London Midday: FTSE Hits Fresh Highs as Investors Shrug Off Trump Trade Rhetoric

Economic

Summary:

London stocks climbed to record highs on Thursday, with the FTSE 100 up 1.1%, as investors dismissed Trump’s trade rhetoric and focused on corporate news and economic data.

London stocks had extended gains by midday on Thursday, with the top-flight index hitting an all-time high as investors shrugged off Trump’s trade war rhetoric.

The FTSE 100 was up 1.1% at 8,960.27, having hit a fresh intraday high of 8,973.

Dan Coatsworth, investment analyst at AJ Bell, said: "European markets in general continue to shrug off Donald Trump’s daily tariff updates, perhaps seeing them as noise and not facts. Trump is throwing out numbers left, right and centre, and investors have begun to dismiss anything that isn’t set in stone.

"So many of Trump’s decisions have either been rolled back, forgotten about, or kicked down the road. For investors, that means a shift in focus back to economic data and corporate news flow as key drivers for markets."

In equity markets, heavily-weighted miners were the best performers on the FTSE 100 following losses the previous day, with Anglo American, Rio Tinto, Glencore and Antofagasta all up.

Advertising agency WPP gained as it appointed Microsoft executive Cindy Rose as chief executive to succeed Mark Read who will step down on 1 September. The shares fell sharply on Wednesday after WPP slashed annual profit forecasts.

Jupiter Fund Management surged as it agreed to buy CCLA - the UK's largest asset manager focused on serving non-profit organisations - for £100m.

Iconic bootmaker Dr Martens advanced as it held annual guidance and said it continued to see positive trading in its Americas direct to consumer operations, driven by full price sales, although its UK business continued to experience a challenging trading backdrop.

Rank Group rallied as it said annual profits would come in ahead of expectations despite a backdrop of higher costs and regulatory uncertainty.

Recruiter Pagegroup rose despite reporting a steeper rate of profit decline in the second quarter, with particular weakness in the EMEA and UK divisions. For the full year, the board said it still expects to hit market forecasts for operating profit, though subdued levels of client and candidate confidence are continuing to impact decision making.

On the downside, water and sewage firm Severn Trent edged lower even as it reiterated its full-year outlook, underpinned by ongoing work to find and fix leaks.

Building materials distributor Grafton slumped as it said first-half trading was in line with its expectations but that many of its markets remain challenging and it is not expecting a significant increase in volumes this year.

British Land and Land Securities were both knocked lower by downgrades to ‘underperform’ at Jefferies.

Vistry reversed earlier gains as the housebuilder said it remains on track to deliver a year-on-year increase in profits in FY25, supported by a forward order book of £4.3bn and a "strong” pipeline of development opportunities.

Source: Sharecast

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Glendon

Commodity

OPEC+ is discussing a pause in further production increases after its next monthly hike, according to delegates familiar with the matter.

Saudi Arabia and its partners already have a tentative plan to complete the revival of a 2.2 million-barrel supply revival in September, with another monthly tranche of 550,000 barrels.

The group will likely wait for some time before moving onto reversing another layer of halted production, amounting to roughly 1.66 million barrels per day, said the delegates. They asked not to be identified as the talks are private.

Source: Bloomberg Europe

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Michelle

Economic

Forex

The US dollar has experienced the worst start to a year since 1973, but analysis from Bank of America suggests the currency may see more limited downside in the second half of 2025.

According to BofA’s time zone framework analysis, while overall USD price action no longer correlates with Federal Reserve rate cut pricing, cumulative USD return during US trading hours still maintains a +71% correlation with Fed rates pricing in 2025.

The bank notes that unchanged Fed rates for the remainder of the year should moderately support the USD during US trading hours.

Asia-based investors have been the biggest USD sellers so far in 2025. However, a longer-term analysis reveals that USD price actions in Asian trading hours have flattened after cumulative long returns from the past two years unwound to neutral levels. BofA suggests these investors may wait for new bearish USD catalysts to form in other time zones before pushing the currency lower.

The dollar still has significant room to depreciate during European trading hours, but this would likely require global equity markets to outperform US equity for the rest of the year. Foreign investors now have less incentive to increase their FX hedge ratio on US-based assets following the year-to-date USD movement.

While global equities outperformed US markets in Q1 2025, the US regained leadership in Q2. BofA indicates that relative equity performance should be the focal point for global FX investors in the second half of 2025.

Source: Investing

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Gerik

Economic

German Exporters Prioritize Equity Over Expediency in US Negotiations

As trade tensions between the European Union and the United States escalate, Germany’s leading export lobby has cautioned against rushing into a trade agreement that overlooks European interests. Dirk Jandura, President of the Federation of German Wholesale, Foreign Trade and Services (BGA), stated firmly in Berlin that any forthcoming deal with Washington must be balanced and fair not merely an exercise in damage control to avert tariffs.

The urgency arises from President Donald Trump’s August 1 deadline, which threatens sweeping tariff hikes on European goods if a framework agreement is not reached. In response, the European Commission is working to broker a deal in the coming days. However, German exporters are warning that concessionary diplomacy could sacrifice long-term strategic interests for short-term relief.

