Weekly Note
| Global Stocks | US Stocks | UK Stocks | EU Stocks | EM Stocks | Japan Stocks | Gilts | GBP/USD |
| +1.2% | +1.1% | +0.5% | +1.7% | +1.0% | +1.4% | -0.3% | +1.3% |
Market update
Global equity markets delivered a broadly positive performance of +1.2% in GBP terms last week. US equities rose by +1.1% as major indices rebounded from the prior week’s decline, led by technology stocks. The rally was driven by positive corporate developments, notably related to Apple, which secured a tariff exemption for semiconductor imports. This boosted its share price and lifted broader market sentiment. Global indices shrugged off tariff news, including increased levies on Indian goods and unresolved negotiations with Switzerland. European equities also advanced by +1.7%, supported by robust earnings and renewed optimism around geopolitical tensions. UK equities saw more modest gains of +0.5%. In Japan, equity markets rose by +1.4% on strong corporate results and clarifications around trade terms with the US, especially the reduction in auto tariffs.
Yields on 10-year government bonds in the UK, US and EU saw minimal changes, each increasing by less than one-tenth of a percent each. Market expectations for a Federal Reserve rate cut in September increased significantly, following dovish commentary from Fed officials and a temporary appointment of a new governor to the Board of Governors who is seen as favouring looser policy. The Bank of England lowered its key rate this week in a decision that reflected concerns about labour market weakness and rising inflation risks. The move was narrowly decided and was seen as a signal that the bank may take a more cautious approach to further easing. Eurozone bond markets responded to mixed economic data, with retail sales and investor confidence showing resilience, while German industrial output and orders were less than expected.
Oil prices experienced a sharp decline of -6.3% last week, driven by a combination of geopolitical tensions, supply-side developments and shifting market sentiment. The US administration’s announcement of increased tariffs on Indian goods linked to India’s continued purchases of Russian crude raised concerns about potential disruptions in global oil flows and trade relations. At the same time, OPEC+ signalled an early end to production cuts by announcing plans to increase output, which added to ongoing concerns of oversupply in the market.
Macro news
Tariffs - The new US tariff rates, which were announced last week, came into effect at midnight on 7th August. These new rates are generally lower than the April 2nd "Liberation Day" rates, but nevertheless leave the effective US tariff rate at 18.3%, compared to a rate of 2.4% at the start of the year, according to the Yale Budget Lab. Certain countries received a higher tariff rate, such as Switzerland, which saw its rate increased from 31% on April 2nd to 39% after revision.
The tariff rate for India was further increased this week from 25% to 50%, with purchases of Russian oil cited as the reason for the increase. Tariffs on strategic sectors such as semiconductors, pharmaceuticals and steel are widely expected to follow - on Wednesday, the White House floated the idea of 100% tariffs on chips and semiconductors with full exemptions for businesses that are building meaningfully in the US.
US services PMI - The US Services Purchasing Manager's Index (PMI) fell to 50.1 in June, below an expected figure of 51.5, indicating that the US services sector more or less stagnated over the month. The survey data also showed weakening employment as well as higher input prices paid for service providers.
Bank of England cuts interest rates - The Bank of England cut interest rates by a quarter point to 4% on Thursday in a close decision. Rate setters voted 5-to-4 to cut rates by 0.25% after an unprecedented re-vote that occurred after the first vote failed to produce a majority decision (one member initially voted for a half-point cut). Following the vote, Governor Andrew Bailey stated that while the direction for interest rates “continues to be downward”, there is now “genuine uncertainty” around the pace at which future cuts may occur.
