Market snapshot: records fall here and overseas

Another strong session on Wall Street benefited from further buying of Magnificent Seven stocks, but there's concerning news about the UK economy. ii's head of markets runs through latest developments.

22nd July 2025 08:21

by Richard Hunter from interactive investor

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Records continue to tumble as investors brush aside trade concerns and concentrate on what is happening, as opposed to what might happen – for the time being at least.

The reasons for the latest rallies are nuanced depending on geography. In the US, a strong start to the earnings season has offset broader inflationary and other economic concerns, whereas the UK is riding the momentum of its current day in the sun as investors flock to an increasingly attractive investment destination.

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The benchmark S&P500 and Nasdaq both hit record closing highs, buoyed in part by some increasingly optimistic estimates for numbers from the mega cap technology stocks, with Google owner Alphabet Inc Class A (NASDAQ:GOOGL) and Tesla Inc (NASDAQ:TSLA) first up to the plate this week.

In the meantime, there was some notable buying of the likes of Meta Platforms Inc Class A (NASDAQ:META) and Amazon.com Inc (NASDAQ:AMZN), underpinned by some year-to-date strength in NVIDIA Corp (NASDAQ:NVDA) and Microsoft Corp (NASDAQ:MSFT). Among the punchy earnings estimates, growth of 14% for the second quarter from the “Magnificent Seven” would totally eclipse the broader 3.5% growth of the “S&P493”.

Elsewhere, Verizon Communications Inc (NYSE:VZ) added 4% after posting an earnings beat, with estimates that of the 60 plus S&P500 companies that have reported thus far, 85% have topped expectations with an average of around 5% year on year growth. Coupled with the most recent economic data which implied an improvement in consumer sentiment, inflation which has yet to be meaningfully affected by tariffs and some hopes that the trade war may have peaked, markets have surged ahead.

The main indices are therefore in rude health so far this year, with the Dow having added 4.2%, and the new record highs reflected by growth of 7.2% and 8.6% for the S&P500 respectively.

Asian markets were mixed, with Japan returning from a public holiday on the front foot, only for the gains to be wiped out as concerns emerged over the current fragility of the political situation, let alone the ongoing tariff negotiations with the US which have yet to settle. The Nikkei 225 is broadly flat for the year, although it has staged a strong recovery since the trauma of “Liberation Day” in April.

Further concerns were also voiced on the UK domestic economy, where the Office for National Statistics revealed an increase in borrowing for June to £20.7 billion, up from £6.6 billion in the corresponding month last year, with a figure of £16.4 billion alone in interest payments on debt. This could further cloud the picture for the Autumn Budget, where the possibility of further spending cuts and/or tax rises are beginning to look increasingly likely.

The dispiriting update took some sheen from the more domestically focused FTSE250, although recent buying strength has been more than sufficient to offset any such weakness, with the index ahead by 6.6% in the year to date.

After settling at another record closing high – and above 9,000 for the first time – the FTSE100 was unconvincing in opening exchanges, as investors temporarily tapped on the buying brakes.

The latest economic update weighed slightly on the banks and the housebuilders, which was offset by some tentative buying among the miners, with Compass Group (LSE:CPG) comfortably topping the leaderboard with a 6% share price spike after upping its guidance on revenues and margins. The premier index represents a remarkable recovery story at present after years in the doldrums, and its rise of 10.3% so far this year is testament to the renewed appetite from overseas investors.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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