Fin-X Weekly 14th July 2025

Global equity markets retreated from their recent highs after the US administration announced new tariffs last week. US customs revenues have now become a significant contributor to the budget.  

Australian business conditions improved in June, while the RBA surprised markets by holding rates steady to await further inflation data. The Fed remains divided on the timing of US rate cuts, while the RBNZ and RBA are both expected to ease policy next month. 

Key data this week includes Australian employment figures, US CPI and retail sales, China’s Q2 GDP, and major US bank earnings reports.

Nvidia’s share price rose +3.5% last week, pushing its market capitalisation above US$4 trillion. However, broader global equity markets weakened as the US administration escalated trade tensions

by confirming a new set of tariffs to take effect from 1^st August.  

While a baseline rate of 10% was announced, actual levies on many countries were set higher than previously indicated. These included 35% tariffs on Canadian imports, 25% on Japanese goods, and 50% on Brazilian products, reportedly in response to perceived political bias against former president Jair Bolsonaro. 

Additional measures introduced over the weekend raised tariffs by 30% on imports from the EU and Mexico, with the president warning that if any new tariffs were imposed in retaliation, “then whatever the number you choose to raise them by, will be added to the 30% that we charge.” 

A 50% tariff on copper imports was also announced, with pharmaceuticals and semiconductors flagged for potential future action. Tariffs on steel and aluminium (50%) and cars and automotive parts (25%) were maintained at the previous levels. 

The US Treasury reported a modest US$27 billion budget surplus for June, close to the amount of gross receipts from customs duties. Over the first nine months of the fiscal year, customs revenues surpassed US$100 million for the first time, highlighting the growing fiscal impact of tariffs. The figures also drew attention to the regressive effects of the current tax policy, which has increased the burden on lower-income households while providing tax relief to higher earners. 

The National Federation of Independent Business’ small-business optimism index declined slightly to 98.6 in June. Although only a small net percentage of firms cited low inventories, there was limited appetite to rebuild stock levels. Taxes remained the most frequently cited concern, though worries about weak sales are becoming more prominent. 

In contrast, Australian business confidence improved. The NAB survey showed stronger business conditions in June, with improved trading, profitability and capacity utilisation. The report was released shortly before the Reserve Bank of Australia unexpectedly held rates steady in a 6-3 decision, despite market expectations for a cut. Governor Bullock stated that the Board remained focused on inflation and preferred to wait for additional data before taking action. While the decline in monthly CPI to +2.1% in May had encouraged some optimism, the RBA flagged potential upside risks to the upcoming quarterly inflation figures, due on 30^th July. The market still expects the next move to be a rate cut, with a 93% probability priced in for an August reduction to 3.6%. Labour market data this week is expected to show the unemployment rate steady at 4.1%. 

The Reserve Bank of New Zealand also kept its policy rate unchanged at 3.25% last week but is expected to begin easing in August. 

Meanwhile, the latest minutes from the US Federal Open Market Committee revealed a wide range of views on the timing of rate cuts, reflecting uncertainty even within the committee. Upcoming inflation data may prove decisive: June’s CPI report, due Tuesday, is expected to show a slight uptick to +2.6% year-on-year, while Wednesday’s retail sales figures are forecast to confirm robust consumer spending. 

In China, Q2 GDP data is due Tuesday, with growth expected to slow slightly from an annual increase of +5.4% to +5.1%. Consumer price inflation remained subdued at +0.1% yoy in June, while producer prices declined by -3.6% compared to a year ago, extending the deflation streak to 33 consecutive months. 

Lastly, the second-quarter earnings season is now underway, with large US banks scheduled to report this week. 

Disclaimer 

The contents of this communication is prepared by Brerona Capital Asset Management Pty Ltd (A.C.N. 627 650 293; AFSL 520526). The information contained in this communication is general in nature and does not take into consideration any investors personal objectives, goals, needs and financial situation. You should not rely on the information contained in this document to make any investment decisions without first consulting an investment professional such as your financial adviser. Any unauthorised use of this document is prohibited. This document (including any attachments) is intended only for the addressee, it may contain information of a privileged and confidential nature. If you are not the addressee of this communication, you must not copy, reproduce, disseminate or use this email and its contents. If this communication has been received in error by you, please inform us immediately and securely delete. Sharing, transmitting, copying, disseminating all or part of the contents of this document may result in a breach of the Federal Privacy Legislation and or copyright and trademark infringement of Brerona Capital Asset Management Pty Ltd and its related entities.