Market Report – Trade truce continues between US and China
Steve Clayton, head of equity funds, Hargreaves Lansdown: “Asian markets have seen mixed trading overnight, with sentiment boosted by reports that China and the US have agreed to extend their truce over tariffs. Not long ago the two nations were locked in fierce argument, with the US seeking to impose tariffs of 120% on Chinese imports. India’s Sensex index rallied by 0.3%, Korea’s Kospi index by 0.7% and Taiwan’s market pushed 1.1% higher.
The party pooper though was China itself, where traders took their cue instead from a raft of Politburo announcements that were generally seen as politicians using big words to say nothing of any importance. In Hong Kong, a miss by HSBC in its latest results undermined sentiment, leading to a 1.4% drop in the Hang Seng index.
Markets in London and Europe have so far sounded a cautious note. In Denmark, pharmaceutical giant Novo Nordisk, at one point Europe’s most valuable company, has given further ground, down 3% even after yesterday’s precipitous falls. This was prompted by its weak sales outlook, which wiped over £40 billion from the company’s market value. In London, the FTSE’s strongest performer is Sage Group, up 4% after well received interim results. The FTSE 100 is trading around 40 points, or 0.44% lower with similar weakness in European indices.
The headlines on HSBC’s results are that the numbers came in a little below consensus estimates, driven by higher restructuring costs and a charge taken against the bank’s investment in China’s BOCOM. Traders in Hong Kong were underwhelmed, sending the stock almost 4% lower. In London, the market has pushed HSBC shares down similarly. More on this from Matt Britzman below.
Homebuilder Taylor Wimpey has reported operating profits of £161m for the first half of the year, down from £182.3 million the year before. The group said that trading has weakened in the most recent quarter. Affordability remains an issue, especially for first time buyers. The group reported an overall loss for the period of £92 million, reflecting a £20m charge to cover the costs of rectifying sub-standard work by a contractor and a further £222m charge relating to cladding safety. The shares dropped 5.5% at the open.
Aston Martin has spent decades proving that it is easier to make cars than money. Today’s interim results illustrate the point particularly well. Aston Martin produced 1,922 cars in the first half of 2025, losing £140.8m in the process. That works out at over £73,000 lost per car sold. This is an improvement, it must be said, from the performance a year ago when the group lost £108,000 per car sold. Chief executive Adrian Hallmark hailed a brighter future for Aston Martin with new models set to help drive sales forward while the group’s operational performance should benefit from their ongoing restructuring efforts.
In the currency markets, the strength of the Japanese Yen is today’s standout feature, with widespread gains for the Yen against a broad basket of other leading currencies. Sterling is trading steadily, holding at around $1.226 and €1.156.
Brent Crude oil futures spiked higher in late trading yesterday, pushing over $2 higher to trade at over $72.50, the strongest level reached since mid-June. So far today Brent is holding steady, consolidating its level around that $72.50 marker. Enthusiasm for Brent futures seems to have been driven by president Trump’s talk of additional penalties and sanctions falling upon Russia should it not strike a peace deal with Ukraine.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Another quarter, another messy set of results for HSBC. Headline numbers have, once again, been skewed by one-off items, and the 29% drop in second-quarter profit before tax is a poor measure of performance. HSBC took a $2.1bn hit due to the accounting impact of dilution and impairment in its Chinese bank holding – not for the first time – but these do not affect capital levels. Underlying performance was far more encouraging, with pre-tax profit coming in comfortably ahead of consensus, driven by strong growth in wealth management.
Capital levels remain robust enough to support another $3bn buyback, but the medium-term outlook is murky. While guidance was technically unchanged, it came with caveats. Tariffs are a concern, not necessarily due to their direct impact, but because of the potential for broader economic pressure. Management included a subtle warning that suggests some unease about the road ahead. HSBC’s Asian listing traded lower following the results, reflecting the uncertain guidance, but there’s room for shares to recover if management can reinforce confidence in the guidance on today’s call. Still, the outlook for HSBC is a lot muddier than some of its UK-focused peers like NatWest and Lloyds, where the path to earnings growth is much clearer.”