Last week: stocks higher on Japan’s 15% tariff and potential deal with the EU; earnings widely moved individual stocks
WEEKLY TRENDS
US stroke a 15% trade deal with Japan last week, the EU is now looking to settle at a similar rate within days. Global stocks were higher last week on US trade deals optimism. Meanwhile, Lagarde said the ECB is now on a ’wait and see’ mode after holding its rates last Thursday
After the poor Tesla’s outlook and strong earnings from Alphabet last week, investors will focus this coming week on more corporate quarterly earnings releases (including Microsoft, Meta on Wednesday and Apple, Amazon on Thursday), furthermore the FOMC (FED ) meets on Wednesday, US June PCE inflation data is to be released on Thursday (no doubt the FED would have had the data already for its meeting) and the US July NFP job report will be released on Friday
Closely followed will be the August 1st tax deadline for metals, scheduled to be enforced at 50% and the potential EU-US trade agreement
World Gold Council: Mid-year outlook 2025 - downhill or second wind?
Kepler Cheuvreux, 21 July 2025
Author: Philippe Ferreira, Deputy Director Cross Asset research
Visibility is low and that investors have good reasons not to want to take risks: endless trade wars, Trump's interference in Canada and Brazil, questions about the independence of the Federal Reserve, uncertainty about how consumers will react to the loss of purchasing power due to customs tariffs, uncertainty about job creation dynamics in this context, complex geopolitics in the Middle East, the ongoing conflict in Ukraine. This list of risk factors is not exhaustive and is changing day by day... Added to this is the seasonality of the markets, with August and September historically performing less well. Finally, the 1 August deadline for Donald Trump's reciprocal tariffs is another reason to want to spend a quiet summer invested in cash.
Most of the investors we have spoken to in recent weeks expect profit-taking in August. They are cautious about the high valuations of the markets and the lack of visibility mentioned above. But markets are unpredictable. When everyone expects a market event, it usually does not happen. And when faced with risk factors, we must not overlook sources of opportunity.
The earnings season is off to a very good start for S&P 500 companies, which are reporting results well above analysts' consensus expectations, especially for banks and consumer discretionary stocks. Retail sales for June exceeded economists' consensus expectations, suggesting that consumers have regained a certain level of confidence.
In Europe, opportunities are harder to find. France is seeking to get its citizens to accept austerity measures, and Germany remains in a difficult economic situation. The difficulties in negotiating a trade agreement with the United States are a weak point for global stocks (luxury goods, pharmaceuticals, automobiles), which weigh heavily on the region's indices. However, the adoption of the German stimulus plan and the revival of Southern Europe (Greece, Spain, Italy, Portugal) are positive factors to consider. Nevertheless, greater selectivity is needed on the European stock market in the face of headwinds.
Finally, there are also positive developments in China, which has managed to reach compromises with Donald Trump. Exports of computer chips to China by Nvidia have been granted certain exemptions, and access to rare earths is forcing the US administration to soften its tone and seek a more sustainable trade agreement.
In conclusion, how can we reconcile the risks and opportunities mentioned above? We remain overweight in equities but are not inclined to increase risk-taking in the short term. However, we do not believe it is appropriate to be underweight in equities, as Trump is giving more reassurances to optimists, taking care not to cause panic in the markets. Ahead of the November 2026 midterm elections, the Trump administration must now act more cautiously, as Trump risks losing his majority next year if he causes a recession or panic in the financial markets, given that voters are very sensitive to movements in the S&P 500.
Natixis IM, 21 July 2025
Author: Romain Aumond, Senior Quant strategist
Data described as ‘soft data’ has been influenced by market sentiment. Sentiment has deteriorated since 2021 and 2022 for most of the soft data we observe, particularly in the United States. However, this deterioration has not generally been accompanied by bad news from a fundamental macroeconomic perspective.
In our models, we now tend to try to avoid soft data, as it contains too much noise and is no longer sufficiently accurate, so to speak, in reflecting the economic cycle we are observing. This has been true for the United States and for the eurozone. What we now prefer to use in our models is market data, which more easily filters out the noise that reflects deteriorating sentiment among purchasing managers or other surveys. From a methodological point of view, we also observe in several surveys in the United States that people are no longer responding. In fact, there is a problem with the way these surveys are composed.
