HOW NEW TRADE POLICIES AND GEOPOLITICS SHAPED GLOBAL MARKETS THIS WEEK
This week in global markets, the headlines were written not just on Wall Street, but in the halls of power from Washington to Beijing. Trade, technology, and teetering central bank policies collided, reordering how investors see risk, reward, and the future path of markets.
The tariff tempest returns
United States (US) trade policy is once again a market-moving force. President Trump’s surprise announcement of potential sweeping tariffs on key trading partners – South Korea, Japan, Brazil, and Canada – sent waves through the commodity world and reignited concerns about global supply chains. Notably, a proposed hefty 50% tariff on copper imports, potentially starting 1 August, catapulted the red metal’s futures prices. While previous tariff announcements have sometimes triggered swift, knee-jerk selloffs, market reaction this time was more nuanced.
Why? Investors, by now, are warier but also somewhat desensitised to the tug-of-war on trade. Rather than a wholesale equity retreat, money, instead, flowed into safe havens – silver surged nearly 4% and select commodity classes outperformed as investors hedged their exposure. This sector-by-sector action underscores a key theme for 2025: the world is learning to trade around trade policy, analysing which assets get hit hardest and which might benefit.
Tech stocks: Relentless, resilient and record-setting
Meanwhile, the tech sector staged one of its classic shows of resilience. US indices, led by the Nasdaq and S&P 500, bounced back from early-week jitters as investors rotated heavily back into premium semiconductor and artificial intelligence (AI) stocks. The symbolic moment? NVIDIA, the poster child for the AI revolution, smashed through the historic $4 trillion market capitalisation barrier. For investors, it’s proof that even amid global headwinds, transformative technologies continue to command capital and attention.
Semiconductors, as core input to everything from AI servers to electric vehicles, benefitted directly from the expectation that supply disruptions may actually boost pricing power in the short run. Meanwhile, broader tech remains stubbornly strong, a reminder that what is said often means as much as the numbers in market psychology.
Central banks: Murmurs, divides and the tricky dance of rate policy
If trade is about geopolitics, central banking is about psychology. This week, minutes from the US Federal Reserve’s (Fed’s) June meeting laid bare just how uncertain the future path for interest rates remains. With US inflation cooling but US growth data sending mixed signals, Fed officials appear divided. While some are pressing for a rate cut as soon as July, others are signalling caution or outright resistance to loosening policy. This internal debate has spilled over to market expectations. By late week, markets priced a roughly 60% chance of a Fed rate cut by September.
Globally, the Reserve Bank of Australia held rates steady, strengthening the Australian dollar, while other central banks remained cautious, wary of inflation caused by rising import costs and domestic growth scares.
The growth-inflation balancing act
Trade and policy came to a head in the economic data, with this week’s focus being China. Investors watched Chinese second quarter gross domestic product (GDP) numbers nervously, looking for signs of trade drag and stimulus fatigue. Chinese growth slowed compared to last year, highlighting the persistent headwinds from weak global demand, deflationary pressures, and the indirect impact of tariffs. The world’s manufacturing engine is sputtering, with global implications for everyone, from African mines to US tech factories.
This week in the US, inflation data remained muted even after the tariff headlines. Consumer and producer price indices registered only slight movements, but analysts warned the impact of new tariffs may not be fully felt for months. As inventories clear and higher input costs filter through, the inflation outlook could shift rapidly further in the second half of the year.
Sector winners and losers – the new market map
Against this ever-more complex backdrop, sector rotation was swift and dramatic. Technology stocks soared as AI and semiconductors dominated the headlines, with investors happy to pay for growth and innovation. Commodities, especially copper and silver, stole some of the limelight, as the combination of supply fears and risk aversion played out in real time.
Not all sectors shared the good fortune. Financials lagged as big banks kicked off earnings season under a haze of caution, wary of what a swipe of the Fed’s pen might mean for margins and loan demand. European and Asian markets were also mixed with eurozone retail sales undershooting expectations, United Kingdom (UK) GDP having contracted again, and Asian equities fading under the twin weight of new trade risks and stagnant data.
Market sentiment: The real driver
Beneath these headlines, the intangible but real influence is sentiment. Investors are navigating an environment where policy can change overnight, central banks hesitate at a crossroads, and the next big move in tech could create, or erase, billions of dollars in value during a single trading session. Volatility remains elevated, but so does the opportunity for those nimble enough to read between the lines.
Opportunity in uncertainty
This week proved that markets are not islands; they are shaped by shifting tides in trade, technology, and policy. Riding the waves requires vigilance. Markets must follow the data, track the sentiment, and understand which sectors are positioned to weather the storm or ride the next big wave. For now, tariffs and tech form the week’s central narrative, with global investors watching nervously, but still hopeful, as opportunity emerges from uncertainty.
A LOOK AT THE MARKETS
The week’s key themes:
- The 10-year US Treasury yield retreated to 4.46% after reaching a five-week high
- US markets closed higher on Thursday, with both the S&P 500 and Nasdaq hitting new all-time highs
- Gold hovered just below $3,340/ounce, heading for its first weekly decline in three weeks
- Dollar set for second weekly gain as data tempers rate cut bets
Bond markets wrestle with policy uncertainty and trade friction
US Treasury yields eased slightly, with the 10-year note dipping to 4.46% after testing a five-week high at 4.5%. Strong retail sales and an unexpected drop in jobless claims point to solid US economic momentum, reinforcing the Fed’s cautious stance. Uncertainty surrounding Trump’s repeated criticism of Fed Chair, Jerome Powell, and speculation about a potential replacement for the role, added tension to the long end of the curve, especially with markets anticipating a more dovish successor. Meanwhile, looming 1 August tariffs on Japan, Korea, and the European Union (EU) continue to cast a shadow over the trade outlook.
