The Davy Digest - 14th July 2025

US equities were near flat last week, tariff news dominated the headlines, but market reaction was muted compared with previous tariff announcements. President Trump threatened to impose a 30% tariff on imports from the EU and Mexico starting on 1st August. The EU and Mexico responded by calling the tariffs unfair but stated they would continue to negotiate with the US for a broader trade deal before the deadline. Minutes from the most recent FOMC Meeting were released, showing that most participants think rate cuts would be appropriate later this year. There was little support for a July rate cut.  In Europe, equities finished the week higher before Trump announced new tariff threats over the weekend. Eurozone retail sales data came out on Monday, showing that sales fell 0.7% in May from April, decreasing for the first time in five months. In the UK, housing market data showed that UK house prices were flat in June after the end of temporary relief for homebuyers. The Reserve Bank of Australia surprised markets by deciding to hold rates steady, despite market expectations for a rate cut. Finally, in China, consumer prices rose 0.1% in June, mainly due to the rebound in prices of industrial consumer goods.

Last week's highlights

	FOMC Minutes (09/07) – Most participants think rate cuts would be appropriate later this year, price shock from tariffs to be "temporary or modest.“ Little support for July rate cut.   Initial Jobless Claims (10/07)
	Retail Sales (07/07) – Fell 0.7% in May from April, decreasing for the first time in five months.
	UK Halifax House Prices (07/07) – UK house prices were flat in June.
	Reserve Bank of Australia Interest Rate Decision (08/07) – Decided to hold rates steady despite market expectations for a rate cut.  China Inflation (09/07) - Consumer prices rose 0.1% in June, mainly due to the rebound in prices of industrial consumer goods.

Looking forward to this week, US inflation data is due out on Tuesday. This will be closely watched by the Fed ahead of their July meeting, where they are expected to hold rates steady. The Fed’s Beige Book, a report that provides a snapshot of the US economy, is due out on Wednesday. Inflation data is also due out in the Eurozone on Thursday. In the UK, investors will receive data on retail sales, inflation and the labour market next week. The UK has been battling a mix of sticky inflation and lacklustre economic growth. In China, data on exports and GDP will be released.

What's on the radar

	US Inflation (CPI) (15/07) Fed’s Beige Book (16/07) Michigan Consumer Sentiment (18/07)
	Eurozone Industrial Production (15/07) Euro Area Inflation (17/07)
	UK Retail Sales (15/07) UK Inflation (CPI) (16/07) UK Unemployment (17/07)
	China Exports Data (14/07) China GDP (15/07) Japan Industrial Production (14/07)

Chart of the moment

Not so great expectations

Source: Goldman Sachs, FactSet as of 04/07/2025.

• Given concerns about tariffs, analysts have lowered earnings estimates by more than normal ahead of the S&P 500’s Q2 reporting season.
• Expected earnings growth for Q2 of 4% implies a sharp deceleration from 12% in Q1 2025. 
• The Comm Services & Tech sectors are expected to report the strongest earnings growth for Q2.