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Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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London Quick Take – 28 July – Critical week for markets as stocks keep making fresh highs
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Macro is busy too. President Trump reckons the Fed is ready to start cutting rates again – but the market is not convinced. Futures markets imply just a 2% chance the FOMC will cut rates at its meeting this week. More importantly perhaps for this bull market to keep running is the double header of PCE inflation and Nonfarm Payrolls data. The Fed is only going to cut if the jobs data is worsening and so far this has not happened. It is also way more likely to stay on the sidelines as inflation is ticking up.
Finally, watch meme stocks again as the bulls are out in force. In unrelated news, Palantir entered the top 20 most valuable American companies, after its market cap hit $375bn following Friday’s 2.5% gain. Shares in the AI-defence play have more than doubled this year.
London Quick Take – 28 July – Critical week for markets as stocks keep making fresh highs
Key Points
- FTSE 100 hits fresh all-time high as S&P 500 notches five straight record high
- US and EU agree tariff deal to avert trade war
- President Trump says Fed is close to cutting rates but the market thinks otherwise
- Palantir enters top 20 most valuable US companies
Stocks jumped at the open on Monday after the US and European Union agreed a deal on tariffs to stave off a trade war, ahead of a key week for the markets. Frankfurt and Paris rallied about 1% at the open before paring gains a touch, with automakers leading the way higher. On the FTSE 100 we saw more circumspect advances but still a push to a fresh record high at 9,171.90 in early trade.
The news on trade is good: The EU agreed to 15% tariffs on exports to the US and to buy hundreds of billions on American energy and defence exports. That’s less than the 30% tariff US President Trump had threatened to impose this week. Meanwhile SCMP reported that China and the US will pause tariffs for another 90 days, ahead of talks in Stockholm today. All this comes ahead of the 1 August tariff deadline on Friday, and 12 August as regards China. The positive news on trade continues to underpin the market for the time being even if it’s ultimately inflationary. And there is a question mark over how sustainable the US-EU arrangements will be and over the potential for sectoral tariffs, such as in pharmaceuticals and semiconductors.
It’s a huge week for markets – four of the Mag 7 report, the Fed meets, and key US inflation and jobs numbers are out.
Apple and Amazon are due to report numbers on Thursday, 31 July, after Microsoft and Meta post quarterly earnings a day earlier on Wednesday, 30 July. The stakes are high – the S&P 500 notched a perfect run of five straight all-time highs last week and the four names from the Mag 7 account for about a fifth of the market capitalization of the broad market. In an exceptionally busy week for earnings we also hear from Boeing, Starbucks, Visa, UnitedHealth, Spotify, Etsy, Ford, Qualcomm, Mastercard, Riot Platforms, Strategy, AMC, Moderna, Chevron and Exxon Mobil. Read our mega-cap tech earnings preview here.
Macro is busy too. President Trump reckons the Fed is ready to start cutting rates again – but the market is not convinced. Futures markets imply just a 2% chance the FOMC will cut rates at its meeting this week. More importantly perhaps for this bull market to keep running is the double header of PCE inflation and Nonfarm Payrolls data. The Fed is only going to cut if the jobs data is worsening and so far this has not happened. It is also way more likely to stay on the sidelines as inflation is ticking up.
Finally, watch meme stocks again as the bulls are out in force. In unrelated news, Palantir entered the top 20 most valuable American companies, after its market cap hit $375bn following Friday’s 2.5% gain. Shares in the AI-defence play have more than doubled this year.
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