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Friday 4th July
Oil price is stable with global tariffs undecided
The price of oil hasn’t shifted much, as traders await the outcome of the OPEC+ meeting on potential production increases. With the global tariff situation still to be decided, Brent Crude is trading around $68 a barrel. For the week it looks set to post a gain of around 2%, recovering from its steepest weekly fall a in over two years after fears of an escalation of the Iran Israel conflict subsided.
UK government borrowing costs retreat further
Concerns about the UK’s fiscal position have retreated after Prime Minister made a big display of support for Chancellor Rachel Reeves. With the government intent on projecting an image of unity, it’s helped stabilise the bond markets. 10-year gilt yields, assessed to judge UK government borrowing costs, have returned to levels they were at before Rachel Reeves’ distressed appearance in parliament and sterling has continued to claw back ground. However, there is speculation that given the difficulties the government has faced in finding savings from welfare budgets, tax rises are likely in the Autumn Budget. Bets are rising that the Bank of England will cut interest rates more quickly with a reduction in August increasingly on the cards. So, that’s kept a bit more downwards pressure on sterling.
US Congress passes the big, beautiful tax bill
The huge and highly controversial tax and spending package passed in Congress, is likely to help stimulate growth in the short term but piles up longer-term financing problems for the US. Trump called it his big, beautiful bill but it risks ending up in an ugly debt spiral. It is forecast to add $3.4 trillion to the huge US debt pile over the next decade. Fans of the tax plan claim it will help boost activity and the tax take but forecasts vary widely about the long-term effect. The Congressional Budget Office estimates it’ll only increase growth by 0.5% over 10 years.
Lower blanket tariffs are expected as Trump runs out of time to do deals
The Trump administration is running out of time to do specific detailed trade deals. and the President has said that instead blocs of nations will be informed by letter that they’ll face tariff rates of around 20-30%. It appears we are returning to a diluted form of blanket tariff policy, which sparked marked mayhem in April. Headline rates threatened have come down markedly but the disruption to trade and growth around the world is still set to be significant. Talks with the European Union are continuing and although a deal is expected, it’s likely to be an eleventh-hour agreement. The 9 July deadline won’t mark the end of the tariff story. There are set to be plenty more twists to come, and there is still a lot of expectation baked in that Trump will eventually retreat further from these latest tariffs threats.
Wall Street has been riding high on signals that so far that Trump’s trade policies haven’t yet weakened the economy. The closely watched US jobs report for June signalled much more strength in the labour market than expected. Although it’s wiped out hopes of an interest rate cut this month, it didn’t hit sentiment, which appears more focused on the resilience of the world’s largest economy. Markets are closed for the 4 July holiday but more cautions is set to creep into sentiment and show up when trading resumes on Monday.
FTSE 100 falls in early trade as worries simmer over trade deadlines
Optimism is evaporating at the end of the week, as the US tariff deadline looms and the signs are that many countries will face higher duties than expected. There’s a distinct lack of Friday fizz for the FTSE 100, as investors mull repercussions for the global economy. Investors are also assessing the implications of the passing of Trump’s big tax cut bill which will add to the mountain of US debt.
Thursday 3rd July
Key non-farm payrolls jobs report eyed in the US
Eyes will turn to the official non-farm payrolls report later today, a crucial snapshot of the labour market for clues as to when the Fed will move again on interest rate cuts. Yesterday’s private sector survey came in weaker than expected, leading to speculation that policymakers may reduce borrowing costs later this month to support a slowing economy. Concerns about slower growth in the US has contributed to a fall back in oil prices.
Brent Crude had gained ground yesterday after reports that Iran had stopped cooperating with the nuclear watchdog, adding to fears of a re-escalation of tensions in the Middle East. But a build-up in US stocks, with inventories rising by 3.85 million barrels last week, is indicating lower demand for energy.
The ballooning debt mountain in the US, which has prompted the mega fall out between Trump and Musk is still on investors’ minds. They are monitoring the progress of the President’s big tax cut bill which is back in the House of Representatives, after being narrowly passed by the senate. It’s forecast to add $3.3 trillion to $3.4 trillion to the national debt. It’s raising concerns about the sustainability of US borrowing, ripples of worry which have been tarnished the dollar’s reputation as a safe haven.
US-Vietnam trade deal adds optimism before tariffs deadline
Broader market sentiment has been buoyed after Trump notched up another tariff agreement, this time with Vietnam. This has added to hopes that there will be a flurry of deals struck before the deadline next week. But it’s by no means certain. If more deals aren’t signed and higher tariffs come into effect, there could be yet another spurt of volatility on financial markets. However, with the TACO trade in play – the expectation that Trump Always Chickens Out – a big showdown may be avoided.
Investors shrug off Parliament turmoil as FTSE opens in the green
There’s been a recovery in sentiment for the pound, stocks and UK government debt after scenes in Parliament roiled markets. A Chancellor in tears, a backbench revolt, and signs investors are becoming more risk averse to the UK is hardly the way the Prime Minister wanted to mark his first year in office. The government is in repair mode, with Keir Starmer backing Rachel Reeves to remain Chancellor into the next election and beyond. This is helping restore some calm on bond and currency markets, given that investors need stability and certainty to have the confidence to invest in UK assets.
