Each week, we provide you with the latest news that may impact the market and, consequently, your investments.
Each week, we provide you with the latest news that may impact the market and, consequently, your investments. Stay informed with Compare Wealth Managers. Here’s what investors should know:
U.S.-EU Tariff Suspension: A Temporary Trade Truce
President Donald Trump has postponed the proposed 50% tariff on European Union imports, following what he called a “very nice call” with European Commission President Ursula von der Leyen. The decision delays tariff enforcement until 9 July 2025, giving both sides time to negotiate a resolution. Markets reacted positively to the news, interpreting it as a sign of de-escalation in trade tensions.
Investment Implications:
- Short-Term Equity Relief: Global equities, particularly in Europe, saw modest gains. Export-heavy sectors such as automotive, luxury goods, and industrials (e.g., BMW, LVMH) may benefit from reduced short-term uncertainty.
- Currency Stabilisation: The euro steadied slightly against the U.S. dollar, supported by improved near-term sentiment.
- Lingering Risk: This is a delay, not a resolution. The possibility of tariffs in July continues to present a volatility risk, particularly for sectors dependent on transatlantic trade.
UK Inflation Rises Despite Interest Rate Cuts
UK inflation rose to 3.5% in April 2025, up slightly from 3.4% in March, driven by higher household energy and water bills. This increase comes even after the Bank of England cut the base rate to 4.25% in May. The central bank anticipates inflation will peak at 3.7% between July and September before returning to its 2% target.
Investment Implications:
- Fixed-Income Challenges: Persistent inflation continues to erode real yields on bonds and other income-generating assets, particularly shorter-duration debt.
- Equity Strategy: Companies with strong pricing power, particularly in sectors like consumer staples and healthcare, may be better positioned to defend margins.
- Inflation Hedges in Focus: Real assets, such as infrastructure, real estate, and inflation-linked bonds, may gain favour as investors seek resilience in the face of elevated price pressures.
U.S. Court Ruling Declares Trump's Tariffs Unlawful
On 28 May, the U.S. Court of International Trade ruled that President Trump’s wide-ranging tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded executive authority and were therefore unlawful. While the administration has appealed the ruling and a temporary stay is in place, the judgment casts doubt over the legal basis for future unilateral trade actions.
Investment Implications:
- Legal Uncertainty for Trade Policy: The case creates a precedent that could constrain the use of tariffs by current and future administrations, adding a layer of legal complexity to trade-related market dynamics.
- Sector Sensitivity: Industries reliant on global supply chains, such as semiconductors, automotive parts, and industrial equipment, may experience increased investor scrutiny and potential repricing.
- Policy Signal: If the ruling stands, it may signal a long-term shift toward more multilateral, rules-based trade governance, which could reduce systemic risk but limit executive flexibility in future disputes.
Markets Summary (as of 29/05/25)
FTSE 100 Index: 8,701.45, up 16.89 points (+0.19%)
(Via: ADVFN)
EUR/USD Exchange Rate: 1.1175, up 0.0012 (+0.11%)
(Via: WSJ)
Brent Crude Oil: $65.08 per barrel, up $0.13 (+0.20%)
(Via: Reuters)
This brief is intended for informational purposes only and does not constitute financial advice. Please consult a qualified adviser before making any investment decisions.
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