Our Head of Investments, Andrew Prosser, is back with another roundup of the week in financial markets.
This week’s update sees attention turn back to President Trump’s tariffs. We also explore NVIDIA hitting a valuation of $4 trillion, while looking ahead to earnings season which kicks off on Monday. Finally, we look at the Fed meeting minutes and the outlook for interest rates.
Tariffs back on the front pages
The reason for the return to the front pages for Trump’s tariffs was the end of the 90-day deadline that the President had put on the first wave of exemptions.
On Monday and Wednesday this week, Trump issued new tariff demands – including some high profile tariffs on Brazil, which pushed up copper prices. Trump did push back the actual implementation of the tariffs until the beginning of August, however.
Market reaction to the latest tariff news has been relatively muted, staying largely flat for the whole week. This is mostly because countries now have a bit more time to negotiate deals with the US before the 1st August deadline. These tariffs are also unlikely to make too many seismic waves in terms of big tech’s corporate earnings and, at the moment, they’re the big market movers.
Nvidia hits milestone after AI rally
Another notable story from this week was AI giant Nvidia surpassing a $4 trillion market cap.
Source: Bloomberg
The milestone was hit thanks to a small rally across the major AI companies, with Nvidia retaining its place as the world’s biggest company by market cap.
It’s more good news for Nvidia, but it also raises expectations for the upcoming earnings season, which begins on Monday. Naturally, investors will be keeping an eye out for any impact any of Trump’s tariffs might have had on earnings.
One consequence of the rally we saw in April is that investors will be paying very close attention to any bad news that comes out of earnings season. Check back in next week for more info on how that goes.
Fed meeting minutes shine a light on interest rates
Finally, let’s turn our attention to the latest from the Federal Reserve – this week, minutes from the latest meeting were released.
These are interesting to investors because they offer a look under the hood of the decision making process with regard to interest rates. This most recent meeting revealed a difference in opinion within the Fed itself on just how much impact the tariffs will have on inflation.
One school of thought is that the tariffs will cause a one-off price shock and that will be that. The other is that they could cause more long-term price rises. As a result, the policymakers are divided on what the outlook for inflation actually is.
Source: Bloomberg
The mood in markets can be a useful barometer here. And, while the Fed may have doubts, markets are actually looking fairly optimistic about the outlook for inflation. It’s still pricing in two rate cuts in the US for the rest of 2025 – the same, incidentally, as the UK.
Overall, this week has been relatively calm in markets. Barring any major shocks over the weekend, it’ll be fairly flat despite all the headlines around tariffs.
There may be a few more surprises to come, particularly over the US-EU trade deal. Markets, however, are more concerned with earnings season, so we could see a bit more movement next week.
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