logo
Stocks consolidate after bumper week buoyed by resilient US economy

Stocks consolidate after bumper week buoyed by resilient US economy

Al Etihad18-07-2025
18 July 2025 20:18
London (AFP)US and European stock markets stalled or trimmed gains on Friday after a bullish week buoyed by US data and upbeat company earnings.New York -- whose S&P 500 and Nasdaq Composite struck record highs on Thursday -- mainly held on to gains but made little further headway. The Dow fell.In Europe, London's blue-chip FTSE was up though just under its all-time record reached on Tuesday. Paris was flat and Frankfurt slipped a little on profit-taking.Asian markets had closed higher -- except for Tokyo, which was dragged down ahead of weekend upper-house elections that could spell trouble for Prime Minister Shigeru Ishiba.The week's strong performance in equities showed that worries -- for now -- were largely being set aside over US President Donald Trump's threats of piling on further tariffs from August 1 if governments did not agree on trade deals."With the president toning down his rhetoric, markets are quick to forget tariff risks and concentrate on the positives including a resilient US economy," Kathleen Brooks, research director at trading firm XTB, said.The overall optimism was fuelled by data suggesting the US economy was still well, with no persuasive indication that the tariffs were pushing up inflation.A June consumer price index report released this week "does not reveal tariff-induced price increases, but a closer look shows clear signs" they could be building, said Holger Schmieding, chief economist at Berenberg bank.One Federal Reserve governor, Christopher Waller, on Thursday argued for a July rate cut, saying he saw limited upside inflation risks.Trump this week denied he was planning to sack Fed boss Jerome Powell, whom he had been urging to reduce US borrowing costs to further boost the world's top economy.A meeting in South Africa of G20 finance ministers on Friday pointedly stressed that "central bank independence is crucial" around the world.In corporate news, American Express followed big US banks in reporting better-than-expected second-quarter results.Results from streaming giant Netflix also outperformed -- though its share price slipped on Friday as investors weighed whether it had been overvalued.
In London, British luxury brand Burberry said sales had not fallen as much as analysts expected, "which is a sign that the company's new strategic direction could be working", said XTB's Brooks. Its shares rose nearly six percent.
Stock Markets
Continue full coverage
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US and EU agree on 15% tariff deal to avert a bigger trade war
US and EU agree on 15% tariff deal to avert a bigger trade war

Khaleej Times

time42 minutes ago

  • Khaleej Times

US and EU agree on 15% tariff deal to avert a bigger trade war

The United States struck a framework trade agreement with the European Union on Sunday, imposing a 15% import tariff on most EU goods, half the threatened rate, and averting a bigger trade war between two allies that account for almost a third of global trade. US President Donald Trump and European Commission President Ursula von der Leyen announced the deal at Trump's luxury golf course in western Scotland after an hour-long meeting that pushed the hard-fought deal over the line. "I think this is the biggest deal ever made," Trump told reporters, lauding EU plans to invest some $600 billion in the United States and dramatically increase its purchases of US energy and military equipment. Trump said the deal, which tops a $550 billion deal signed with Japan last week, would expand ties between the trans-Atlantic powers after years of what he called unfair treatment of US exporters. Von der Leyen, describing Trump as a tough negotiator, said the 15% tariff applied "across the board", later telling reporters it was "the best we could get." "We have a trade deal between the two largest economies in the world, and it's a big deal. It's a huge deal. It will bring stability. It will bring predictability," she said. The deal, which Trump said calls for $750 billion of EU purchases of US energy in coming years and "hundreds of billions of dollars" of arms purchases, likely spells good news for a host of EU companies, including Airbus, Mercedes-Benz and Novo Nordisk, if all the details hold. The baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, though it is better than the threatened 30% rate. German Chancellor Friedrich Merz welcomed the deal, saying it averted a trade conflict that would have hit Germany's export-driven economy and its large auto sector hard. German carmakers, VW, Mercedes and BMW were some of the hardest hit by the 27.5% US tariff on car and parts imports now in place. The euro rose around 0.2% against the dollar, sterling and yen within an hour of the deal's being announced. Mirror of Japan deal The deal mirrors key parts of the framework accord reached by the US with Japan last week, but like that deal, it leaves many questions open, including tariff rates on spirits, a highly charged topic for many on both sides of the Atlantic. Carsten Nickel, deputy director of research at Teneo, said it was "merely a high-level, political agreement" that could not replace a carefully hammered out trade deal: "This, in turn, creates the risk of different interpretations along the way, as seen immediately after the conclusion of the U.S.-Japan deal." "We are agreeing that the tariff ... for automobiles and everything else will be a straight-across tariff of 15%," Trump said, but he quickly added that a 50% US tariff on steel and aluminium will remain in place. Von der Leyen said that tariffs would be cut and replaced with a quota system. Von der Leyen said the rate also applied to semiconductors and pharmaceuticals, and there would be no tariffs from either side on aircraft and aircraft parts, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources and critical raw materials. Trump appeared to suggest pharmaceuticals would not be covered, leaving some question about that aspect of the deal. No fact sheet was immediately issued by the White House. "We will keep working to add more products to this list," von der Leyen said, adding that spirits were still under discussion. The deal will be sold as a triumph for Trump, who is seeking to reorder the global economy and reduce decades-old US trade deficits, and has already reached similar framework accords with Britain, Japan, Indonesia and Vietnam, although his administration has not hit its goal of "90 deals in 90 days." Arriving in Scotland, Trump said the EU wanted "to make a deal very badly" and said, as he met von der Leyen, that Europe had been "very unfair to the United States".

