Market snapshot: confusion as Trump delays tariff deadline

Tariff threats look likely to take centre stage yet again this week, following further developments over the weekend.

US markets were strong last week, with the S&P500 and Nasdaq hitting new record highs on Thursday before being closed on Friday for Independence Day. Non-farm payrolls breezed past expectations, further vindicating the Federal Reserve’s current policy of keeping its powder dry, while there was equal optimism that the eventual tariff levels would be lighter than had been feared after “Liberation Day” in April.

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Over the weekend, however, the waters were muddied once more. Positively, the tariff deadline was extended further to 1 August from the previous 9 July, although the accompanying rhetoric threatened to unsettle investors.

Additional tariffs and rates which could “boomerang back” to the previously punitive levels were discussed, leaving investors bewildered and uncertain for the umpteenth time this year. In early futures trading, each of the main indices fell by up to 0.6%, although despite the turmoil performances have been robust. In the year to date, the Dow Jones has added 5.4%, with the S&P500 and Nasdaq both ahead by 6.7% and sitting at new highs.

Amid the lack of absolute clarity on trade deals, domestic focus will also be on the upcoming earnings season, where estimates are set against a low bar. The effects of the last three months have been well documented and the reticence of many companies to provide guidance or outlook comments further proof of a vacillating environment.

As such, there is the prospect of positive surprises given low expectations and what has largely been an unaffected economy so far at the headline level. Delta Air Lines Inc (NYSE:DAL) will report on Thursday, before the banks kick off the season in full force next week.

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Asian markets were also bruised by the weekend updates and were largely lower as a result. The fractious relationship between the US and China, which had been showing some signs of warming over recent weeks, is a particular area of concern. In some respects, China appears to have an upper hand in terms of its stranglehold on rare earth materials, but more broadly high tariffs between the world’s two largest economies will also fan out and potentially dampen global trade.

The UK will have domestic concerns of its own this week, with the release of both retail sales and GDP numbers adding further colour to what is becoming an increasingly parlous backdrop.

The consumer has so far shown relative resilience although it remains unclear whether this relates to true confidence, as opposed to bringing forward purchases ahead of what could be another round of tax hikes over the coming months as the government makes further efforts to balance its books.

The more domestically focused FTSE250 continues to show some resilience despite these headwinds, not least of which due to some overseas investors circling what is still a comparatively cheap market in terms of valuation. The index is now up by 4.6% this year after shaking off some weakness earlier in 2025, while the premier index remains a global outlier with an advance of 7.8% despite a flat opening.

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Any gains were largely hamstrung by a mixed production outlook which weighed on Shell (LSE:SHEL), alongside a lower oil price which also dragged BP (LSE:BP.) down. There was some bargain hunting among the banks, particularly those with a more diversified geographical model such as HSBC Holdings (LSE:HSBA) and Barclays (LSE:BARC), ahead of what could be a positive set of earnings numbers in the US next week and in the UK at the end of the month.