US markets deliver mixed performance despite record highs
United States (US) equity markets delivered a split performance, with the US Tech 100 (Nasdaq 100) climbing 0.35% to a fresh record close while the US 500 (S&P 500) and Wall Street (Dow Jones) struggled under pressure from pharmaceutical giant Eli Lilly. The weight-loss specialist plunged 14.1% after disappointing clinical trial data for its oral obesity treatment, despite raising full-year forecasts.
Apple provided crucial support to the Nasdaq with a 3.2% gain, benefiting from Trump’s new semiconductor tariffs that notably excluded major US-based technology firms. This selective approach to trade policy highlighted the complex political calculations now influencing market movements across the technology sector.
However, the broader market showed signs of fatigue after recent earnings-driven rallies, with NYSE decliners outnumbering advancers. Fortinet exemplified the challenges facing some technology names, tumbling 22% on weak forward guidance, while Intel dropped 3.1% amid reports that Trump demanded the CEO’s resignation over China ties.
Weekly jobless claims rose to 226,000, marking a one-month high and slightly exceeding expectations. While the labour market remains relatively resilient, the uptick provides another data point for Federal Reserve (Fed) officials to consider as they calibrate monetary policy.
UK markets show muted response to Bank of England surprise
The FTSE 100 managed only a modest 0.2% gain despite the Bank of England (BoE) delivering a quarter-point interest rate cut, with the benchmark finding support from pound weakness rather than domestic optimism. pound sterling slipped 0.1% against the US dollar, though it maintained its position above the $1.34 level.
The more significant market reaction came in government bond markets, where gilts extended yesterday’s selloff with yields rising particularly sharply across longer-dated maturities. This reflects the market’s interpretation of the BoE’s surprisingly cautious tone despite the rate reduction.
The central bank’s 5:4 vote split revealed substantial resistance to further aggressive easing, with Monetary Policy Committee members expressing heightened concerns about persistent inflation pressures, particularly in food prices. Markets subsequently reduced expectations for future rate cuts, creating a stark contrast with Fed policy expectations.
Federal Reserve nominations signal policy shift
President Trump’s nomination of Stephen Miran to the Fed Board, alongside speculation about Christopher Waller as a potential Fed chair replacement, signals continued pressure for more accommodative monetary policy. Both appointments would likely support further rate cuts, creating additional dollar weakness pressures.
This dovish shift at the Fed contrasts markedly with the BoE’s more cautious approach, potentially supporting further pound strength despite today’s modest decline.
Trump’s escalating tariff policies, now pushing import duties to historic highs, add another layer of complexity to market dynamics. The selective application of these measures creates winners and losers across sectors, requiring careful stock selection in current conditions.
Corporate earnings delivered mixed results, with GlaxoSmithKline (GSK) gaining ground following a $370 million settlement payment from CureVac, while TBC Bank fell 11% despite apparently solid results.