In the UK, 10-year Gilt yields climbed to 4.668%, a six-week high, as UK labour data painted a mixed picture. Payroll employment declined again, though less sharply than previously reported. Unemployment ticked up to 4.7%, but wage growth – excluding bonuses – remained firm, albeit slowing. Combined with a hotter-than-expected June inflation reading of 3.6%, the outlook complicates the Bank of England’s (BoE’s) path. While slowing wages support monetary policy easing, sticky inflation may delay rate cuts. Markets are now pricing in two BoE cuts this year.
German Bund yields surged past 2.7%, near three-month highs, as Trump’s 30% tariff threat on EU goods stirred inflation fears. The EU has paused retaliatory measures to keep talks alive, delaying action until August. Inflation surprises in the US and UK have slightly pared global rate cut expectations. While the European Central Bank (ECB) is expected to hold rates steady at its next meeting, at least one cut is still priced in by year-end.
Global equities extend gains amid trade hopes and tech surge
US markets closed higher on Thursday, with both the S&P 500 and Nasdaq hitting new all-time highs. Upbeat US retail sales and falling jobless claims fuelled optimism about the US economy’s strength. Tech led the charge again – thanks in part to Taiwan Semiconductor’s bullish guidance, which sparked renewed enthusiasm for AI-linked spending. Meanwhile, Fed officials offered mixed signals with San Francisco Fed President, Mary Daly, supporting two cuts this year, while member of the Fed board of governors, Adriana Kugler, urged patience amid rising inflation risks.
The FTSE 100 rose 0.6%, outperforming peers as mining and energy stocks lifted the index. UK labour data remains soft, though tax revisions cushioned the downside. Low-cost airline, EasyJet, fell 5% after warning that strikes and fuel costs will dent profits, though full-year growth is still expected.
In Germany, the DAX surged 1.5% to 24,367, breaking a five-day decline. Trade optimism helped, as the EU’s chief negotiator in Washington is pushing to finalise a trade deal. Gains were also driven by strong results from industrial technology firm, Siemens and global software giant, SAP, while computer chipmakers rebounded sharply.
South Africa’s JSE All Share Index continued its solid run, closing at 97,353 and extending its monthly gain to nearly 2.5%. The index is now over 21% higher year-on-year, though trade-related risks still loom.
Oil steadies on supply worries; gold dips on strong data
Brent crude hovered near $69.60/barrel, holding onto a 1.5% gain after geopolitical tensions and tighter supply boosted prices. Disruptions in Iraq’s Kurdistan region, ongoing instability in Syria, and falling US inventories all supported sentiment. Chinese GDP data also surprised to the upside, offering a better demand outlook from a key consumer. Still, oil is heading for its first weekly loss in three weeks, after Trump gave Russia a 50-day ceasefire deadline, easing fears of new sanctions.
Meanwhile, gold hovered just below $3,340/ounce, heading for its first weekly decline in three weeks. The retreat follows stronger US data, with retail sales rebounding, and jobless claims hitting a three-month low, thereby reducing the urgency for Fed rate cuts. Despite the policy tug-of-war within the Fed, gold remains underpinned by geopolitical risks and tariff uncertainty. With Trump’s notification of tariff rates to over 150 trade partners, safe haven appeal remains intact. Ongoing Middle East conflict and the unresolved Russia-Ukraine war continue to offer tailwinds for the precious metal, although rate expectations and dollar strength are capping gains.
Dollar edges up; rand holds firm amid trade watch
The US Dollar Index traded around 98.4 on Friday, set for a second straight weekly gain. Markets responded to stronger-than-expected US retail sales and lower jobless claims, suggesting the US economy remains resilient despite trade headwinds. President Trump also dialled back market fears by stating he does not intend to remove Fed Chair Powell, despite earlier criticism. This reassurance helped maintain dollar strength, now up 0.6% this week, which is the first back-to-back streak in gains since May.
The euro fell to $1.16/€, hitting a one-month low. A firmer dollar and muted ECB outlook pressured the common currency. Despite Trump’s 30% tariff threat on EU goods, optimism lingers that a deal will be reached before August. Inflation in the eurozone held steady, and markets still expect one ECB rate cut by year-end.
The British pound hovered around $1.339/£, near an eight-week low. Mixed UK labour data and sticky inflation have kept the BoE in a policy bind. Markets are still pricing in two UK rate cuts this year, but timing remains uncertain.
The rand traded near R17.90/$, remaining relatively flat. Traders are monitoring US-South Africa trade tensions as Trump’s 30% tariff takes effect 1 August. South African Reserve Bank Governor, Lesetja Kganyago, flagged inflation risks from dollar weakness and global deflation, especially in China. Economists remain divided on interest rates ahead of the 31 July policy meeting, with low inflation supporting either a rate cut or a cautious hold.
*Please note that all information and data is as at the time of writing.
Key indicators:
USD/ZAR: 17.82
EUR/ZAR: 20.69
GBP/ZAR: 23.90
GOLD: $3,333
BRENT CRUDE: $69
Sources: TradingView, LSEG Eikon, Trading Economics and Investing.com.
Written by: Citadel Advisory Partner and Citadel Global Director, Bianca Botes.