FTSE passes 9,000 as global equities surge

Global equity markets surged to new record highs, with the S&P 500, Nasdaq 100, and Dow Jones Industrial Average all hitting fresh peaks. The FTSE 100 surpassed the 9,000-point mark, an historic milestone for the UK’s flagship stock index. It reflected a surge in investor confidence despite broader economic stagnation. This record high is driven by a combination of factors: expectations of a Bank of England rate cut, undervaluation relative to US equities, and a wave of regulatory reforms aimed at revitalising London’s financial markets. The index’s rise also signals a shift in global investor sentiment, with the UK increasingly seen as a “safe haven” amid US trade uncertainty and European tariff struggles.

Indices in Germany, France, Japan, India, Brazil and Australia also reached – or hovered near to – all-time highs. The MSCI All Country World Index, which tracks both developed and emerging markets, also set another milestone.

The rally is fuelled by expectations of interest rate cuts, strong corporate earnings, as well as resilient economic data, despite geopolitical tensions and tariff threats from the US administration. This broad-based upswing reflects investor confidence in a soft economic landing and suggests that markets are increasingly resilient to political and trade shocks.

The second-quarter earnings season kicked off with a mixed but eventful start, as major US companies across sectors reported results that reflected both resilience and growing caution. Big banks led the early wave, posting solid profits that beat expectations, buoyed by strong consumer credit and investment banking rebounds. In contrast, airlines such as United Airlines delivered strong second-quarter results but issued cautious guidance, reflecting concerns over fuel costs and demand volatility. Technology and semiconductor giants like Apple and TSMC were early winners, with Apple reporting record services revenue and TSMC posting a record profit. Meanwhile, consumer staples like PepsiCo outperformed expectations, while communications and media companies showed mixed results, with some struggling over? ad revenue pressures. Overall, the season began with more beats than misses, but management commentary revealed growing unease over tariffs, inflation, and global demand.

The second quarter of 2025 witnessed some of the most extraordinary market behaviour in decades. Charles Stanley’s Chief Investment Officer Patrick Farrell explores the latest trends driving economics and markets.

The FTSE 100 was up +0.7% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading +1.3%.

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Donald Trump

The US dollar fell sharply after reports emerged that US President Donald Trump looks likely to fire Federal Reserve Chair Jerome Powell, raising alarm over the central bank’s independence and rattling investor confidence. The reports revealed that Mr Trump discussed the potential dismissal with Republican lawmakers in the Oval Office – and received their backing. The dollar dropped as much as 0.7% against a basket of major currencies, while gold rallied and US Treasury yields spiked. Analysts warned that removing Mr Powell – whose term runs until May 2026 – could undermine the credibility of US monetary policy and it is another black mark against the dollar’s status as the world’s reserve currency.

President Trump announced sweeping 30–35% tariffs on imports from the European Union (EU), Mexico, Brazil, and Canada, citing long-standing trade imbalances and national security concerns as justification for the move. In letters posted to his social media account, Mr Trump accused the EU of maintaining unfair tariff and non-tariff barriers that have led to persistent US trade deficits, calling the relationship “far from reciprocal”. He also criticised Mexico for not doing enough to curb drug trafficking and illegal migration, despite recent cooperation. The tariffs, set to take effect on 1 August, are part of a broader “reciprocal tariff” strategy aimed at pressuring trading partners into new deals and reshaping global trade rules in favour of US manufacturing and supply-chain security.

The president also announced plans to impose sweeping tariffs on pharmaceutical and semiconductor imports, framing the move as a national security imperative and a push to bring manufacturing back to the US. Speaking after an artificial intelligence (AI) summit in Pittsburgh, Mr Trump said pharmaceutical tariffs could reach as high as 200%, with a one-year grace period for companies to shift production domestically. He described the semiconductor tariff rollout as “similar but less complicated”, hinting at levies on both chips and consumer electronics that rely on them, such as smartphones and laptops. The proposed measures are part of a broader “reciprocal tariff” strategy set to begin on 1 August, aimed at reducing US dependence on foreign supply chains and pressuring trading partners to strike new deals.

Rio Tinto has revealed that US aluminium tariffs added more than $300m to costs during the first half of 2025, underscoring the disruptive impact of the administration’s aggressive trade agenda on global metals supply chains. The mining giant, which is Canada’s largest aluminium producer and ships most of its output to the US, said it incurred $321m in gross costs due to the tariffs, which were raised from 25% to 50% in June. While some of the burden was offset by higher US market premiums, the company warned that the full impact of the elevated tariffs had not yet been absorbed by the market. Rio also noted that the tariffs are fuelling inflationary pressures and dampening sentiment, as American buyers face surging costs and supply uncertainty.

