In this week’s Market Week update from Fidelity, Jemma Slingo, Pensions and Investment Specialist at Fidelity International, shares her insights on the current market landscape, noting:
Jemma Slingo, Pensions and Investment Specialist, Fidelity International comments: “It is a strange time to be an investor. In the past few months, markets have endured a series of global shocks – from international trade tensions and regional conflicts to fiscal uncertainty in the United States.
“But stocks are buoyant. The S&P 500 hit an all-time high on Friday after a dip just a couple of months ago. The tech-focused Nasdaq is also trading at record levels, meaning the US is rapidly closing the gap with European stocks that emerged earlier in the year.
“What’s going on? Are we back to business as usual? Or should investors be wary of the calm, especially as the US prepares for its Independence Day holiday on Friday?
Mixed signals
“Artificial intelligence has driven the latest stock market gains. After a tough start to 2025, chip giant Nvidia is the most valuable company in the world again after hosting an upbeat shareholder meeting. Micron, which supplies memory storage to Nvidia, also posted some impressive numbers last week.
“The de-escalation in geopolitical tensions in the Middle East has also contributed to a more settled mood. Earlier this year, concerns over supply disruptions briefly drove Brent crude – the global oil benchmark – above $80 per barrel. Prices have since eased to around $67, as markets grew less concerned about prolonged disruption.
“Meanwhile, fears of a global trade war are subsiding. The US has seemingly reached a deal with China, which promises to accelerate rare earth shipments. Although the official suspension of global tariffs is due to expire on 9 July, investor anxiety has eased for now.
“Elsewhere, however, there are signs of unease. Outflows from long-term US bond funds suggest concerns are mounting over fiscal policy developments. Trump wants to sign the One Big Beautiful Bill Act by the 4 July holiday, and the US Senate will begin voting on amendments today. The bill aims to extend tax cuts and reduce social spending.
“Analysts are also on high alert for signs of recession, particularly after last week’s US GDP data underwhelmed. The US economy shrank by more than 0.5% in the first quarter of 2025, after a weak period for consumer spending.
Milestones this week
“It is a relatively heavy week for economic updates. A flurry of manufacturing and services data will arrive from the US and Europe in the form of Purchasing Managers Indices. PMIs are based on monthly industry surveys and broadly reflect whether sectors are expanding or contracting.
“Central banks will also be scrutinising new US employment data – specifically the non-farm payroll – and fresh inflation data from the eurozone is due to be published too, after the European Central Bank cut rates to just 2% earlier this month.
“Both the Federal Reserve and the Bank of England are in wait-and-see mode at the moment, having held interest rates earlier this month, so these indicators could prove crucial to future decision making. Given the resilience of the US stock market, investors appear to be betting that rate cuts are on the table.
“Closer to home, the UK will publish its GDP figures for the first quarter of 2025. Results from listed retailers like Currys, Watches of Switzerland and Topps Tiles should provide a bit more colour on how consumers are holding up. We will also have more idea of what’s happening in the UK property market when Nationwide publishes its house price index on Tuesday.”
