This morning, as has often been the case over the past two or three weeks, I spent quite some time wondering what I could tell you that would be both original and informative. This is one of the most difficult aspects of daily single-topic reporting, particularly in finance: providing information without being boring and without resorting to the same old tricks all the time. In my defence, the current pitch isn't very varied. Primary observation: Donald Trump is announcing tariffs across the board, which we suspect will end up causing a major economic problem, which could itself trigger a domino effect that will be difficult to stop. Secondary observation: the financial markets are paying little attention and continue to rise.
Fortunately, the rest of the week looks a little more eventful, because the ‘tariffs and rising share prices’ routine is about to be challenged by other developments.
For example, the first half-year results from major companies. It all kicks off at midday with quarterly results from the world's largest bank, JPMorgan Chase, and its counterparts Wells Fargo, Citigroup and Bank of New York Mellon. These will be accompanied by figures from asset managers BlackRock and State Street. So there will be a lot of financial companies, which we imagine have done well thanks to volatile markets and feverish investors in the first half of the year.
The other event of the day is the release of two important macroeconomic statistics. Overnight, China announced that its second-quarter GDP grew by 5.2% year-on-year. This is slightly higher than expected, although the pace is slowing compared to the first quarter (5.4%). Industrial production offset weaker-than-expected consumption. Overall, this remains a good figure, although economists are still struggling to separate the underlying momentum from the spikes linked to expectations of higher tariffs in the future.
The second key indicator is the June inflation figure in the United States. It is all the more important because it is the central cog in the most uncertain financial mechanism at the moment: will the tariffs introduced or in the pipeline by the US push inflation back into dangerous territory, thereby thwarting hopes of a Fed rate cut? So far, doom-mongering theories of skyrocketing prices have been dismissed, much to the delight of the White House, which loves to show that its opponents are completely wrong. Nevertheless, the market fears that the surcharges are beginning to have an impact. Inflation is expected to reach 0.3% between May and June, bringing the annual rate from 2.4% to 2.7%. Economists even believe that core inflation will rise from 2.8% to 3% over one year, marking a rebound after three months of stability. If price trends remain under control, the stock markets will be able to say, ‘Not so bad after all, these tariffs.’ If the rise in inflation is confirmed, hopes for a rate cut in September are likely to be dashed, especially as traders have recently reduced their forecast to a 60% chance.
In other news, Washington has toughened its stance towards Moscow, promising more weapons to Ukraine via NATO and demanding a ceasefire within 50 days, failing which 100% tariffs could be imposed on Russia. Paradoxically, this announcement caused oil prices to fall because the market had expected tougher measures after the White House's teasing over the past 72 hours.
In the trade standoff between the United States and the EU, Brussels has updated its list of retaliatory trade measures in case the current negotiations fail. The catalogue would cover €72 billion worth of goods, ranging from Boeing to Jack Daniel's and Ford. Europe wants to negotiate a British-style deal, i.e. 10% customs duties, while Donald Trump has set the bar at 30%. There are two weeks to go before the planned entry into force on 1 August, already dubbed ‘liberation day 2’ by financiers who are still betting on the White House backing down (relatively). Still on the subject of customs duties, Jensen Huang, the man who clearly whispers in Donald Trump's ear, has secured the lifting of the ban on exports of Nvidia H20 chips to China. The announcement sent Asian tech stocks soaring this morning.
In Japan, the Nikkei 225 gained 0.3% at the close, while Australia's ASX rose 0.7%. China is struggling to get excited about its Q2 GDP, with Shanghai falling slightly while Hong Kong rose 0.5%. South Korea and India are up modestly, while Taiwan gained 0.9%, helped by indirect support from Nvidia. European markets are expected to open slightly higher.
Today's economic highlights:
On today's agenda: China's quarterly, yearly, and year-to-date GDP, along with industrial production and retail sales; In the eurozone, industrial production and the ZEW survey on expectations; In Germany, the ZEW survey on the current situation and expectations; In the United States, the CPI and the Empire Manufacturing index. See the full calendar here.
- GBP / USD: US$1.34
- Gold: US$3,362.24
- Crude Oil (BRENT): US$69
- United States 10 years: 4.44%
- BITCOIN: US$116,980
In corporate news:
- NatWest Group plans to sell its remaining stake in Permanent TSB, exiting its investment.
- Diageo has refuted claims of deceiving US consumers about tequila purity.
- Hazer Group has signed an MoU to develop a clean hydrogen production facility in the UK.
- Quadrise executives have sold 3.5 million shares of company stock.
- Skanska has undertaken an upgrade of a UK infrastructure project.
- LVMH's Loro Piana placed under court administration in Italy due to labor exploitation issues.
- AFRY AB acquired Reta Engenharia; Q2 2025 results missed expectations.
- Pandox AB and Eiendomsspar have bid for Dalata Hotel Group PLC, with Pandox planning a cash offer.
- TomTom NV raised its revenue guidance for 2025 after strong first-half results.
- Vertex Pharmaceuticals reached a reimbursement agreement with NHS England for Alyftrek.
- Nvidia resumed sales of its H20 GPU in China with a compliant model.
- Tesla launched Model Y sales in India, priced around $69,766.
- Starbucks announced a shift in work policy, requiring four days a week in-office for corporate employees.
See more news from UK listed companies here
Analyst Recommendations:
- Lloyds Banking Group Plc: Mediobanca maintains its outperform recommendation and reduces the target price from GBX 88 to GBX 84.
- Next Plc: Bernstein maintains its market perform recommendation with a price target raised from 10000 to GBX 11500.
- Informa Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from GBX 900 to GBX 960.
- Relx Plc: Morgan Stanley maintains its overweight rating and reduces the target price from 4520 to GBX 4410.
- British American Tobacco P.l.c.: Barclays maintains its overweight recommendation and raises the target price from 41 to GBP 45.
- Shell Plc: Piper Sandler & Co maintains its overweight recommendation and raises the target price from 83 to USD 84.
- Molten Ventures Vct Plc: CIBC Capital Markets maintains its neutral recommendation with a price target raised from 41 to CAD 53.
- Hochschild Mining Plc: JP Morgan maintains its overweight recommendation and reduces the target price from 4.20 to GBP 3.70.
- Fresnillo Plc: JP Morgan maintains its overweight recommendation and raises the target price from 14.50 to GBP 18.50.
- Diversified Energy Company Plc: Johnson Rice initiates an accumulate recommendation with a target price of USD 24.
- Convatec Group Plc: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 330 to GBX 340.
- Experian Plc: Hedgeye Risk Management upgrades to long from short.
- Rio Tinto Plc: Morgan Stanley maintains its overweight recommendation and reduces the target price from 5760 to GBX 5500.
- Glencore Plc: Morgan Stanley maintains its overweight recommendation and raises the target price from 8700 to 8900 ZAr.
- Diageo Plc: BNP Paribas Exane maintains its underperform recommendation with a price target reduced from 1720 to GBX 1635.
- Legal & General Plc: Citigroup remains neutral recommendation with a price target raised from GBP 2.20 to GBP 2.43.
