Closing post
Time to wrap up….
US stock markets have hit record highs after America reached an agreement with China to speed up rare-earth shipments.
The S&P 500 index, and the Nasdaq, both hit new peaks amid news of wider efforts to end the trade wars between the US and the world’s biggest economies.
Donald Trump said on Thursday that the US had signed a deal with China the previous day, without providing additional details, and that there might be a separate deal coming up that would “open up” India.
China confirmed the details of the deal on Friday, and reiterated that it will continue to approve the export permits of controlled items.
European markets also rose, with the FTSE 100 closing at its highest level in over a week. Asia-Pacific markets hit three-year highs.
There were signs that the trade war has hurt the UK auto sector, with shipments to the US halving in May.
Nike has said it expects costs to increase by about $1bn (£728m) as a result of Donald Trump’s tariff war as the sportswear company looks to reduce its manufacturing in China.
The European pharmaceutical industry has urged Brussels not to retaliate if Donald Trump brings in threatened tariffs on imported drugs, amid fears he could impose the levies as early as next week.
There was relief in London after the US announced it plans to drop the ‘revenge tax’ section of Donald Trump’s new tax and spending bill.
In other news…
An increase in demand for weight loss drugs, including Mounjaro and Wegovy, as well as demand among its generation Alpha customer base for beauty products is driving expansion at Superdrug.
Barclays and its former chief executive Jes Staley are facing a class action lawsuit in the US over claims they defrauded and misled investors over Staley’s relationship with the child sex offender Jeffrey Epstein.
The police criminal inquiry into the Post Office Horizon IT scandal is investigating more than 45 individuals, with seven formally identified as main suspects.
London’s stock market has ended the day at its highest closing level in over a week.
The FTSE 100 index of blue-chip shares has closed 63 points higher at 8799 points, up 0.7% today. That’s its highest close since 18 June.
Hopes that the US and EU will reach some form of a trade agreement before the 9 July deadline expires are also lifting markets.
Bloomberg reports that European Commission President Ursula von der Leyen told EU leaders at a summit yesterday that she was confident a deal could be reached before the deadline to avoid an economically damaging escalation, according to people familiar with the matter.
The boss of Barclays bank has welcomed the news that the White House wants to drop the ‘revenge taxes’ proposal, Section 899, from Donald Trump’s tax and spending bill.
Barclays CEO C.S. Venkatakrishnan told Reuters:
“The developments on 899 are welcome progress and a significant outcome for a great many UK companies like Barclays that invest in the US and support economic growth in both countries.”
The Nasdaq is on track to enter a new bull market today, Reuters reports, adding:
The tech-heavy index was last up 0.4% at 20,243 points, surpassing its record high of 20,204 on December 16.
It had tumbled 26.8% from its previous peak, marking a bear market days after Trump’s “Liberation Day” reciprocal tariffs on April 2.
Sportswear brand Nike are the top riser on the S&P 500 in early trading.
Nike’s shares have jumped 15%, driven by hopes that its turnaround plan may be working, despite the company reporting a drop in profits for the last quarter yesterday.
As reported earlier, Nike told analysts last night that the US tariffs on Chinese-made goods will cost it $1bn, and it plans to take steps including moving manufacturing out of China.
Elior Manier, market analyst at OANDA’s MarketPulse, says the US-China trade deal breakthrough announced overnight has lifted markets.
Stocks have also rallied through the week, on relief that the Israel-Iran ceasefire has held.
Manier writes that stock markets have been “on a frenzy” this week, adding:
“Markets are awaiting and getting a few good news on the US trade deals – The latest is the White House announcing that the July 9 is in the end not too important, and Trump mentioning the completion of a Deal with China, however the details are still missing.
“Taking a step back to the daily chart highlights just how volatile equities have been in the first half of 2025.
“One of the key emerging themes is the market’s increasingly muted reaction to Trump-related developments — especially now that the Israel-Iran conflict is fading from the headlines.
Wall Street hits record highs
Boom! America’s stock market has hit a new record high, as hopes of trade deal progress lift shares.
The S&P 500 has just touched an intraday record high at the start of trading in New York. It gained 0.2% to 6,153.55 points, surpassing the previous peak set in mid-February.
This milestone underlines that the markets have recovered from their slump in early April, when Donald Trump’s trade wars sparked a heavy selloff (before recovering when the president delayed his tariffs for 9o days).