Federal Reserve meeting: If not now, then when?
Federal Reserve meeting: If not now, then when?

The National

time3 hours ago

  • The National

Federal Reserve meeting: If not now, then when?

The Federal Reserve enters this week facing relentless pressure from the White House, mixed economic data and continued uncertainty. Yet, in the face of it all, the US central bank is expected to hold rates steady once more. The meeting comes less than a week after President Donald Trump's tour of the Fed headquarters, where he and Federal Reserve Chair Jerome Powell publicly bickered over the renovation project's costs. But with Mr Trump on holiday in Scotland, focus now shifts towards the Fed's interest rates. Mr Powell had acknowledged the bank would have cut rates by now were it not for Mr Trump's tariffs, which have put the global economy on edge since his announcement on April 2. The President's harsher 'reciprocal tariffs' are due to take effect on Friday. Meanwhile, recent data shows that other charges are beginning to be passed on to consumers. The Labour Department's Consumer Price Index (CPI) report showed that inflation rose to 2.7 per cent annually in June. Everyday goods such as toys, household appliances and clothing also saw price increases. Citing uncertainty surrounding tariffs and the current inflation level above its 2 per cent target, most Fed officials are signalling they will keep their target range level for a fifth consecutive meeting at 4.25 to 4.50 per cent. The UAE Central Bank, which mirrors Fed decisions due to the dollar peg, would also be expected to hold rates at 4.4 per cent following the US central bank's announcement. Path forward According to the Fed's projections from June, it still expects to cut rates twice this year to bring its target level to around 3.9 per cent. But with the central bank likely to hold interest rates at this meeting and only three left on the calendar this year, the window to cut is closing. 'We're simply taking some time,' Mr Powell said during a panel discussion in Portugal at the start of July. Mr Powell has practised extreme caution towards cutting rates this year, afraid that moving too soon or too quickly could lead to a renewed spike in prices not long after the most recent inflationary surge, with CPI inflation peaking at 9.1 per cent in 2022. 'When you get through an inflation episode like that, by the skin of their teeth, they're going to be really careful about anything that looks inflationary from now on,' said Derek Tang, an economist at LHMeyer/Monetary Policy Analytics in Washington. Traders anticipate the Fed will resume cutting rates in September, before reductions in October and December, according to CME Group data. A deluge of economic data this week should also give Fed officials greater clarity on the direction of the economy. When you get through an inflation episode like that, by the skin of their teeth, they're going to be really careful about anything that looks inflationary from now on Derek Tang, economist at LHMeyer / Monetary Policy Analytics The Labour Department will provide fresh insight into the health of the labour market with the Job Openings and Labour Turnover Survey on Tuesday and the June unemployment report on Friday. The government will also report on second-quarter GDP hours before the Fed rate announcement. US economic activity contracted by 0.5 per cent in the first quarter, but economists note that was due to a surge of imports as business rushed to get ahead of tariffs. The Fed's preferred inflation metric – Personal Consumption Expenditures Price Index – for June is also due to be released on Thursday. Fed divisions Not everyone might be on board with the committee's decision this time. Public remarks indicate a growing division inside the rate-setting Federal Open Market Committee. Fed Governor Christopher Waller, who holds a permanent vote on the rate-setting committee, laid out his case for a quarter-point cut earlier this month. Speaking in New York, he said the Fed should not wait for further weakening in the labour market to act. 'With inflation near target and the upside risks to inflation limited, we should not wait until the labour market deteriorates before we cut the policy rate,' he said. US job growth was more solid than expected in June, although most of those gains occurred in the government sector. At the same time, the unemployment rate has remained steady around 4.1 per cent. Dissents among FOMC members are rare. Under Mr Powell's stewardship, only 3 per cent of dissents have come from a Fed governor. 'I'm sure it'll get a lot of attention,' said David Wilcox, senior fellow at the Peterson Institute for International Economics and director of US economic research at Bloomberg Economics. However, he argued such disagreements could guard against groupthink. Fed Vice Chair for Supervision Michelle Bowman could join Mr Waller's dissent after she voiced her own support for a rate cut this month. It would be the first time two Fed governors dissented on a rate move since 2002, when Alan Greenspan was in charge of the central bank. Mr Wilcox, a former staff member of the Federal Reserve Board, expects Mr Powell to acknowledge there could be a case to cut rates this week but that a majority of officials favour holding them steady. 'And he'll lay out the rationale for why that is,' he said. What will Trump say? Looming against this backdrop is Mr Trump, who softened his stance on Mr Powell last week after touring the Fed's headquarters. Those attacks have ranged from calling the Fed Chair a 'numbskull' to at times publicly considering whether he should fire him. But last week's tour offered some relief for Mr Powell after Mr Trump said he did not think the unprecedented move is necessary. 'I think we had a very good meeting on interest rates. And [Mr Powell] said to me … very strongly, the country is doing well,' Mr Trump told reporters after touring the Fed. 'I got that to mean that I think he's going to start recommending lower rates.' Mr Powell has sometimes cited the economy's strength as a reason not to move on rates. The President's holiday in Scotland could give the Federal Reserve some breathing room for now, although Mr Trump has proven he can dictate the news cycle and gyrate financial markets with a push of a button.