If we take the example of job openings, we see that fewer and fewer companies are providing detailed answers to these questions. This is a problem from a technical point of view. With regard to recent developments in the economic cycle, we see that these survey data are improving in Europe. And in the United States, the situation is not so dire.
When compiling survey data, we sometimes observe biases in the composition of samples. Perceptions of the American economic situation vary depending on whether survey participants are Republican, Democrat or independent supporters. We observed that the entire decline was attributable to the responses of Democrat supporters. When we look at Republican supporters, these indicators remained more stable. This means that there is a polarisation of the American spectrum, which is certainly not new, but which has a huge impact on sentiment – and on how that sentiment can then be processed by the markets.
We need to add tools to our analytical toolkit and take a really close look at the hard data itself. We also need to look at measures of market uncertainty or things that truly reflect a deterioration in sentiment – rather than relying too heavily on the surveys themselves, which have a life of their own. One of the reasons why some global macro funds have underperformed since the beginning of the year is that they are really very focused on survey data (sentiment, leading indicators) – because these are the first surveys available at a given moment in time, and they use them to implement asset allocation processes. However, if this data does not reflect the true cruising speed of an economy, you are heading straight for disaster.
When I worked at the European Central Bank (ECB), we conducted surveys of consumers to try to gauge how they perceived past inflation and how they anticipated future inflation. We realised that the assessments of consumers surveyed varied depending on how the question was phrased. This illustrates the fact that sentiment is, by its very nature, something that is very difficult to measure. The general conclusion is that we should not be overly influenced by short-term sentiment measures, even when they vary significantly. In our profession, we have to look at these sentiment data because that is what the market looks at. We can no longer ignore these measures because the market will base most of its valuations on them.
World Gold Council, 15 July 2025
Gold has continued its record setting pace, rising 26% in US dollar terms in the first half of 2025 – and reaching double digit returns across currencies. A combination of a weaker US dollar, rangebound rates and a highly uncertain geoeconomic environment has resulted in strong investment demand. As we look forward, one of the questions investors continue to ask is whether gold has reached a peak or has enough fuel to push higher. Using our Gold Valuation Framework, we analyse what current market expectations imply for gold’s performance in the second half of 2025, as well as the drivers that could push gold higher, or lower, respectively.
If economists and market participants are correct in their macro predictions, our analysis suggests that gold may move sideways with some possible upside – increasing an additional 0%-5% in the second half. However, the economy rarely performs according to consensus. Should economic and financial conditions deteriorate, exacerbating stagflationary pressures and geoeconomic tensions, safe haven demand could significantly increase pushing gold 10%-15% higher from here. On the flipside, widespread and sustained conflict resolution – something that appears unlikely in the current environment – would see gold give back 12%-17% of this year’s gains.
Gold closed out the first half of the year as one of the top-performing major asset classes, rising nearly 26% over the period. It recorded 26 new all-time highs (ATHs) in H1 2025 having broken through 40 new ATHs in 2024. Behind this was a combination of factors, including:
· a weaker US dollar
· rangebound yields with expectations of future rate cuts
· heightened geopolitical tensions – some of these directly or indirectly linked to US trade policy
· Central banks also contributed with continued buying at a robust pace – even if not at the record levels of previous quarters.
Trade-related and other geopolitical risks played a large role, not just directly, but by fuelling moves in the dollar, interest rates, and broader market volatility - all of which fed into gold’s appeal as a safe haven. Taken together, these factors have contributed around 16% to gold’s return over the past six months, according to our Gold Return Attribution Model (GRAM).
Our analysis, based on our Gold Valuation Framework, suggests that, under current consensus expectations for key macro variables, gold could remain rangebound in H2, closing roughly 0%–5% higher than current levels, equivalent to a 25%–30% annual return.
Technical indicators suggest that gold’s consolidation phase over the past few months is a healthy pause in a broader uptrend, helping to ease previous overbought conditions and potentially setting the stage for renewed upside. Falling interest rates and continued uncertainty would maintain investor appetite, particularly via gold ETFs and OTC transactions. At the same time, central bank demand is likely to remain robust in 2025, moderating from its previous records while staying well above the pre-2022 average of 500-600t.
However, elevated gold prices are likely to continue to curb consumer demand and potentially encourage recycling. This would act as a damper to stronger gold performance
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