Global markets ended the week in positive territory, driven by the continued tug-of-war between solid macroeconomic performance and mounting geopolitical uncertainty. Global equities rose by 1.5%, led by Japan after its signed trade agreement with the US.
The Q2 2025 earnings season is well underway, with results from Alphabet (GOOGL) and Tesla (TSLA) grabbing the headlines. Corporate performance and U.S. trade policy developments will remain central to markets in the week ahead. However, it is the European and UK equity markets which remain among the standout performers with year-to-date growth of 18% and 13.3% respectively.
Last week
- Alphabet and Tesla reported their earnings last week, marking the beginning of the second quarter earnings for the Magnificent Seven stocks. Alphabet delivered a strong Q2, beating expectations with EPS of $2.31 and 13.8% revenue growth. This contrasts with Tesla which reported Q2 adjusted EPS of $0.40, down 23% year-on-year but in line with expectations, while its revenue fell 12% to $22.5B, slightly ahead of estimates.
- In the US the Purchasing Managers’ Index (PMI) data for July was released, showing growth in US business activity, the expansion was driven by the services sector.
- The UK and India signed a historic Free Trade Agreement in July 2025, cutting tariffs on nearly all bilateral trade and aiming to boost annual trade by over £34 billion by 2030
- On the FTSE 100, NatWest rose 3.4% as it raised its full-year guidance, and boosted its dividend, after a strong first half which saw loans and deposits grow.
- Retailers were mixed as figures from the Office for National Statistics showed UK retail sales improved in June following record-setting warm weather but fell short of expectations. Next (NXT) edged up for the week while Marks & Spencer Group (MKS) ended flat.
This week
- Looking to the week ahead, we have plenty of earnings on both side of the Atlantic and will be paying close attention to tech heavyweights like Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Meta (META)
- In the UK, investor attention will be on GSK (GSK), AstraZeneca (AZN), Unilever (ULVR), and HSBC (HSBA) as they report results and update guidance.
- Markets face a busy week of central bank decisions, with the Federal Reserve, Bank of Japan, and Bank of Canada all set to meet. While no changes to interest rates are expected, investors will be scrutinising the accompanying statements and guidance for any signals on future policy shifts. The Fed will be watched for commentary on inflation persistence and the timing of potential rate cuts later in the year.
- On the economic data front, the week brings closely watched indicators from both the US and China. In the US, the release of nonfarm payrolls will be critical for gauging the health of the labour market, while the ISM manufacturing PMI will provide insights into industrial momentum amid mixed signals from recent surveys.
- From Asia, China will report its official manufacturing and services PMIs, which will serve as a pulse check on the world’s second-largest economy amid ongoing concerns about sluggish growth and the impact of recent stimulus efforts.
| Equities and Oil | Last week (%) | YTD (%) |
|---|---|---|
| WTI Oil | 3.2 | -9.2 |
| Global | 1.5 | 5.7 |
| UK | 1.4 | 13.3 |
| US | 1.5 | 2.1 |
| Japan | 4.8 | 4.4 |
| Europe ex UK | 1.4 | 18.0 |
| Emerging | 0.6 | 7.9 |
| Bonds, Gold and Currencies | Last week (%) | YTD (%) |
|---|---|---|
| Gold | -0.4 | 18.6 |
| Sterling Corporates | 0.4 | 3.4 |
| GBP vs Japanese Yen | -0.6 | 0.8 |
| GBP vs USD | 0.2 | 7.4 |
| UK Government Bonds | 0.5 | 1.6 |
| High Yield | 0.5 | 5.4 |
Source: Bloomberg. Currency GBP.
More details:
- Alphabet delivered a strong Q2, beating expectations with EPS of $2.31 and 13.8% revenue growth, fuelled by robust cloud and digital ad momentum. Cloud revenue surged 32% with a record 21% margin, while YouTube and Search grew double digits, prompting management to boost 2025 capex guidance by $10B to $85B to scale its AI infrastructure. The results reinforce confidence in sustained mid- to high-20% cloud growth and a path toward 30%-plus margins over the coming years.
- Tesla reported Q2 adjusted EPS of $0.40, down 23% year-on-year but in line with expectations, while revenue fell 12% to $22.5B, slightly ahead of estimates. Automotive sales dropped 16% on lower deliveries and pricing, and regulatory credit revenue plunged 51% to $439M, pressuring margins despite a gross margin beat at 17.2%. Free cash flow slumped to $146M (vs. $1.34B a year ago), well below consensus, though cash reserves remain strong at $36.8B. With no update to 2025 guidance. This is the worse revenue slide in a decade and Elon Musk didn’t sugarcoat the message warning that investors should brace for “a few rough quarters ahead.”
- The UK and India signed a landmark Free Trade Agreement (FTA) aimed at eliminating or reducing tariffs on 95% of goods traded between the two nations, including key sectors such as automotive, pharmaceuticals, and financial services. The deal is expected to boost bilateral trade by over £34 billion by 2030, create new investment opportunities, and strengthen the UK’s economic ties with one of the world’s fastest-growing major economies.
The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.
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