushed to August 1st and, as the deadline passes, more delays of a week have been announced to allow for the orders to be communicated.
The US has, however, announced further tariffs to more than 90 countries, including increasing Canada’s tariffs from 25% to 35%. Brazil faces a 50% levy, while higher tariffs for Mexico are on pause for another 90 days.
So, it’s still all action in tariff news, and the reaction from markets has been muted this time. This latest round of tariffs is still less aggressive than those threatened in April and, as countries make further deals, the impact could be lessened still.
US and EU reach tough trade deal
It may feel like a lifetime ago now as far as markets are concerned, but Monday saw the US and the EU reach a trade deal. The agreement has been criticised by members of the EU who see it as a submission to US bullying.
The deal includes $600 billion in EU investments in the US. The EU will also buy $750 billion of US energy and purchase American military equipment.
It’s an enormous deal that brings to a close the threat of a protracted trade war between the EU and the US. 15% tariffs are included across the board on EU goods, a reflection of the tough negotiation the White House is becoming known for.
Fed holds rates despite Trump pressure
On Wednesday, the Federal Reserve chair Jerome Powell announced he would be keeping US interest rates steady, despite pressure from President Trump.
Powell said that the primary focus of the Fed is to control inflation and that, given the risks inherent in Trump’s global tariffs and other policies, it was not time to loosen the grip on the economy.
There is a lot more data to come before the Fed’s next meeting in September. Powell was, therefore, tight lipped on the possibility of a rate cut at that meeting.
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