Market update: 29 July 2025
Global markets had another strong week, supported by improving trade sentiment and resilient economic data. The big news came from the US and Japan striking a trade deal, while the EU is expected to finalise its own agreement with the US soon. In the US, the S&P 500 finished at another all-time high after advancing every day this week, boosted by a solid earnings season and signs of economic resilience. Greater China markets also rallied, with the Hang Seng and Shanghai Composite reaching levels last seen in early 2022 as infrastructure and materials stocks climbed following the announcement of a major hydropower project, while tech names surged after Beijing pledged to curb excessive competition.
Despite strong offshore leads, the ASX 200 fell 1.0% for the week as interest rate cut expectations were tempered following RBA minutes and Governor Bullock’s speech. The minutes showed that while a 25bps cut had been considered, the majority of the board preferred to wait for more certainty on inflation. This cautious stance weighed on bank stocks, with Financials down 3.9% to be the worst-performing sector. Investors also rotated away from rate-sensitive names as global bond yields moved higher, further adding pressure to the local market.
In Europe, equities started the week lower but recovered on optimism that a trade deal between the US and EU could see tariffs cut to 15% on EU goods. The ECB, as expected, kept its benchmark interest rate on hold at 2%, noting an uncertain economic backdrop but easing price pressures. Meanwhile, Japan equities rallied during the shortened trading week, buoyed by the landmark trade deal with the US, which not only reduced reciprocal tariffs to 15% but also included a US$550bn investment commitment from Japan, expected to drive US job creation.
Looking ahead, markets will be focused on the US Federal Reserve’s meeting, where investors will be watching for any policy shifts, as well as key data including second-quarter GDP, PCE inflation, and jobs numbers later in the week. These releases could provide clearer direction for global markets after an upbeat, trade-driven rally.
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