21st July 2025

U.S.

• US stock markets performance:

• S&P 500 Index and Nasdaq Composite Index reached new record highs, driven by strong corporate earnings and generally positive economic data.

• Small-cap Russell 2000 Index also ended in positive territory.

• Dow Jones Industrial Average and S&P Midcap 400 Index closed lower for the week.

• US corporate earnings season:

• Reporting season began in earnest on Tuesday with major US banks announcing results.

• JP Morgan Chase, the largest US bank, and Citigroup both posted stronger-than-expected Q2 earnings.

• On Thursday, PepsiCo, United Airlines, and Netflix reported results that exceeded forecasts.

• Chipmaker NVIDIA gained after receiving Trump administration approval to sell its H2O artificial intelligence chips to China.

• NVIDIA’s market capitalisation surpassed USD 4 trillion in early July.

• Shares rallied further on news of the export approval.

• US inflation and retail sales:

• Consumer price index (CPI) recorded its largest monthly rise in five months.

• CPI increased 0.3% month-on-month in June, up from 0.1% in May.

• Annual CPI rose to 2.7% in June from 2.4% in May.

• Core CPI (excluding food and energy) rose 2.9% year-on-year, up from May’s 2.8%.

• Price increases were most notable in household goods, recreational goods, and footwear.

• Car prices fell, partially offsetting broader inflationary pressures.

• Economists cited higher tariffs as a key driver of price increases.

• Retail sales rebounded:

• June sales rose 0.6%, beating expectations, following a 0.9% decline in May.

• Data pointed to resilient consumer spending.

• Midweek, stocks briefly fell on reports President Donald Trump planned to dismiss Federal Reserve Chair Jerome Powell.

• Markets rebounded after Trump denied plans to remove Powell.

• Trump has been critical of Powell for pausing further interest rate cuts in 2025.

• US bond markets:

• Intermediate- and long-term Treasury yields ended the week largely unchanged.

• Short-term yields edged lower amid speculation about Powell’s future.

• Investment-grade corporate bonds outperformed Treasuries:

• Issuance met expectations and was mostly oversubscribed.

Europe

• European equity markets:

• STOXX Europe 600 Index finished flat as investors monitored progress in US–EU trade talks.

• Mixed performance across major national indices:

• Italy’s FTSE MIB rose 0.58%.

• Germany’s DAX and France’s CAC 40 were little changed.

• UK’s FTSE 100 gained 0.57%, benefiting from a weaker pound, which supports companies with significant overseas earnings.

• UK economic data:

• Inflation:

• Annual consumer price inflation unexpectedly rose to 3.6% in June from 3.4% in May, the fastest since January 2024.

• Driven by higher transport costs, particularly motor fuels.

• Services inflation, closely watched by the Bank of England, held steady at 4.7%, signalling persistent cost pressures.

• Labour market:

• Unemployment rate increased to 4.7% (three months to May) from 4.6% (previous three months), the highest in four years.

• Payrolled employees fell by an estimated 41,000 in June, after a 25,000 drop in May.

• Annual pay growth (excluding bonuses) was 5.0%, slightly above forecasts but down from an upwardly revised 5.3% in the previous month.

• Eurozone economic indicators:

• Industrial production rose 1.7% month-on-month in May, rebounding from April’s 2.2% fall and exceeding forecasts for a 0.9% gain.

• Growth was led by higher output in energy, capital goods, and nondurable consumer goods.

• Year-on-year growth accelerated to 3.7% from 0.2% in April.

• Trade surplus widened to EUR 16.2 billion in May, up from EUR 12.7 billion a year earlier.

• Exports rose 0.9%, imports fell 0.6%.

• German ZEW economic sentiment index rose for a third consecutive month to 52.7 in July, the highest since February 2022.

• Analysts had expected 50.2.

• Nearly two-thirds of surveyed experts anticipate economic improvement, citing expected stimulus and a resolution to EU–US trade disputes.

Japan

• Japanese financial markets and economy:

• Equity markets posted modest gains:

• Nikkei 225 Index up 0.63%, TOPIX Index up 0.40%.

• Political uncertainty ahead of the 20 July Upper House election capped returns.

• Potential outcome: Prime Minister Shigeru Ishiba’s LDP–Komeito coalition may lose majority control.

• Market focus on the new cabinet’s pro-growth and fiscal policy stance.

• Bond and currency markets:

• 10-year Japanese government bond yield rose to 1.53% from 1.49%.

• Yen weakened to mid-JPY 148 range from JPY 147.4 per USD.

• Inflation and trade:

• Core CPI rose 3.3% year-on-year in June, below expectations of 3.4% and down from 3.7% in May.

• Decline driven by lower energy contributions, supported by government subsidies.

• Exports fell 0.5% year-on-year in June (second consecutive decline), missing forecasts for a 0.5% gain.

• Shipments to the US fell sharply, especially autos, parts, and pharmaceuticals.

• Exports to China also declined.

• US announced a 25% reciprocal tariff on Japanese imports, effective 1 August; bilateral trade talks continue.

China

• Chinese economic and property trends:

• Mainland markets rose: CSI 300 Index up 1.09%, Shanghai Composite up 0.69%.

• Hong Kong’s Hang Seng Index advanced 2.84%.

• GDP expanded 5.2% year-on-year in Q2, slowing slightly from Q1’s 5.4% growth but exceeding expectations.

• Stronger growth may reduce the urgency for further policy stimulus.

• Analysts warned of potential H2 slowdown due to:

• Persistent deflationary pressures.

• Weak retail sales growth.

• Possible US–China trade tensions after a temporary deal expires in mid-August.

• Producer price index fell the most in nearly two years in June, marking 33 consecutive months of factory deflation.

• Property sector remains weak:

• New home prices in 70 cities fell 0.27% month-on-month in June; existing home prices fell 0.61%.

• Residential sales dropped 12.6% year-on-year in June, the steepest fall this year.

• Housing downturn, in its fifth year, continues to weigh on consumer spending.

Other Key Markets

• Indonesia

• US–Indonesia trade deal announced:

• New tariff rate of 19% on Indonesian exports to US, lower than the initially proposed 32%.

• Indonesia agreed to:

• Purchase 50 Boeing aircraft.

• Spend USD 15 billion on US energy supplies.

• Allocate USD 4.5 billion for US agricultural goods.

• Central bank cut benchmark interest rate from 5.50% to 5.25% after 15–16 July meeting.

• Decision aligned with:

• Lower inflation forecasts for 2025–2026.

• Commitment to maintain rupiah stability in line with fundamentals.

• Efforts to support economic growth.

• Peru

• Central bank kept reference rate unchanged at 4.50% on 10 July meeting.

• Rationale:

• Economic activity remains near potential level.

• Annual inflation steady at 1.7% in June; core inflation edged down from 1.8% in May.

• Inflation expectations rising globally, especially in the US, due to trade tensions, suggesting a slower-than-expected convergence to targets.

• 12-month forward inflation expectations in Peru steady at 2.3%, within target range.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.