Please see below, Brooks Macdonald’s Daily Investment Bulletin which summarises the key factors currently impacting global investment markets. Received today – 30/05/2025
What has happened
Optimism around potential tariff relief outweighed mixed economic data, boosting market sentiment. The S&P 500 gained +0.40%, with ten of its eleven sectors advancing. The Magnificent 7 stocks hit a three-month high, up +0.61%, driven by Nvidia’s strong +3.25% performance.
Tariffs back in place
Yesterday, Federal Appeals Court temporarily upheld tariffs imposed under the International Emergency Economic Powers Act, including a 10% baseline tariff, a 20% additional tariff on China, and a 25% tariff on non-USMCA-compliant imports from Mexico and Canada. In the meantime, the White House is exploring alternative tariff powers under the Trade Act of 1974, which allows 15% tariffs for 150 days to address trade imbalances and allows tailoring country-specific tariffs after investigation. While legal challenges are likely, this approach could stand on stronger legal footing than the current framework.
Data drives rate cut hopes
Markets also saw weaker economic data than expected. Weekly jobless claims rose to 240,000 (above the 230,000 forecast), and continuing claims hit 1.919 million (versus 1.893 million expected). Q1 GDP showed personal consumption growth revised down to +1.2%, the weakest in seven quarters. April’s pending home sales also dropped significantly, the largest decline since September 2022. These figures fuelled hopes for Federal Reserve rate cuts, with markets now pricing in 50 basis points of cuts by December.
What does Brooks Macdonald think
Recent tariff developments are getting hard to keep up. In a week, we have seen a 50% EU tariff announced, delayed by five weeks, and a US Court ruling against broad tariffs, followed by an appeals court stay keeping them in place. At the same time, the Trump administration is prepared to pivot to alternative tariff powers if needed. While a court ruling could potentially reduce tariffs, a return to a pre-2025 ‘tariff-free’ world seems unlikely. We expect ongoing trade policy uncertainty to influence markets, but resilient corporate earnings and increasing expectations of Fed rate cuts could support risk assets in the near term.
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Marcus Blenkinsop
30th May 2025