Economics

UK Chancellor Rachel Reeves used her second Mansion House speech to unveil what she called the “most wide-ranging package of reforms to financial services regulation in more than a decade”, but the speech was widely deemed as underwhelming due to its cautious tone and lack of bold new measures. While Ms Reeves introduced the so-called “Leeds Reforms” – aimed at boosting investment, easing some regulatory burdens, and encouraging more stock market participation – she stopped short of announcing expected changes to ISAs or new taxes on banks, despite heavy speculation. Critics noted that much of the content echoed previous pledges made under the “Edinburgh Reforms” by her predecessor, Jeremy Hunt, with little evidence of transformative change. The speech matters because it was a major opportunity to set the tone for Labour’s economic agenda in the City amid scepticism over the fiscal outlook. Her measured approach left some in the financial sector questioning whether the government is prepared to take the bold steps that are clearly necessary to help revitalise UK capital markets.

UK inflation unexpectedly accelerated in June, with headline Consumer Price Index (CPI) rising to 3.6% - its highest level since January 2024 – while core CPI remained elevated at 4.4%, fuelling debate over the Bank of England’s next move. The surprise uptick – driven by stubbornly high prices in transport, clothing and food – came in above economists’ forecasts and slightly above the Bank of England’s own projections. Analysts noted that, while services inflation held steady at 4.7%, the broader inflation picture remains uncomfortably far from the 2% target. However, with wage growth cooling and the UK economy contracting for a second consecutive month in May, markets still expect the central bank to proceed with a rate cut in August – although the path forward now appears more finely balanced.

US inflation came in hotter than expected in June, with the CPI rising 2.7% year-on-year – up from 2.4% in May – and core CPI climbing to 2.9%, fuelling concerns that tariffs are beginning to push up prices across the economy. The monthly CPI increase of 0.3% marked the largest gain in five months, while core CPI – which strips out food and energy costs – also rose 0.3% month-on-month, matching forecasts but still underscoring persistent inflationary pressures. Economists attributed the uptick largely to President Trump’s sweeping tariffs on imports, which are now filtering through to consumer prices. The data has tempered expectations of near-term interest rate cuts, with markets now pricing in a hold at the Federal Reserve’s 30 July meeting, as central bank policymakers must weigh the risk of reigniting inflation against slowing growth.

US retail sales and jobless claims surprised to the upside this week, signalling continued economic resilience and complicating the Federal Reserve’s path forward on interest rates. Retail sales rose modestly in June, driven by steady consumer demand for services and essentials, despite lingering inflation and tariff-related price pressures. Meanwhile, jobless claims fell more than expected, reflecting a still-tight labour market and improving labour force participation. These indicators suggest that the economy remains on solid footing, reducing the urgency for immediate rate cuts. For the US central bank, this data reinforces a cautious stance – balancing the need to support growth with the risk of reigniting inflation – especially as markets increasingly price in rate reductions later this year.

Japan’s 10-year government bond yield surged to 1.59% this week – its highest level since the 2008 financial crisis – as investors braced for a wave of fiscal stimulus and political uncertainty ahead of the country’s upper house election. The sharp rise reflects growing expectations that Prime Minister Shigeru Ishiba’s government will ramp up spending, including possible tax cuts, to shore up support amid plunging approval ratings. Despite the Ministry of Finance reducing issuance of super-long bonds, demand for shorter-term debt has weakened, pushing yields higher. Analysts also pointed to global bond market stress and fears over US tariffs on Japanese goods as additional pressure points, with some warning that Japan’s long-standing role as a global “anchor” for low yields may be coming to an end.

Geopolitics

Donald Trump gave Russia a 50-day deadline (ending around September 1, 2025) to agree to a ceasefire in Ukraine. If not, the US will impose 100% tariffs on all Russian exports to the US, and more significantly, secondary sanctions on countries that continue to import Russian oil. The plan focuses on punishing countries that buy Russian oil, rather than directly attacking Russian infrastructure. This includes potential tariffs or trade restrictions on India, China, Turkey, and even some European nations. Alongside economic measures, Trump is increasing military aid to Ukraine and pressuring Nato allies to contribute more, creating a multi-pronged strategy to isolate Russia. However, tariffs and reduced global supply could lead to higher fuel prices, affecting consumers and inflation.