Causal Link Between Tariff Threats and Trade Decline

Recent trade data underscores the deteriorating situation. German exports to the United States its largest trading partner in 2024, with bilateral goods trade reaching €253 billion fell by 7.7% in May, following a 10.5% drop in April. These back-to-back contractions mark a clear downward trajectory, closely aligned with the rise in protectionist US policies.

The causal relationship between Trump’s tariff stance and Germany’s export downturn is becoming increasingly apparent. Tariff threats have already destabilized cross-border supply chains and investment planning, eroding the predictability exporters rely on. As Jandura put it, “The situation in foreign trade is dramatic and threatens to get worse,” highlighting the immediate economic costs and future risk if tensions escalate unchecked.

Strategic Recalibration: Strengthening the EU’s Negotiating Leverage

In calling for a stronger European single market, Jandura emphasizes the need for internal cohesion within the EU to counterbalance external pressures. A more integrated market, he argues, would increase Europe’s bargaining power and reduce dependency on any one trade partner, particularly the United States.

Moreover, the BGA is advocating for the expansion or renegotiation of trade agreements beyond the transatlantic axis. This includes diversifying export destinations to reduce vulnerability to policy shifts in Washington. The proposal reflects a shift from reactive to proactive trade policy, aiming to insulate European exporters from the volatility of global trade politics.

Germany’s exporters are drawing a line: economic pragmatism must not be mistaken for submission. While the EU scrambles to finalize a trade framework before Trump's tariff deadline, Berlin is warning against hasty decisions that may sacrifice broader European interests. The recent export declines provide empirical weight to the argument that a weak deal could do more harm than good. Ultimately, the call is for a durable, rules-based trading relationship one that upholds fairness, maintains economic stability, and reinforces Europe’s sovereignty in global trade negotiations.

Source: Reuters

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Gerik

Economic

Trading and Investment Banking Rebound Lifts Profit Expectations

The earnings outlook for the six largest US banks JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley is showing marked improvement heading into the second-quarter results. Analysts anticipate that the rebound in investment banking activity, paired with strong trading performance, will lead to a notable earnings uplift. While the broader macroeconomic environment remains volatile due to trade tensions and policy ambiguity, the banking sector appears to have found stability through diversified revenue streams.

Analysts at Morgan Stanley and Goldman Sachs report that deal pipelines are strengthening, reversing the April slowdown that marked a 20-year low in global M&A activity. The causal factor here is improved market confidence following a brief lull in early Q2, which revived investor appetite and prompted banks to re-engage in capital markets. This coincided with rising volatility, which in turn created favorable conditions for trading desks.

Stronger Net Interest Income and Lower Provisions Add to Resilience

Beyond trading and advisory services, banks are benefiting from a steady increase in net interest income (NII), albeit at low to mid-single digit rates. The expected gains stem from better margins on loans versus deposits, suggesting that interest rate dynamics continue to favor lending profitability.

Additionally, provisions for loan losses are likely to shrink, as both consumer and commercial borrowers maintain strong credit quality. Analysts have pointed to a possible increase in overall loan growth to 5%, exceeding earlier expectations of 3%, although questions remain about how sustainable this growth trend will be in the second half of the year.

Regulatory Relief and Capital Deployment in Focus

The sector also enjoys support from the current deregulatory climate under President Donald Trump. Following successful performance in the Federal Reserve’s stress tests, banks have been authorized to deploy capital more freely. This includes higher dividends and renewed share buyback programs, which investors are likely to scrutinize during earnings calls.

For institutions like Wells Fargo, the end of a long-standing asset cap opens new possibilities for growth, drawing attention to management’s strategic vision. Similarly, the successful CEO transition at Morgan Stanley has bolstered investor confidence in its long-term positioning.

Bank-Specific Highlights and EPS Forecasts

JPMorgan Chase is forecast to report a 5% increase in earnings per share (EPS) to $4.48, driven by stable loan growth and potential updates on its stablecoin initiatives. Bank of America is expected to post a 4% rise in EPS to $0.86, alongside a 7% gain in NII, although investment banking fees may slip to $1.2 billion.

Citigroup stands out with a 5% projected EPS increase to $1.60, led by strong capital markets performance. Citi remains a top pick for some analysts, although higher expenses and provisions may weigh slightly. Wells Fargo is expected to report $1.41 in EPS, with operating costs falling due to personnel reductions and flat provisioning for credit losses.

Goldman Sachs is projected to deliver an impressive 11% EPS rise to $9.53, supported by a rebound in both trading and deal-making. Morgan Stanley is anticipated to see a 7% EPS increase to $1.95, with its CEO’s strategic recalibration expected to drive future market share gains.