The tech-focused Nasdaq index has also hit a new record high, as optimism around artificial intelligence and hopes of interest rate cuts lifted technology stocks.
NASDAQ COMPOSITE REACHES FIRST RECORD SINCE DECEMBER
— Naeem Aslam (@NaeemAslam23) June 27, 2025
The Nasdaq Composite Index has hit an intraday record high for the first time since December 16, driven by continued strength in AI and tech stocks. Investor confidence in earnings resilience and a softer Fed stance is…
The overnight comments from US commerce secretary Howard Lutnick, who said the White House has imminent plans to reach agreements with a set of 10 major trading partners, may be cheering Wall Street today.
Updated
The future of UK bank TSB is growing closer to being resolved.
Santander and Barclays are the main contenders left in the race to acquire TSB from its current owner, Sabadell, Bloomberg reports.
The two banks are said to be the only ones in the data room, analysing a possible bid.
Earlier this month, Sabadell said it has received interest from prospective buyers.
The 0.4% decline in nominal US incomes last month “is not quite as bad as it looks”, reports Harry Chambers, assistant economist at Capital Economics, who tells clients:
It was mainly due to a drop back in social security payments, which were boosted in April by changes in the Social Security Fairness Act.
Chambers also points out that the 0.1% drop in consumer spending was due to a “huge drag from spending on motor vehicles and parts”.
US personal income fall, as PCE inflation rises
Just in: US personal incomes fell last month, just as the Federal Reserve’s preferred inflation measure rose.
Personal income decreased by 0.4% in May, according to estimates released today by the US Bureau of Economic Analysis.
This data measures the income which Americans receive from wages and salaries, Social Security and other government benefits, dividends and interest, business ownership, and other sources.
Personal consumption, a measure of spending, dipped by 0.1% in the month.
The BEA also reported that the PCE price index rose by 2.3% in the year to May, up from 2.2% in April. Core PCE inflation (which strips out food and energy) rose to 2.7% from 2.6%.
More startling economic data for May:
— Joel Griffith (@joelgriffith) June 27, 2025
📊 Personal income down 0.4%
📊Personal spending down 0.1%
📊Real (inflation-adjusted) spending down 0.3%.
This combination of falling incomes, weakening spending and rising prices may alarm the Fed, which is under pressure from Donald Trump to cut interest rates despite its concerns about inflation.
Updated
China’s central bank has warned that its economy still faces “difficulties and challenges” such as weak domestic demand and persistently low inflation.
In a statement following its quarterly monetary policy meeting, the People’s Bank of China (PBOC) also points to global challenges, saying:
“The external environment has grown increasingly complex and challenging, with weakening momentum in global economic growth, rising trade barriers, and diverging economic performance among major economies.”
Heathrow warns of weakening demand for US business travel
Heathrow Airport has warned that the US travel market is becoming “more challenging”, dut to rising economic uncertainty across North America.
In its latest investor report, released this morning, Heathrow says it is seeing “some early signs of softness on business-heavy routes”, a trend that appears linked to economic uncertainty than geopolitical reasons.
Heathrow cautions:
Transatlantic travel remains a core strength in our network however, we acknowledge the overhanging uncertainty in this market and we continue to monitor airline and passenger behaviour closely as the summer progresses.
Relief as US drops Trump's 'revenge taxes'
There’s relief today that the White House are dropping Donald Trump’s ‘revenge tax’, which could have hurt UK businesses.
Last night, US treasury secretary Scott Bessent announced he was asking Congress to remove the Section 899 protective measure from Trump’s “One, Big, Beautiful Bill”, which is currently being debated.
Section 899 would have allowed the US to impose retaliatory taxes on any company from a country that imposed unfair taxes on US companies. This could have hurt many FTSE 100 companies who have significant operations across the Atlantic.
Bessent says the US has reached an agreement with the G20 that US companies will not be subject to the new OECD global minimum tax regime.
He says:
OECD Pillar 2 taxes will not apply to U.S. companies, and we will work cooperatively to implement this agreement across the OECD-G20 Inclusive Framework in coming weeks and months.
After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests. President Trump paved the way for this historic achievement. On January 20, the President issued two…
— Treasury Secretary Scott Bessent (@SecScottBessent) June 26, 2025
Pillar 2 set a minimum global tax rate of 15%, and was designed to ensure large multinational enterprises pay a minimum level of tax on the income arising in each jurisdiction where they operate.