It’s been a positive start for the Footsie, with investors shrugging off yesterday’s turmoil. Gilt yields, which indicate UK government borrowing costs, have been dipping back from the sharp gains yesterday, while the pound has also regained some strength. Sterling is still lower against the dollar compared to 24 hours ago, having reached multi-year highs earlier this week. But it is still up 1.5% on a fortnight ago, and around 12% since the start of the year.
Some worries remain about the government being backed into a corner and losing its grip on the public finances. Investors may still be on alert to fresh opposition to government plans to trim spending, to try and abide by its fiscal rules and keep bond markets onside. This wasn’t a mega strop out, but a flare of alarm lobbed into Westminster. It comes as business sentiment remains weak, according to the British Chambers of Commerce. Less than half of firms surveyed expect their sales to grow over the next 12 months, with tax the biggest bugbear for business. With a quarter of firms cutting back on investment plans amid rising costs, it’s not fertile ground for the seed of growth to grow.
Tuesday 1st July
S&P 500 caps off June with a fresh all-time high
June ended with a roar across the pond as a late-day rally pushed the S&P 500 to a fresh all-time high. The index is now up 28% from its 7 April lows, making the second quarter of 2025 the strongest since December 2023, fuelled by strength in tech and growth stocks. That’s even as investors eye Thursday’s jobs report, Fed signals, and global trade tensions. Tariff news added to the momentum as Canada dropped its digital services tax, the EU agreed to Trump’s proposed 10% tariff (with caveats), and the ‘Big Beautiful Bill’ continued advancing through the Senate.
Oil prices find a temporary floor
Oil is trading flat this morning with Brent hovering around $66.30 as fears of oversupply weighed on the market. OPEC+ is reportedly set to boost production by another 411,000 barrels per day in August - part of a broader push led by Saudi Arabia to punish overproducers and regain market share from US shale. Easing geopolitical tensions, a steady Israel-Iran ceasefire, and tariff uncertainty ahead of the 9 July deadline added more pressure, with Treasury Secretary Scott Bessent warning of potential hikes despite ongoing talks.
Choppy open in Europe as FTSE 100 makes some gains
Trade talk is heating up again as President Trump’s 90-day pause on reciprocal tariffs nears its end. Markets are starting to see that Trump’s bark is worse than his bite, with news that the White House might dial back its tariff plans to avoid reigniting a global trade war the latest example of a softer touch. European markets have had a choppy open this morning, but the FTSE 100 managed to edge out some gains, as investors try and gauge what’s to come.
Monday 30th June
Eyes will turn to US jobs report on Thursday
While markets remain buoyant at the start of the week, some wariness may creep back as eyes turn to the key US jobs report out on Thursday. For now, hopes appear high that there will be fresh signs of a softening labour market, which may propel interest rate cuts to come a little swifter this year.
Unemployment is expected to edge up from 4.2% and employers are expected to take on fewer workers compared to the 135,000 total in May. The demand for workers in healthcare and social assistance and leisure is expected to continue, but there could be signs of fresh employer wariness in other areas such as manufacturing - and also the retail and travel business given weaker consumer confidence. But wages look set to remain stickier than the Fed would like to see, so hopes for a cut in July is still unlikely and September still looks a stronger bet.
Brent crude remains sharply lower at $66 a barrel
With the Iran-Israel-US truce holding, geopolitical tensions have calmed and that’s kept downwards pressure on oil prices. Brent Crude has fallen 14% over the past week as the easing of supply disruption worries collided with expectations that OPEC+ nations would ramp up production. There is still expected to be fall out for global growth, due to the impact of US trade policies, so the expectation of lower demand for energy is also weighing on prices.
China's manufacturing and services activity turns a corner
The trade deal announced again between the US and China, has poured more optimism into glass half full attitudes. Even though it’s still pretty scant on detail, the agreement looks set to give US companies better access to crucial rare earth minerals, exported from China. Already data out today shows that the downturn in factory activity in China may be turning a corner. Although official data, from the NBS Manufacturing PMI, showing the sector contracted in May, it was the smallest drop for three months, while new orders grew for the first time since March.
Data on the services sector showed growth has returned, helped by more positive vibes on tariff policy. Efforts by authorities to stimulate domestic demand, like lowering borrowing costs, increasing some public sector wages and offering targeted funding for innovation, also appear to be bearing fruit. With the world’s second largest economy showing resilience, it’s likely to keep sentiment more positive at the start of the week.
Canada and the US are back round the negotiating table
Talks between Canada and the US are back on the cards, after an agreement to scrap a tax targeting American tech firms. Mark Carney appears to have acquiesced to Trump’s demands to drop the digital services levy, to get back round the table and avoid another trade threat escalation. Bit by bit, Trump’s hard line negotiating tactics appear to be bearing fruit. There will now be speculation that other countries, like the UK, will be forced to drop their own taxes targeting the biggest tech firms in the world when further talks take place.
Equities trade higher after trade talks
Exuberance is set to continue at the start of the week, as more trade deal scores are on the doors and geopolitical tensions have eased off. The FTSE 100 has nudged higher in early trade, edging back on track towards highs reached earlier this year. Positivity has been washing through Wall Street, with stocks looking set to book fresh record levels. It comes after the S&P 500 reached a fresh milestone on Friday. Investors have shaken off tariff fears, with the deepest threats from Trump failing to materialise.