July 2025 Market Summary

July was another month dominated by tariffs, causing uncertainty about whether the US and its trading partners would be able to secure trade agreements. Despite this, global markets achieved growth throughout July, with a Presidential state visit to the UK resulting in a US trade deal with the European Union. Both the FTSE 100 and the S&P 500 hit multiple record highs during the month, reaching levels far beyond the dip in April and suggesting a more positive route for markets going forward.

Indices

Here’s how some of the global stock markets performed in the 12 months up to 31 July:

FTSE 100 – 9.14%
S&P 500 – 14.80%
Stoxx 600 – 5.39%
Nikkei 225 – 7.72%

United Kingdom

UK inflation data was revealed in the last week of July, showing that inflation had risen to 3.6% in the 12 months to June, up from 3.4% in the 12 months to May. Last month, the Bank of England remained cautious about lowering interest rates further, maintaining the base rate at 4.25%, and hinting that further cuts would only be possible once trade instability had eased.

Data released by the ONS also showed that retail sales bounced back in June by 0.9% – a rise that was expected, though lower than economists had initially predicted. The increase was driven by higher food sales in retail stores and more fuel purchases as people ventured out in the sun. Despite this, retail sales grew by only 0.2% from April to June, lower than in the previous three months.

United States

A positive market sentiment continued into July in the United States, with the S&P 500 reaching multiple record highs throughout the month. This followed strong earnings reports from Meta and Microsoft, and new tariff agreements between the US and the EU. Microsoft is set to become the second company to reach a valuation of $4 trillion, behind Nvidia, which hit the same milestone earlier in July.

On 30 July, the Federal Reserve voted to keep interest rates unchanged, despite strong pressure from President Donald Trump to lower them. Trump has consistently hinted at his support for lower rates, and there were leaks earlier in the month suggesting he had considered firing Federal Reserve Chair Jerome Powell, which he later denied. The vote to hold rates steady was 9–2, marking the first time since 1993 that two members dissented – both appointed by Trump.

Asia – China

The US and China held further meetings in the final week of July to reach a new tariff agreement, but no resolution has yet been announced. President Trump has yet to confirm an extension to the 12 August deadline. If no agreement is reached, a 34% reciprocal tariff will come into effect on that date. This comes amid July data showing that Chinese manufacturing activity shrank for the fourth consecutive month, suggesting a rush to export goods ahead of the expected tariffs.

Europe

The EU and the US finally reached a tariff agreement in the last week of July, setting a 15% reciprocal tariff on goods imported into the United States. European Commission President Ursula von der Leyen welcomed the deal, stating it would bring “stability,” though other European leaders have criticised aspects of the agreement, particularly the $600bn of EU investment into the US and $750bn to be spent on US energy.

In more positive news, June’s inflation data showed an annual rate of 2.0%, up from 1.9% in May, meeting the ECB’s long-term target.

In summary

Markets have continued to show volatility into the second half of 2025, but the continued growth and record highs in the S&P 500 and FTSE 100, along with greater stability following tariff agreements between the US and EU, suggest that a return to normality may be slowly approaching. As ever, the importance of retaining a well-diversified portfolio across asset classes and regions remains vitally important.