The Section 899 breakthrough follows talks between the UK government and the Trump administration about exempting British companies from these “revenge taxes”.
An HM Treasury spokesperson says:
“The removal of Section 899 is welcome news for British businesses and comes after the Chancellor raised concerns directly with her G7 counterparts on behalf of those businesses.
“This work will continue with global partners to ensure the international tax system provides a level-playing field, while combatting aggressive tax planning and avoidance.”
Rachel Reeves has welcomed Bessent’s “important action”, adding:
Look forward to further work with global partners to ensure a level playing field on tax.
We are breaking down barriers and delivering in Britain’s national interest.
Important action by @SecScottBessent, after intensive collective effort, providing certainty for business.
— Rachel Reeves (@RachelReevesMP) June 26, 2025
Look forward to further work with global partners to ensure a level playing field on tax.
We are breaking down barriers and delivering in Britain's national interest.
Updated
After hitting its lowest levels since 2022 yesterday, the US dollar has not really taken much comfort from today’s trade deal optimism.
The dollar is up just 0.08% against a basket of currencies.
Raffi Boyadjian, lead market analyst at Trading Point, explains:
The US dollar hovered near three-year lows at the start of European trading on Friday, putting its index against a basket of currencies on course for weekly losses of 1.5%. The receding crisis in the Middle East that had rekindled the US currency’s safe-haven appeal, combined with growing expectations of more than two Fed rate cuts this year have scuppered the dollar’s recovery prospects.
Not even the headlines overnight about the White House finalizing the trade truce agreement with China and plans for 10 new deals have been able to inject much life into the flagging greenback. As things stand, the dollar, at best, is only able to halt the selloff, with a little help from some not-so-bad data.
Trade deal optimism has pushed up shares in European carmakers too.
Porsche (+2.7%), Daimler Trucks (+2.5%) and BMW (+2%) are among the risers on Germany’s stock market this morning.
This has helped to lift Europe’s Stoxx Automobiles and Parts index by around 2% this morning.
Stocks are rallying in London this morning.
The FTSE 100 blue-chip index has gained 50 points, or 0.55%, to 8785 points, with banks among the risers.
The smaller FTSE 250 index of medium-sized companies is up 0.65%, to a 10-month high.
Neil Wilson, UK investor strategist at Saxo Markets, says the market mood today is very much optimistic.
Markets are ignoring the noise – looking ahead to rate cuts from the Fed, fiscal stimulus in Europe, deregulation for banks on Wall Street, lower inflation and trade deals – hardly the negative environment everyone has been shouting about.
But watch out for July 9th [when Donald Trump’s 90-day tariff pause expires].
And the big beautiful tax bill, on which a vote could happen this weekend...is that going to be dollar-negative but lift animal spirits?
Updated
Czech billionaire Daniel Křetínský has been appointed chairman of Royal Mail, after his EP Group completed its £3.6bn takeover of the company.
EP Group also announced it has issued a golden share to the UK Government, as agreed under the deal.
That golden share should give the government the power to block the movement of Royal Mail’s headquarters abroad, of a shift in where the company pays its taxes.
Křetínský’s appointment comes a week after the chief executive of Royal Mail left after just over a year in post, as the Guardian reported last Friday,
Nike facing $1bn hit from China tariffs
Sportswear brand Nike has estimated that the US tariffs on Chinese imports will add $1bn to its costs, and warned that its industry is facing geopolitical volatility and tariff uncertainty.
It revealed the figure on a call with analysts last night, calling these tariffs “a new and meaningful cost headwind”.
Nike intends to respond by shifting some production out of China. Currently, 16% of its imports into the US are made at Chinese factories; it intends to cut this to single figures by the end of the 2026 financial year.
Nike is also raising US prices, and will consider internal cost-cutting too.
The company reported a 12% drop in revenues in the last quarter, but shares jumped in after-hours trading on hopes that its turnaround plan is starting to work.
Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, explains:
“Nike continues to slump, with its fourth quarter the worst in at least two decades. Sales were down 12%, while its operating margin was a meagre 2.9%. The sales themselves had actually come in ahead of really low expectations, producing an earnings beat.
“These troubling numbers, though, suggest that Nike may nearly be at rock bottom. The share price rallied strongly in after market trading as investors are beginning to expect a positive rate of change going forward. It has been a difficult period for Nike following the pandemic, and the threat of tariffs simply is not helping the situation for the company.
