Please see below, todays Daily Investment Bulletin from Brooks Macdonald covering their thoughts on markets and the ongoing Geopolitical Issues. Received today – 08/07/2025:
What has happened
Equity markets faced volatility yesterday as investors reacted to President Trump’s tariff announcements. The S&P 500 closed down -0.79%, with losses accelerating after the tariff news, though it rebounded from a daily low of -1.25% as markets priced in potential trade negotiations. The ‘Magnificent 7’ tech stocks fell -1.03%, with Tesla plummeting -6.79% after Elon Musk’s announcement of a new ‘America Party,’ raising concerns about political and market uncertainty. The Russell 2000 small-cap stocks index, which are more vulnerable to tariff impacts, fell -1.55%. In Europe, markets closed before the tariff news fully hit, allowing the STOXX 600 (+0.44%) and Germany’s DAX (+1.20%) to post gains, buoyed by optimism over a potential US-EU trade deal following positive talks between EU Commission President Von der Leyen and Trump. In the UK, the FTSE 100 lagged, declining -0.19%, reflecting broader caution.
Trump’s tariff announcements
President Trump escalated trade tensions yesterday, announcing new tariff rates via social media. Japan and South Korea face 25% tariffs, while South Africa, Malaysia, and Indonesia are set to see rates of 30%, 25%, and 32%, respectively, among twelve targeted countries. Trump emphasised that goods transhipped to evade tariffs will face the higher rate and warned that retaliatory tariffs from other nations would trigger reciprocal US increases. White House Press Secretary Karoline Leavitt indicated more tariff letters would follow later this week. However, these higher rates are not in force yet for a few weeks as Trump also signed an executive order delaying these hikes, maintaining the current 10% tariff rate until at least 1 August, therefore providing a window for negotiations. Trump signalled flexibility, noting the deadline was ‘not 100% firm’ and open to adjustments for trade deals.
What does Brooks Macdonald think
The tariff announcements again introduce significant uncertainty for global markets, particularly for more sensitive sectors like small-cap stocks and industries reliant on international supply chains. While the delay until August 1 offers a reprieve, the threat of higher tariffs could dampen investor confidence and disrupt trade flows, and potentially fuelling inflation and pressuring corporate margins. However, the prospect of trade deals, especially with the EU, provides a counterbalance, as successful negotiations could mitigate some risks. We expect continued market volatility as investors monitor trade talks and further developments. For now, a cautious approach favouring well diversified portfolios seems prudent as markets navigate this period of heightened geopolitical and economic uncertainty.
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Marcus Blenkinsop
8th July 2025