Written by Dominic Williams
Global stock markets made modest gains last week, showing resilience despite renewed trade tension from the United States. President Trump announced new tariffs, including 30% on imports from Mexico and the European Union, and 50% on goods from Brazil, due to begin on 1st August. Investors, however, largely viewed these measures as political posturing rather than an immediate threat to global growth. This more relaxed reaction helped push the MSCI All Country World Index, which tracks a broad range of global shares, up by +0.7%.
In the US, economic data remained supportive. Weekly jobless claims fell to 227,000, which suggests that fewer people are newly out of work, a sign of continued labour market strength. However, a rise in continuing claims, which track those still receiving unemployment benefits, may indicate that it’s taking longer for some to find new jobs, hinting at a possible slowdown in hiring.
The S&P 500 rose +0.7%, while the tech-heavy Nasdaq-100 gained +0.6%. This followed news that Nvidia became the world’s most valuable company, becoming the first stock market-listed company to achieve a value of $4tn, overtaking Microsoft and Apple. This milestone reflects continued investor confidence in AI. However, stretched valuations and increased market concentration could pose risks, particularly if market leadership broadens, as it did earlier this year, potentially leading to underperformance among the highly valued top-performing companies. This is where diversified portfolios play an important role. The Russell 2000 Index of smaller companies added +0.4%, reflecting broader market strength.
One region that appeared more directly affected by the new tariff announcements was Japan, an export-heavy economy and the largest foreign direct investor in the US. The MSCI Japan Index fell -1.4%, weighed down by renewed trade tensions. The proposed tariffs have raised concerns about Japan’s export-reliant sectors, particularly in manufacturing and technology. The sell-off reflects growing anxiety over Japan’s economic exposure to US policy shifts, especially as the country remains dependent on external demand amid subdued domestic consumption. However, Japan continues to benefit from strong corporate balance sheets and contained inflation which allows a supportive monetary policy. This contrasts with broader Asian markets, where the MSCI All Country Asia Pacific ex-Japan Index rose +1.8%, highlighting Japan’s unique sensitivity to geopolitical developments.
In the UK, the latest GDP figures painted a mixed picture. While the economy contracted slightly by -0.1% in May, the broader three-month average showed +0.5% growth, the strongest quarterly performance in over a year. However, some of this strength came from businesses bringing forward trade activity, likely in response to President Trump’s initial tariff announcements earlier in the year. This temporary boost raises doubts about whether the UK can keep up this momentum in the second half of the year.
Despite this, UK equity markets held up relatively well. The FTSE 100, which includes globally competitive firms with significant overseas earnings, rose +1.3%, supported by a weaker pound. The more domestically focused FTSE 250 gained +0.3%, recovering some ground after recent politically driven losses. However, fiscal uncertainty continues to weigh on sentiment, particularly after the government’s welfare reform delays and the unresolved budget deficit. This divergence between economic data and market performance highlights the complex interplay between macroeconomic fundamentals and political risk.
The past week has shown that markets do not always move in step with political developments, and headline-grabbing news does not always translate into immediate market impact. Maintaining a diversified investment approach and staying invested for the long term continues to provide a solid foundation, regardless of short-term noise.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 14th July 2025.
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