Week Ending 25/07/2025 – UK equities defy higher number of warnings and outlook for increased taxes
Jeremy & Gareth, having skipped a week, cover the macro news of the last fortnight.
Trump's new tariff "magic money tree" has encouraged him to ramp up the rhetoric on tariffs. Critically, the inflationary impact of higher tariffs is now coming into focus, impacting the growing feud between the White House and the Federal Reserve.
Japan has struck a deal with the US, but the EU and China are awaiting their turn. Both of these larger trading partners present difficulties that the market seems relatively sanguine about. The risk that China plays hardball has been all but discounted.
Macro data shows that inflation remains elevated in both the US and the UK. The UK labour market has softened over the past eight months as the economy faces rising taxes in the Budget and the government deals with higher-than-expected borrowing.
EY has reported on the highest level of UK profit warnings in 25 years. Several businesses, such as Treatt and Judges, have warned due to exposure to the US market and the weaker dollar. The UK market, meanwhile, continues to move higher, which appears to be more a result of capital flows than fundamentals.
Gareth discusses recent results from Van Elle and Severfield in the construction space.
Looking ahead, it is jobs week in the US, which should indicate a further slowing in the labour market. Additionally, the Fed Chair's press conference should be worth watching, even though no one is expecting any movement in rates.
We also receive the BoJ rate decision, which, as ever, can send shockwaves through the rest of the world's financial markets. Let's see.
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