Originally published at: https://blog.investengine.com/market-roundup-powell-panic-ftse-soars/
This week’s market round-up covers a major milestone as the FTSE 100 surges past 9,000 for the first time ever. We also unpack rising inflation in the UK and US, fresh concerns over Jerome Powell’s future as Federal Reserve Chair, and what it all means for interest rates, investors, and global market sentiment.
Trump’s tariffs return (again)
Over the weekend, President Trump announced more proposed tariffs. This time, a 30% rate on goods from Mexico and the European Union. But markets shrugged off the news, just as they did with last week’s tariff threats. The reason? There’s still plenty of time before the proposed August 1st deadline, leaving room for negotiation and potential backtracking.
Market jitters over Powell’s future
What did rattle markets this week, however, was news about US Federal Reserve Chair Jerome Powell. On Wednesday, a White House official suggested Trump was planning to replace him and the S&P 500 dropped nearly 1% in response.
But just hours later, Trump denied those reports, saying he had no plans to fire Powell. Markets quickly reversed, recovering the day’s losses and finishing in positive territory.
Hotter than expected inflation
Also on Wednesday, both the US and UK released inflation figures — and they were higher than expected.
In the US, inflation now sits at 2.7%, still well above the Federal Reserve’s 2% target. The rise is largely being attributed to the impact of tariffs feeding into consumer prices.
In the UK, inflation came in at 3.6%, with retailers pointing to higher payroll taxes and the recent minimum wage hike introduced by the new Labour government.
Interestingly, despite the strong inflation print, markets didn’t adjust their expectations for future rate cuts in the UK. Investors are still pricing in two rate cuts this year. Why? It seems they’re more worried about the cooling labour market than persistent inflation right now.
UK job market weakens
That concern was backed up by new UK employment data from the Office for National Statistics (ONS), released on Thursday. The data showed:
- Wage growth slowing down
- Unemployment rising to 4.7%, up from 4.6%
- Job vacancies falling, with an average of 2.3 job seekers per vacancy
Employers continue to cite higher costs from the national insurance hike and the minimum wage increase as key reasons behind recent job cuts. In fact, businesses have reduced staff in 7 of the 8 months since the national insurance changes were announced.
A milestone for the FTSE 100
Let’s end on a positive note. This week, the FTSE 100 crossed 9,000 points for the first time ever. A major milestone for the UK’s main stock index.
UK equities have been a standout performer this year as investors diversify away from US markets, wary of rising trade tensions linked to Trump’s return to the spotlight. So far this year, the FTSE has outperformed most global markets, including the US, Japan, and broader emerging markets, with only European equities delivering stronger returns (in sterling terms).
Thanks for reading, and we’ll be back next Friday with your next weekly market rundown!
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