Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
✅ US ‘Big beautiful bill’ set for approval – Trump’s huge $3.4trn tax and spending package passes through both the US House and Senate. It’s now with the president for final approval, expected later today.
✂️ Labour revises stance on welfare reforms – facing a backlash from its own party, Labour softened proposed welfare cuts that had been slated to help cover a fiscal shortfall.
🎯 Eurozone inflation hits target – inflation rose slightly to 2% year-on-year in June, as rising service costs fought declining energy prices. This brings inflation back in line with the European Central Bank’s (ECB) official target.
📈 Japanese sentiment improves – consumer confidence improved more than expected in June to hit its highest level since February. Improvements were seen across all key factors measured.
⬆️ US job openings rise – openings rose by 374,000 in May to hit 7.77m, with the biggest increases seen in accommodation and food services.
What this means for financial advisers and clients
After weeks of political wrangling and lots of last-minute deals, republicans in the US have passed Trump’s signature tax and spending bill, laying out his domestic policy agenda. This bill cuts taxes and allocates billons to defence and immigration enforcement. Healthcare, welfare spending, and much of the clean energy projects set out by Biden have been massively cut back. The total bill comes with a huge financial cost, estimated to add trillions to the US’s national debt over the next 10 years. Questions around affordability will likely increase the cost of government borrowing. In response, US Treasury yields have already begun to rise.
Here in the UK, Labour’s decision to reverse proposed welfare cuts could signal potential tax rises in the Autumn Budget to help balance the books - despite pledges to the contrary. Gilt yields also spiked on concerns around instability should Rachel’s Reeves’s job be in jeopardy. However, those concerns eased after Starmer confirmed she’ll be staying on.
Chart of the week - the US asset premium
Source: Topdown Charts, LSEG
Why this matters
This week’s chart compares the valuations of US assets to global ex-US assets across a combination of stocks, bonds, currencies and housing. The result? US assets are trading well above historical averages, while global markets outside the US look comparatively undervalued.
US assets cover equity, high yield credit, the US dollar, and the housing market. Global assets include emerging market, developed market (ex-US), and frontier market equities as well as emerging market currencies and bonds.
Following incredible post-financial-crisis market rises and a strong economy, US assets have stormed ahead of competition around the world and are now priced for perfection. However, this means any cracks in the US-exceptionalism narrative - like tariff fallout or greater AI competition from China - could cause large falls in valuations. Meanwhile, many overseas assets such as European and emerging markets are looking considerably cheaper and could offer greater opportunities for outperformance going forward.
While this doesn’t mean US valuations can’t keep climbing or that the tides will turn overnight, it’s certainly a risk factor to be conscious of. And serves as another reminder on the importance of diversifying portfolios.
Market recap
UK markets flat
UK markets saw only marginal rises this week. Political clarity and gains in domestically-focused stocks helped support the market, but this was offset by profit warnings in some international stocks that face greater tariff risks.
US hits record highs
Markets rose on strong jobs data and an AI-led tech-rally, leading to both the S&P 500 and NASDAQ hitting record highs in dollar terms.
Hang Seng boosted by Chinese demand
The Hang Seng gained as capital inflows from Chinese investors tempted by low valuations. While in Japan, the Nikkei fell as a US tariff deadline looms and a deal is yet to be made. Geopolitical concerns also caused a rush for safe-haven currencies such as the Yen, making exporting more expensive.
Oil and gold edge higher
Oil prices climbed on anticipated demand increases on the back of strong US economic data. This was combined with likely cuts to production at an upcoming OPEC+ meeting. Meanwhile, gold benefitted from continued geopolitical tensions and tariff threats.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.29% | 10.29% |
| FTSE 250 | 0.03% | 7.34% |
| S&P 500 | 2.26% | 1.55% |
| NASDAQ | 1.75% | -0.98% |
| MSCI Europe ex UK | 0.92% | 14.68% |
| Hang Seng | 0.70% | 12.73% |
| Nikkei 225 | -0.57% | 0.83% |
| Brent Crude | 1.12% | -8.17% |
| Gold Spot | 1.99% | 27.28% |
| UK 10yr Gilt yield | +9bps | -5bps |
| US 10yr Treasury yield | +8bps | -23bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 3rd July 2025.
Stay tuned for next week’s market insights
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
