Blog

7th August 2025

Cappuccino Commentary

A relaxed read on the issues of the day

July Review

Despite a lot of political noise and further threats around tariffs, equity markets delivered strong returns in July. After several months of the dollar weakening versus sterling (and other major currencies), the US currency rebounded over the month, delivering additional returns to sterling investors. Global equities posted a sterling return of 5.7%, mainly driven by the US market which posted a healthy 6.9% return. All major equity returns posted positive returns, with the UK market +3.9%.

Markets demonstrated their ability to climb the “wall of worry” despite complex geopolitical tensions, trade policy developments and monetary policy uncertainty. They were buoyed by a successful US earnings season, with 80% of US companies beating consensus estimates. Major US banks did particularly well as, according to Morgan Stanley CEO, Ted Pick, corporate clients and boardrooms now “appear more accepting of ongoing uncertainty”. While on the trade policy front there were some major developments, with Trump’s administration agreeing deals with Japan, Europe and Vietnam, and a deal in principle with China, reduced fears of an escalating trade war. Trade uncertainty has driven volatility since the initial announcement on 2nd April. The average US tariff rate has risen to 18% from the 2% level on 1st April but markets responded positively with policy clarity, particularly after the passage of the “One Big Beautiful Bill Act” (OBBBA), which supported risk sentiment. It was a busy month from a legislative perspective with Trump also signing the cryptocurrency related GENUIS Act and three executive orders on AI as part of the US’s AI Action Plan.

The UK equity market delivered healthy returns, with the large cap section of the market (FTSE 100) leading the charge. A significant number of the index has global exposure so the strength of the dollar over the month contributed to performance.

While markets breathed a sigh of relief over tariff policy clarity, there were certain areas that were hit quite hard. Copper saw an intra-month fall over -20%, as Trump imposed a 50% tariff on certain copper products. As soon as July finished, we got to see the final (for now at least) tariff rates. Brazil, Canada and Switzerland were struck with particularly aggressive rates. Latin America’s largest country was given a 50% rate for purely political reasons as Trump retaliated over the charges facing his ally, the former Brazilian President Jair Bolsonaro.

With the market in “risk-on” mode and equities delivering positive returns, it was no surprise to see bond markets were generally flat over the month, with the exception being emerging market bonds finished up 5% – in keeping with the “risk-on” narrative.

Returns across asset classes have been positive so far this year and it’s reassuring to see diversification demonstrating its benefit to investors. However, looking forward there are a few things to note. Valuations in the US remain elevated and income growth is skewered in favour of a small number of ginormous firms:

There are no guarantees tariff dramas won’t return.  All while potential macroeconomic volatility and geopolitical uncertainty are very much issues to be mindful of and underscore the need for effective diversification.

Please note:

For regulated financial advisers and investment professionals only. Copia does not provide financial advice, and the contents of this document should not be taken as such. The value of investments can increase and decrease, past performance and historical data cannot guarantee future success, and any references to individual stocks or asset classes are made purely for illustrative purposes.

The performance of each asset class is represented by certain Exchange Traded Funds and Passive Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at last UK market close before the end of the calendar month. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.

    Subscribe

    Subscribe to our blog and get our best content in your inbox.



    Understanding the risks

    This information is intended for professional financial advisers only. Copia does not provide financial advice. This information is not intended as financial advice and should not be interpreted as such. Model investment portfolios may not be suitable for everyone. The value of funds can increase and decrease, past performance and historical data cannot guarantee future success. Investors may get back less than they originally invested.

    Copia Capital Management

    Hamilton House, 1 Temple Avenue, London, EC4Y 0HA

    Copia Capital Management is a trading name of Novia Financial Plc. Novia Financial Plc is a limited company registered in England & Wales. Register Number: 06467886. Registered office: Cambridge House, Henry St, Bath, Somerset BA1 1JS. Novia Financial Plc is authorised and regulated by the Financial Conduct Authority. Register Number: 481600.

    © 2021 - 2025 Copia Capital

    Advisers, staff of professional firms and other eligible counterparties

    I work for an advisory / professional firm or other eligible counterparty.

    I will take responsibility for any jurisdictional restrictions that apply to the services described by this website in accordance with applicable law and regulation.

    I have read and accept that Cookies are used on this website.  I understand that a Cookie will show that I have accepted the terms to access this website.

    Customers and prospective customers

    I confirm that I am resident in the UK or other EU Country and I am not a US citizen.

    I have read and accept that Cookies are used on this website.  I understand that a Cookie will show that I have accepted the terms to access this website.


    The content of this website may only be viewed by persons that meet either of the above conditions.  If neither option is applicable please click here which will close this webpage.