The market doesn’t care for sequels

The list of 14 countries included Japan, South Korea and Malaysia, who will all receive a 25% tariff. The BRICS nations, which were assembling in Rio de Janeiro, criticised US trade policy in a public statement. Trump responded by threatening an additional 10% levy on the BRICS nations and any nation aligning themselves with their ‘anti-American’ policies.

Finally, on Friday, the US president announced that he will also impose a 35% tariff in Canada. While new tariff threats revived talk of a trade war, stock markets had a notably muted reaction to the events that transpired. US equities finished the week relatively flat amid a quiet economic calendar.

One release to note was initial jobless claims data for the week previous. The number of new applications for jobless benefits in the US fell below consensus estimates to a seven-week low. 10-year treasury yields finished the week higher in response to tariff impositions on Friday. 

Better-than-expected economic data provided a tailwind for European equities. German industrial production rose by 1.2% MoM in May, surging past forecasts for growth to be flat at 0%. Meanwhile the Eurozone Sentix Investor Confidence index rose to 4.5, beating estimates of 1.2 and marking its highest reading since February 2022. European stocks also benefitted during the week from optimism that a USEU trade deal will be reached.

Elsewhere, UK GDP unexpectedly contracted again in May by -0.1% MoM after being forecasted to expand by 0.1%.  In commodities, US plans for a 50% tariff on imports of copper, caused US prices for the metal to briefly climb as much as 17% to a new record high, marking its largest intraday spike since 1989. Meanwhile, silver continued its impressive run, rising to prices not seen since 2011.

Equities

Global stocks finished up 0.4% in euro terms and down -0.3% in local terms last week. Year-to-date global markets are down by -2.5% in euro terms and up by 10.1% in local terms. The US market, the largest in the world, finished up 0.4% in euro terms and down -0.4% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.4% last week. The German equivalent finished at 2.7%. The Irish 10-year bond yield finished at 3.0%. The Euro/US Dollar exchange rate finished at 1.17, whilst Euro/GBP finished at 0.87.

Commodities

Oil finished the week at $69 per barrel and is down -15.5% year-to date in euro terms. Gold finished the week at $3,356 per troy ounce and is up 13.3% year-to-date in euro terms. Copper finished the week at $9,639 per tonne and is down -1.3% year-to-date in euro terms.

The week ahead

Tuesday 15th July

China GDP for Q2 goes to print.

Wednesday 16th July

US PPI inflation for June is released.

Thursday 17th July

US retail sales for June is reported.