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Crypto

Bitcoin surged to a record high above $123,000 this week, fuelled by massive inflows into spot Bitcoin ETFs and growing optimism over pro-crypto legislation advancing in the US Congress. The rally was driven by institutional investors pouring billions into ETFs – including a single-day inflow of $1.18bn – as Congress kicked off “Crypto Week”, a series of debates on regulatory clarity for digital assets. The proposed GENIUS Act, which would establish federal rules for stablecoins, and broader signals of support from President Trump’s administration have boosted confidence in the sector. Analysts also cited tightening supply dynamics and long-term holders locking up coins as key factors behind the price surge, which marks an 80% gain since Trump’s election victory.

Standard Chartered became the first globally systemically important bank to launch fully regulated spot trading in Bitcoin and Ethereum for institutional clients – a landmark move signalling growing mainstream acceptance of digital assets. Announced through its UK branch, the service allows corporates, asset managers, and investors to trade crypto directly via familiar foreign exchange interfaces, with settlement options including the bank’s own digital custody platform. Chief executive Bill Winters called digital assets “foundational” to the future of finance, and the move comes amid surging institutional demand and bullish crypto market momentum. The significance lies in the bank’s ability to offer secure, regulated access to crypto within a trusted financial framework – potentially setting a precedent for other major banks to follow.

Initial public offerings (IPOs)

The potential London IPO of CFC, a private equity-backed insurtech valued at around $6.7bn, matters because it could mark a turning point for the UK’s struggling IPO market. Amid a backdrop of post-Brexit uncertainty and a wave of high-profile delistings, CFC’s listing would signal renewed investor confidence in London as a global capital-raising hub. As a fast-growing cyber and specialist insurer with a strong international footprint, CFC embodies the kind of tech-driven, globally scalable business the London Stock Exchange is eager to attract. Its IPO would not only offer a rare public exit for private equity backers but also serve as a bellwether for the broader insurtech sector and a potential catalyst for follow-on listings. CFC’s move could help reposition London as a credible venue for high-growth tech and fintech companies.

Grayscale’s filing for a US IPO marks a pivotal moment in the evolution of crypto finance, signalling the asset manager’s intent to transition from a trust-based structure to a publicly listed company amid growing institutional interest in digital assets. The documents were reportedly submitted to the US Securities and Exchange Commission on 14 July. It came after Grayscale successfully converted its flagship Bitcoin and Ethereum trusts into spot exchange-traded funds (ETFs), boosting its assets under management to more than $30bn. While details on valuation and share count remain undisclosed, the IPO could broaden investor access and solidify Grayscale’s role as a mainstream financial player. Its timing also reflects a maturing regulatory environment and renewed political support for crypto innovation under the Trump administration. It may turn out to be a litmus test for market sentiment on the future of digital asset integration into traditional finance.

Companies

US chip design software giant Synopsys secured conditional approval from China for its $35bn acquisition of Ansys, a leading engineering simulation software company. Although neither company is based in China, the two companies needed Beijing’s sign-off because China is one of the world’s largest semiconductor markets. At its core, the Synopsys-Ansys merger is about consolidating power in the electronic design automation (EDA) and simulation software markets. Synopsys dominates in chip design tools, while Ansys is a leader in simulating physical systems — from aircraft engines to 5G antennas. Together, they form a formidable end-to-end platform for designing and testing next-generation technologies, including AI chips, autonomous vehicles, and quantum computing systems. Synopsys' acquisition of Ansys could help its competitive position against rival Cadence.

ASML beat expectations in the second quarter, reporting €7.7bn in net sales and €2.3bn in net income – but its shares fell as investors reacted to cautious guidance amid geopolitical uncertainty. The Dutch semiconductor equipment giant posted a strong gross margin of 53.7% and a surge in net bookings to €5.5bn – well above forecasts – driven by robust demand for its cutting-edge EUV lithography systems. However, despite reaffirming a 15% full-year sales growth target, chief executive Christophe Fouquet warned of “increasing uncertainty” heading into 2026, citing macroeconomic and geopolitical headwinds. The company also announced a €1.60 interim dividend and continued its share buyback programme, purchasing €1.4bn of equity during the quarter.

