Market snapshot: records under serious threat

For all the trials and tribulations this year, leading global markets are bumping against the ceiling of new record highs.

Investors have fresh wind in their sails, perhaps most starkly illustrated by the benchmark S&P500 in the US, which has rallied by more than 20% since its April low to come within just a few points of its highest ever level.

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The 30% rebound of the technology heavy Nasdaq is even more striking, as the “Magnificent Seven” have come back into fashion. Another record high for NVIDIA Corp (NASDAQ:NVDA), itself enjoying a bounce of more than 60% since April, was accompanied by notable buying in the likes of Meta Platforms Inc Class A (NASDAQ:META) and Apple Inc (NASDAQ:AAPL).

A flourish of more positive news drove the latest gains, as the fragile ceasefire in the Middle East continues to hold up. Economic data suggested that the US is slowing slightly but certainly not near stagflation territory, and with comments from the White House that there was a possibility of an extension to the tariff deadlines which are currently due to expire early next month.

In addition, without providing details, there was an announcement that the US and China had penned a deal, particularly in regard to rare earth shipments, which could signal a cooling of tensions between the world’s two largest economies.

Inflation remains a key focus for investors and of course is one of the reasons behind the Federal Reserve’s current stance on holding interest rates until such time it is satisfied that prices are under control. The oil price decline following the latest truce has removed one potential inflationary spike, and today’s Personal Consumption Expenditures index will provide further colour, with a low reading likely to keep optimism alive that the Fed will cut rates twice before the year is out.

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Three themes will emerge in July, each of which will be market moving one way or another. It is now expected that the effects of the tariffs which have been implemented will have fully washed through in June, therefore showing up in the July economic readings.

The expiry of the tariff deadlines will be another defining moment, while the second quarter and half-year reporting season will give a strong indication of how companies have fared under the significant pressure of recent months. Many previously chose not to give guidance or outlook comments due to the uncertain backdrop and, revenue and profit numbers aside, investors will be keen to hear whether corporate views have changed this time around.

In the meantime, the fresh impetus has propelled each of the main indices into positive territory in the year to date, with a gain of 4.4% for both the S&P500 and the Nasdaq accompanied by a 2% rise for the Dow Jones Industrial Average.

UK investors hopped on the bullish bandwagon in early trade, with the FTSE100 nudging ahead to bring it within 1.4% of its own recent record high. There was a small drag on the premier index in the form of Babcock International Group (LSE:BAB), where investors took some profit following a 10% rise in the share price after its full-year numbers earlier this week, which has taken its rise this year alone to almost 130% in view of escalating defence spending.

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A slight dip in the gold price also took some sheen from the likes of Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES), but these headwinds were more than offset by a broad round of investor buying which stretched across the banks and the miners in particular, with JD Sports Fashion (LSE:JD.) at the top of the leaderboard with a 7% share price rise. The increasingly consistent performance leaves the FTSE100 ahead by 7.2%, with the FTSE250 having shaken off some previous weakness to have added 4.4% so far this year.