UK car exports to the US halved in May
UK car production has slumped to a 76-year low, as Donald Trump’s trade war hurt the British auto industry.
Shipments to the US fell by 55.4% last month, according to new data from the Society of Motor Manufacturers and Traders.
The SMMT says:
This was primarily due to the imposition by the US administration of a supplementary 25% Section 232 tariffs on cars from March which depressed demand instantly forcing many manufacturers to stop shipments.
However, with the trade agreement negotiated by government due to come into effect before the end of June, this should hopefully be a short-lived constraint.
There was weakness elsewhere too, though. Shipments to the EU fell by 22.5%, while output for the UK domestic market tumbled by 42%.
Overall, UK car and commercial vehicle production fell by 32.8% in May. That’s the lowest performance for the month since 1949, if you exclude 2020, when Covid lockdowns forced factories to shut or cut capacity.
New car and commercial vehicle production volumes fall, by -32.8% as multiple challenges beset industry.https://t.co/J73sTCk49z pic.twitter.com/Ypw8Ta4vgz
— SMMT (@SMMT) June 27, 2025
Updated
Data overnight has indicated the US trade war hurt earnings at China’s factories this year.
China’s industrial profits plunged 9.1% in May, compared with a year earlier, and have fallen by 1.1% in the first five months of the year, according to the National Bureau of Statistics (NBS).
NBS statistician Yu Weining attributed the fall to:
“insufficient effective demand, declining prices of industrial products and fluctuations in short-term factors.”
BBG: China confirms trade framework details With US
China has said it has further confirmed details of a trade framework with the US in recent days, Bloomberg reports.
A spokesperson for the Chinese Commerce Ministry made the announcement in a statement today, while reiterating that it will continue to approve export permits of controlled items.
In the statement, the Chinese Commerce Ministry said Beijing will “review and approve eligible applications for export of controlled items in accordance with the law,” and the US side will cancel restrictive measures, which it didn’t specify.
Updated
Asia-Pacific shares hit over three year high
Shares across Asia-Pacific markets have hit their highest level in more than three years today, as optimism builds in the markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan has climbed to its highest level since November 2021.
The rally was driven by strong gains in Japan, where the Nikkei 225 index jumped by 1.4%. The yen, typically a safe-haven, weakened amid hopes for progress in tariff negotiations between the US and other countries.
China’s markets were mixed, though, with the CSI300 index dipping by 0.5%.
Jim Reid, market strategist at Deutsche Bank, suggests markets are in a ‘sweet spot’:
The continued positive momentum in equities was impressive. We seem to be in a sweet spot post Middle Eastern calm and pre the July 9th reciprocal tariff extension deadline. This will start to come into view soon, and headlines are starting to bubble up.
Introduction: US 'close to 10 trade deals' after China agreement 'signed'
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Hopes are building that the US may be close to announcing more trade deals, and avoid imposing punishing new tariffs that would disrupt the global economy.
Overnight, Donald Trump announced that China and the US had signed a deal, without providing details, declaring:
“We just signed with China yesterday.”
It later emerged that the agreement will expedite rare earth shipments to the US, building on the progress negotiators made in Switzerland last month.
A White House official explained:
“The administration and China agreed to an additional understanding for a framework to implement the Geneva agreement……how we can implement expediting rare earths shipments to the US again.”
The US, and its trading partners, have less than two weeks until Trump’s 90-day trade war pause expires.
US Commerce Secretary Howard Lutnick has claimed that progress is being made, and hinted that the White House has imminent plans to reach agreements with 10 major trading partners.
Lutnick told Bloomberg Television:
“We’re going to do top 10 deals, put them in the right category, and then these other countries will fit behind.”
Trump has previously indicated he could send letters to countries announcing their new tariff rates, if deals aren’t agreed in time.
Lutnick has indicated that countries will be sorted into “proper buckets” on 9 July, although there might be flexibility for further negotiations….
He says:
“Those who have deals will have deals, and everybody else that is negotiating with us, they’ll get a response from us and then they’ll go into that package. If people want to come back and negotiate further, they’re entitled to, but that tariff rate will be set and off we’ll go.”
The agenda
10am BST: EU consumer and business confidence stats
1.30pm BST: US PCE inflation report for May
3pm BST: University of Michigan’s US consumer confidence index
Updated
