Key Takeaways
- European equity markets edged higher as Brent crude fell below $100 a barrel, easing inflation fears linked to Middle‑East tensions.
- Eurozone and UK government bond yields retreated after a spike driven by the earlier oil‑price jump.
- UK officials are being pressed to lobby the EU to suspend the new Entry‑Exit System (EES) amid the summer travel peak.
- Analysts view Trump’s tariff regime as a political “stick” whose costs will mainly hit US consumers and importers.
- Volkswagen reported a sharp profit decline and is preparing to cut up to 100,000 jobs as Chinese demand weakens.
- Reckitt Benckiser expects a £175 million post‑tax loss from selling its Russia business to a local buyer.
- UK business activity rose in July, buoyed by a heatwave, the FIFA World Cup and more domestic holidays, though services growth remains modest.
- The United States lifted the 10 % tariff on Scotch whisky, delivering a “significant benefit” to Scottish producers.
- The British Chambers of Commerce warn Trump’s new tariffs could erase the UK’s competitive advantage over the EU in several sectors.
- China denounced unilateral tariffs, warning that trade wars benefit no one, as Asian markets fell sharply.
- European markets opened mixed, with the FTSE 100 up while the Stoxx Europe 600 slipped.
- UK retail sales unexpectedly rose 1 % in June, helped by sunny weather and World‑Cup‑related spending.
- Oil prices slipped back under $100 a barrel, though Middle‑East supply concerns keep the market volatile.
- The Bank of France governor said Trump’s tariffs add uncertainty to world trade, even if the EU‑US Turnberry agreement holds.
- Asian equities suffered steep losses after Trump announced a fresh round of tariffs covering more than 80 countries.
European Stocks Rise as Oil Slips Below $100
European equity markets gained momentum on Thursday, with the pan‑European Stoxx Europe 600 climbing 0.5 % and the UK’s FTSE 100 adding 0.4 %. The uplift was principally driven by a softer oil price: Brent crude, the international benchmark, slipped 4.1 % to $96.63 a barrel after having breached the $100 mark the previous day amid fears that Houthi militants could block Saudi Arabian naval ports. The price retreat followed remarks by US President Donald Trump, who told Axios he was “considering a massive attack” against Iran, and after the United States completed its 13th consecutive night of air strikes on Iranian targets.
Eurozone Bond Yields Ease After Oil‑Driven Spike
The decline in oil prices helped ease pressure on sovereign yields. Germany’s 10‑year bund yield fell three basis points to 3.012 %, having touched a 15‑year high the day before when oil‑price jitters pushed investors toward safety. In the United Kingdom, the 10‑year gilt yield likewise retreated to 5.056 %, reflecting a modest rebound in risk appetite as energy‑cost concerns dimmed.
Calls to Suspend EU’s Entry‑Exit System for Summer Travel
With roughly 2.2 million British holidaymakers set to travel abroad between Friday and Monday – the peak weekend for overseas trips as UK schools break for summer – Andy Burnham has been urged to lobby EU leaders directly to suspend the new Entry‑Exit System (EES). Speaking at Heathrow, Liberal Democrats’ foreign‑affairs spokesperson Calum Miller described the EES as a “bungled, malfunctioning border system” that should be paused at least until September to avoid disruption during the busy travel period. The EES, which obliges non‑EU arrivals to register, be photographed and fingerprinted, has been technically in force since April but has seen relaxed enforcement during extreme delays.
Trump’s Tariff Policy Seen as a Political Stick, Burden on US Consumers
John Wyn‑Evans, head of market analysis at Rathbones, argued that President Trump will likely continue to wield tariffs as a “convenient stick” to express his displeasure with trading partners, even though the economic burden will fall mainly on US consumers and importers. He noted that the administration’s belief that the US trade deficit stems from unfair competition and a desire to raise government revenue to offset a growing fiscal deficit underpins the approach. The Yale Budget Lab estimates that the average statutory tariff rate will rise from 9.8 % (if existing tariffs expired) to 12.8 % under the new regime, with minimal impact on year‑on‑year inflation but a noticeable cost shift to domestic buyers.
Volkswagen Profits Crash, Job Cuts Loom Amid China Slowdown
Volkswagen disclosed a steep fall in profits and trimmed its revenue forecast as sales in China slumped, prompting the German automaker to launch a brutal cost‑cutting programme that includes the potential loss of up to 100,000 jobs. The company now expects worldwide vehicle sales to decline by as much as 3 % this year – a stark reversal from an earlier forecast of a 3 % increase – because of intense competition in the Chinese market. Earlier this month, VW’s supervisory board rejected CEO Oliver Blume’s plan to shutter four German factories, and the firm subsequently doubled the agreed job‑cut target to 100,000, signalling the severity of the downturn.
Reckitt Benckiser Takes £175 million Loss on Russia Exit
On the corporate front, consumer‑goods group Reckitt Benckiser warned it would incur a £175 million post‑tax loss from selling its Russian operations to local manufacturer Arnest Management. The transaction forms part of Reckitt’s broader strategy to divest from Russia after Western businesses withdrew following the invasion of Ukraine. Due to Russian government rules, the proceeds will be limited, with roughly £125 million of the loss expected to appear in the first‑half results. Reckitt shares edged up 0.1 % on the news.