Taiwan Semiconductor Manufacturing Company (TSMC) reported record-breaking second-quarter results, with revenue reaching NT$933.8bn (approximately $28.4bn), marking an 11.3% increase quarter-over-quarter and a 38.7% surge year-over-year. The company hit the upper end of its guidance range, driven by strong demand for advanced chip technologies despite headwinds from currency fluctuations and global trade tariffs. Gross margin stood at 58.8%, while its operating margin reached 48.5%, both within forecasted ranges. These results underscore TSMC’s continued dominance in the semiconductor industry and its resilience amid macroeconomic challenges.

Goldman Sachs posted stronger-than-expected second-quarter results, reporting earnings of $10.91 per share and revenue of $14.58 billion, as robust trading and investment banking activity helped offset a slight sequential decline. Net earnings rose to $3.72bn, with Global Banking & Markets revenue jumping 24% year-on-year to $10.12bn, driven by a rebound in advisory fees and solid performance in fixed income and currency trading. The bank also raised its quarterly dividend to $4.00 per share and reported a 12.8% return on equity. While revenues dipped 3% from the previous quarter, the results exceeded Wall Street forecasts and underscored Goldman’s resilience amid volatile markets and geopolitical uncertainty.

JPMorgan Chase reported a robust second-quarter performance, posting net income of $15 billion – or $5.24 per share – as strong trading and investment banking activity helped offset a 10% year-on-year decline in total revenue to $45.7bn. The bank’s Commercial & Investment Bank division saw a 9% rise in revenue, while Asset & Wealth Management saw a 10% increase, buoyed by net inflows and higher market levels. Despite rising expenses and a $2.8bn credit cost, chief executive Jamie Dimon highlighted the group’s resilience amid volatile markets and praised its $1.5 trillion liquidity buffer.

BlackRock reported strong second-quarter results, with earnings per share rising 16% year-on-year to $12.05 and assets under management (AUM) hitting a record $12.5 trillion, despite a $52bn redemption from a single institutional client. The asset management giant posted $5.4bn in revenue, up 13%, driven by robust organic base fee growth, higher markets, and increased technology and subscription income – including a boost from its Preqin acquisition. Despite a dip in performance fees, BlackRock’s results underscored its growing strength in both traditional and alternative investment platforms.

Intermediate Capital Group reported a strong start to its financial year in a first-quarter trading update. Assets under management (AUM) rose to $123bn and fee-earning AUM was up 4% quarter-on-quarter to $82bn. The company raised $3.4bn during the period, driven by strong demand for its Europe IX and Infrastructure Europe II funds, which are both on track to exceed prior years. With $34 billion in cash and a healthy fundraising pipeline, the group reaffirmed its confidence in long-term growth despite a cautious macroeconomic backdrop.

Experian kicked off its 2026 financial year with a strong first-quarter performance, beating analyst expectations. It reported 8% organic revenue growth, driven by robust demand across North America and Latin America. The credit data and analytics firm saw North American organic revenue rise 9%, outpacing forecasts, while Latin America also posted solid gains. The company highlighted continued momentum in its B2B services and consumer platforms, including growth in fraud prevention, credit marketplaces, and digital identity tools. The upbeat results signal resilience in Experian’s core markets, despite macroeconomic uncertainty, and reinforce its strategic push into cloud-based and AI-enhanced services.

Debra Crew stepped down as chief executive of Diageo after a turbulent two-year tenure marked by falling sales, profit warnings – and a sharp decline in the company’s share price. Ms Crew, who took the helm in June 2023 following the sudden death of her predecessor, struggled to revive growth in key markets such as the US and Latin America, where stockpiles of unsold premium products and shifting consumer habits triggered a major profit warning in late 2023. Her departure comes as Diageo embarks on a $500m cost-cutting plan and asset sales drive aimed at restoring investor confidence. Chief financial officer Nik Jhangiani has been appointed interim chief executive as the board searches for a permanent successor.

Netflix delivered a strong second-quarter performance, reporting better-than-expected earnings and revenue as subscriber growth and advertising momentum continued to drive its post-pandemic resurgence. The streaming giant posted earnings per share of $7.05 on revenue of $11.04bn, reflecting double-digit year-on-year growth, with analysts highlighting the success of its ad-supported tier and international expansion – particularly through its partnership with France’s CANAL+. The results reinforce Netflix’s position as a leader in the streaming space, with investors now watching closely for updates on its gaming strategy and AI-driven content recommendations. Management upped its revenue guidance for the year.