Market report: Trump teases with hints of fresh trade deals but risks remain
Susannah Streeter head of money and markets, Hargreaves Lansdown: “Nations are waiting on tenterhooks as the clock ticks down to another tariff deadline. President Trump is in a teasing mood, hinting that more deals will be inked in the coming days but still issuing threats that blanket tariffs will be imposed on swathes of countries. Investors are bracing for another burst of volatility, as another cloud of unpredictability descends. The FTSE 100 has had a stumbling start to the week but there may be a little relief that the date for tariffs to be imposed is set for 1August. This may see the so-called ‘TACO trade’ continuing to play out, as investors expect that even as new tariffs rules are set, there’s still time for Trump to ‘chicken out’. US indices may still be hanging around fresh record highs, but wariness is set to creep in after the holiday break, as the implications of trade policy are assessed.
As the BRICS summit of developing nations got underway there were fresh warnings from member countries that US policies threatened global trade. That appears to have provoked Trump into promising to impose an extra 10% tariff rate on other nations who align themselves with ‘Anti-American’ policies of BRICS nations or even try to join the group. As the US rips up old trade alliances, the administration is also attempting to derail efforts to establish new relationships.
Trump’s policies increasingly appear to be more of a turn-off for investment. A Deloitte survey of UK chief financial officers indicates that only 2% of respondents see the United States as an attractive place to invest, down from 59% in late 2024. Meanwhile, there’s a warming up of attitudes towards their home market, with 13% indicating the UK is now appealing, a sharp turnaround from 2024, when the reading came in at -12%. This will be music to the ears of the chancellor Rachel Reeves who is poised to bring in new rules to lure more firms to list in London and increase investment in UK companies.
Tesla investors are bracing for fresh repercussions from Elon Musk’s mega fall out with Trump. It’s feared Musk’s pledge to establish an America Party could goad the US president into fresh policies, detrimental to Tesla. But there is also concern that Musk’s attention will once again be diverted away from solving his company’s problems, back into the political realm. It’s one thing being a temporary big cog in an administration, quite another trying to lead a political party. Tesla’s shares were buoyed when Musk stepped back from his DOGE role, so as fresh spats are expected with the US President, they are set to come under renewed pressure. Investors are still waiting for meaningful revenue from autonomous vehicles to kick in. While the opportunity is significant, there are real concerns Musk’s eyes will not be on the prize if he tries to take on the Republican and Democratic parties.
The UK housing market is stalling but there are signs that green shoots could spring up again in the months to come. The closely watched Halifax house price index showed an increase of 2.5% year on year in June, the lowest rate in eleven months. However, the building society has flagged that mortgage approvals and property transactions are picking up and more buyers are returning to the market. Given that more interest rate cuts are expected this year, wages are still rising ahead of inflation and unemployment remains relatively low, there are firmer foundations in place. Better mortgage offers are around compared to the last few years. However, prices remain affordable for many, plus there are still big swathes of homeowners who are rolling off cheaper deals onto higher rates which mean they may find it super-tricky to afford to take on bigger loans. So, it’ll take time for the market to revitalise.
Oil prices have edged down a little, amid expectations of higher supplies in the market. The oil cartel OPEC+ has agreed faster hikes to production, with output rising by 584,000 barrels per day from August. But output increases haven’t yet kept up with previous targets, which is probably why it’s not had a significant effect on prices. The global trade tensions are also helping to keep a lid on prices, with expectations that there will be lower demand for energy as growth slows down. But with tensions in the Middle East remaining lower than a few weeks ago, it’s helping to stabilise prices.’’