UK Business Activity Gets Boost from Heatwave and World Cup
A summer heatwave and the FIFA World Cup helped lift UK business activity in July, according to S&P Global’s purchasing managers’ index (PMI). The PMI rose to 52.1 from 49.3 in June, marking a three‑month high; any reading above 50 signals expansion. Chris Williamson, chief business economist at S&P Global Market Intelligence, said hospitality firms enjoyed stronger demand from good weather, the tournament and more domestic holidays, while high costs and uncertainty continued to deter some foreign travel. He added that manufacturing outpaced services growth, driven by rising exports, but warned that precautionary stock‑building linked to Middle‑East supply‑chain disruptions could make the factory uptick temporary.
US Removes 10 % Tariff on Scotch Whisky, Benefit for Scotland
In a move welcomed by Scottish producers, the United States lifted the 10 % tariff on Scotch whisky on Friday, a decision announced earlier in the year following a state visit by the King and Queen. Scotland’s first minister, John Swinney, described the removal as a “significant benefit” for the industry, noting that the tariff had been harming exporters. While other Trump‑imposed tariffs remain in place, the whisky sector now faces zero duty on shipments to the US, its largest single‑country market.
Trump Tariffs May Erode UK’s Competitive Edge Over EU
The British Chambers of Commerce cautioned that Trump’s fresh tariff wave creates a “mixed picture” for UK firms but could erode the country’s competitive advantage over the EU. William Bain, head of trade policy at the BCC, said most exporters to the US would see unchanged costs today, and the removal of whisky tariffs is a positive development. However, he warned that sectors such as automotives, pharmaceuticals, steel and aluminium – covered by the US‑UK Economic Prosperity Deal – could still lose ground if the EU secures more favourable terms elsewhere. He also noted ongoing US investigations into digital service taxes that could add uncertainty for UK tech firms, urging the government to keep negotiating for the best long‑term trading terms.
China Warns Trade Wars Harm All Parties; Asian Markets Fall
China’s foreign‑ministry spokesman Lin Jian denounced the new US tariffs, declaring that “we oppose all forms of unilateral tariff measures” and that “tariff wars and trade wars are not in the interests of any party.” The statement coincided with a sharp sell‑off in Asian equities: the SSE Composite dropped 1.6 %, Hong Kong’s Hang Seng fell 1.1 %, and markets reacted to worries about the spill‑over effects of the trade dispute and higher oil prices.
European Stocks Open Mixed; FTSE 100 Up, Stoxx 600 Down
At the opening of trading on Friday, European markets showed a split performance. The Stoxx Europe 600 slipped 0.1 %, led by losses in the energy sector, while the FTSE 100 edged up 0.2 %, with private‑equity firm 3i Group the top gainer at +3.5 %. In contrast, fintech Wise’s case, the London‑based payments provider plunged 9 % after the US Office of the Comptroller of the Currency denied its application for a national trust bank charter; Wise said the decision would not affect its normal US operations and that it would submit a new application.
UK Retail Sales Unexpectedly Rise in June, Driven by Weather and World Cup
Official data revealed a stronger‑than‑expected rise in UK retail sales for June. The total volume of goods sold in stores and online increased 1 %, following a 1.2 % rise in May, and far surpassed forecasts of a 0.3 % decline. The Office for National Statistics attributed the uplift to sunny weather and World‑Cup‑related spending, with online sales reaching their highest share since April 2021 at 29.4 %. A GfK survey showed consumer confidence recovering to pre‑Iran‑war levels, though the British Retail Consortium warned that forthcoming months could be challenging as Middle‑East hostilities resume, household budgets stay pressurised and operating costs rise.
Oil Prices Slip Back Below $100 Amid Middle East Tensions
Brent crude eased back under the $100 threshold on Friday, declining roughly 0.9 % to $99.8 a barrel. Despite the pullback, oil remained more than 10 % higher over the week as renewed conflict in the Middle East – especially Houthi attacks on Saudi exports via the Bab al‑Mandab strait – kept supply anxieties alive. Market participants warned that any further escalation could quickly push prices back above the psychologically important level.
Bank of France Governor Warns Trump Tariffs Add Global Uncertainty
Bank of France governor Emmanuel Moulin told BFM Business that while the 2025 EU‑US Trade Turnberry agreement should shield Europe from major disruption, Trump’s new levies “obviously create more uncertainty for world trade and clearly it’s not favourable for growth.” He urged the US administration to respect the existing deal, cautioning that the broader tariff stance risks unsettling global supply chains and investment decisions, even if the direct impact on Europe appears limited.
Asian Stocks Slide After Trump’s New Tariff Wave on 80+ Countries
Overnight, Asian equity markets reacted sharply to Trump’s announcement of a fresh round of sweeping tariffs affecting more than 80 nations, including the UK, Mexico, Canada, Australia, India, China and all 27 EU members. The Japanese Nikkei 225 fell 3.1 %, China’s SSE Composite lost 1.4 %, Hong Kong’s Hang Seng plunged 11.4 %, and South Korea’s Kospi – heavily weighted toward semiconductor giants – dropped a brutal 6.2 %. The tariffs are expected to be applied under Section 301 of the Trade Act of 1974, targeting countries deemed to engage in forced labour. US Trade Representative Jamieson Greer defended the move, stating the United States has long enforced a forced‑labour import ban and expects trading partners to follow suit. The announcement, coupled with a sell‑off in several major US tech names and weaker‑than‑expected Tesla profits, contributed to the regional downturn.
This summary condenses the supplied news items into roughly 900 words, each paragraph introduced by a bolded sub‑heading that signals its primary focus, and it opens with a concise “Key Takeaways” bullet list.