US banks are entering the second quarter earnings season with cautious optimism. Trading revenues remain buoyant amid geopolitical uncertainty, and investment banking pipelines are beginning to fill again. As regulatory constraints ease and loan growth edges upward, the financial sector appears well-positioned to capitalize on these favorable conditions barring any escalation in trade disruptions or macroeconomic shocks. Investors will watch closely for clues about capital strategy, credit risk, and long-term growth momentum.

Source: Reuters

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Glendon

Economic

Forex

German exporters do not want a deal at any price in the trade conflict with the United States, said Dirk Jandura, head of the BGA trade lobby.

"Our interests must be reflected in an agreement with the U.S.," Jandura said on Thursday in Berlin. "We need a fair deal for the whole of Europe. It must not be concluded at any price."

The European Commission aims to reach a trade agreement outline with the U.S. in the coming days, ahead of the August 1 deadline set by President Donald Trump for broad tariff increases.

Jandura, President of the Federation of German Wholesale, Foreign Trade and Services (BGA), called for a stronger European single market to improve the EU's negotiating position and to cushion the economic impact of tariffs, alongside new trade agreements or the revision of existing ones.

The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($296.77 billion).

Exports to the United States dropped 7.7% in May month on month, following a 10.5% decline in April, data showed on Tuesday.

"The situation in foreign trade is dramatic and threatens to get worse," said Jandura. "The consequences of Trump's tariff policy are thus becoming ever clearer."

Source: Yahoo Finance

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Gerik

Economic

Vietnam Responds to US Pressure with Regulatory Overhaul

In the wake of a preliminary tariff agreement with the United States, Vietnam is preparing to enforce stricter trade compliance measures aimed at curbing illegal transshipment practices. A draft decree seen by Reuters outlines plans for increased penalties and inspection protocols, primarily targeting Chinese-origin goods suspected of bypassing US tariffs by re-entering global supply chains through Vietnam.

This initiative is a direct outcome of recent negotiations between President Donald Trump and Vietnamese leader To Lam, resulting in a deal that reduces the threatened 46% US tariff on Vietnamese imports to 20%. However, goods found to be illegally transshipped through Vietnam will still face a punitive 40% levy, signaling that enforcement not just diplomacy will determine the agreement’s long-term success.

Causal Relationship Between Trade Surges and Transshipment Concerns

The US has repeatedly accused Vietnam of being a transshipment hub for Chinese goods attempting to avoid high US tariffs. These accusations are supported by trade data showing a near-synchronous surge in both Vietnamese exports to the US and Vietnamese imports from China since the start of the US-China trade war in 2018. By 2024, Vietnam’s exports and imports in this bilateral triangle both stood at approximately $140 billion.

The correlation suggests that a significant share of Vietnam’s rising export volume may be composed of goods that underwent minimal transformation, raising questions about their compliance with rules of origin standards. Washington’s demand for clearer thresholds on value-added requirements reflects a push for Vietnam to decrease its reliance on Chinese components, especially in sectors such as electronics and machinery.

Focus of Enforcement: Origin Fraud and Counterfeit Goods

Vietnam’s new measures aim to address widespread concerns surrounding fraudulent certificates of origin and counterfeit imports. The July 3 trade ministry document lists key product categories under heightened scrutiny, including plywood, wooden furniture, steel parts, headphones, batteries, and bicycles. These goods have been flagged as high-risk due to their prior involvement in trade defense cases by the US and EU.

Vietnamese authorities have already intensified inspections on US-bound exports and are preparing to regulate self-certification practices more strictly. Future updates to the draft decree are expected to include financial penalties and legal sanctions. The draft also outlines plans for more frequent on-site inspections and a revision of the certificate-of-origin issuing process to deter fraud.

Legal Ambiguities and the Path to a Final Deal

Despite the outlined enforcement intentions, significant legal ambiguities remain. The US has yet to define how it will determine illegal transshipment and how much domestic value addition is required to classify goods as legitimately Vietnamese. These details are crucial, as they will shape compliance expectations and enforcement frameworks on both sides of the deal.

Sources familiar with the ongoing discussions indicate that Washington is pushing for Vietnam to localize more production processes and reduce dependency on upstream Chinese inputs. However, without clear value thresholds or finalized timelines, both businesses and regulators are navigating uncertain terrain.

Vietnam’s Strategic Trade Balancing Act

Vietnam’s actions illustrate a strategic attempt to preserve trade ties with the US, its largest export market, while carefully managing its industrial dependence on China. This balancing act reflects a broader regional challenge: how to navigate great power rivalries while maintaining export-led economic growth.

By committing to stronger enforcement, Vietnam seeks to demonstrate alignment with US trade priorities without severing its deeply integrated supply chains with China. Whether these measures will satisfy US regulators or disrupt trade flows remains to be seen, but they mark a clear shift in Vietnam’s trade governance in the face of mounting geopolitical and economic pressure.

Vietnam’s pending crackdown on trade fraud is not merely regulatory housekeeping it is a political and economic response to the evolving demands of its largest trading partner. As the final terms of the tariff deal remain under negotiation, the success of these reforms will depend on both legal clarity and Vietnam’s capacity to enforce new standards without destabilizing its export-driven economy.