US and EU strike an 'across the board' agreement on tariffs
US and EU strike an 'across the board' agreement on tariffs

The National

time10 hours ago

  • The National

US and EU strike an 'across the board' agreement on tariffs

US President Donald Trump and European Commission President Ursula von der Leyen said on Sunday they had reached a deal to end a transatlantic tariff dispute, averting the risk of a full-scale trade war. Mr Trump and Ms Von der Leyen held private talks at one of Mr Trump's golf courses in Scotland and later announced what the US President called an 'across-the-board' agreement. The breakthrough comes just days before an August 1 deadline for the European Union to strike a deal with Washington or face a sweeping 30 per cent US tariff on EU goods. 'We have reached a deal. It's a good deal for everybody,' Mr Trump told reporters. Mr Trump said the deal involved a baseline levy of 15 per cent on EU exports to the United States, the same level secured by Japan, including for the bloc's crucial auto sector, which is currently being taxed at 25 per cent. 'We are agreeing that the tariff straight across, for cars and everything else, will be a straight across tariff of 15 per cent,' he added. Mr Trump also said the bloc had agreed to purchase "$750 billion worth of energy' from the United States, as well as $600 billion more in additional investments in the country. Negotiating on behalf of the EU's 27 countries, Ms Von der Leyen's European Commission had been pushing hard to salvage a trading relationship worth an annual $1.9 trillion in goods and services. 'It's a good deal,' the EU chief told reporters, sitting alongside Mr Trump following their hour-long talks. 'It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic,' she said. The EU has been hit by multiple waves of tariffs since Mr Trump reclaimed the White House. It is currently subject to a 25 per cent levy on cars, 50 per cent on steel and aluminium, and an across-the-board tariff of 10 per cent, which Washington threatens to hike to 30 per cent in a no-deal scenario. Brussels has been focused on getting a deal to avoid sweeping tariffs that would further harm its sluggish economy with retaliation held out as a last resort.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store