Executive Summary

Global financial markets advanced during July 2025 as resilient corporate earnings, continued investment in artificial intelligence and progress in international trade negotiations supported investor confidence. US equities reached additional record highs, while European, UK, Japanese and Chinese markets also generally advanced.

The S&P 500 gained approximately 2.4% during the month, supported by technology, communication-services and artificial-intelligence-related companies. The Nasdaq also reached record levels as investors responded positively to strong results from several of the world's largest technology groups.

Trade policy remained one of the most important market drivers. The United States reached agreements with Japan and the European Union that reduced the immediate threat of substantially higher tariffs. The EU agreement established a 15% US tariff on most European goods, significantly below some of the rates threatened earlier in the year.

The Federal Reserve maintained its target range at 4.25% - 4.50% at its 29 - 30 July meeting. The decision was notable because two governors dissented in favour of a quarter-point reduction, demonstrating increasing disagreement about whether monetary policy remained unnecessarily restrictive.

The European Central Bank also held rates unchanged after eight reductions during the preceding year. The deposit facility rate remained at 2.00%, with policymakers noting that inflation was at the 2% medium-term target and that previous rate cuts were supporting the economy.

The Bank of England did not hold a monetary-policy meeting during July, leaving Bank Rate at 4.25%. UK inflation increased to 3.6%, while labour-market data indicated a gradual weakening in employment conditions.

Oil prices rose strongly as geopolitical tensions and uncertainty surrounding Russian supply supported energy markets. Gold declined modestly as demand for defensive assets eased, while Bitcoin reached new record levels above $120,000 before ending the month close to $116,500.

Key Themes During July

• US equities reached additional record highs.
• The S&P 500 gained approximately 2.4%.
• US - EU and US - Japan trade agreements reduced immediate tariff uncertainty.
• The Federal Reserve held rates at 4.25% - 4.50%.
• Two Federal Reserve governors voted for an immediate rate cut.
• The ECB held its deposit rate at 2.00%.
• UK inflation increased while labour-market conditions weakened.
• Artificial intelligence remained the dominant equity-growth theme.
• Oil prices rose strongly.
• Bitcoin reached new record highs above $120,000.

Global Economic Overview

The global economy remained surprisingly resilient during July despite the substantial increase in trade barriers introduced during 2025. Economic performance varied considerably by region, with the United States maintaining stronger growth than Europe while China continued to rely upon policy support and manufacturing exports.

United States

US economic activity remained relatively strong. The advance estimate for second-quarter GDP showed annualised growth of approximately 3%, reversing the contraction recorded during the first quarter and exceeding market expectations.

The rebound partly reflected unusually large movements in imports associated with tariff timing, but consumer spending and broader domestic demand continued to demonstrate resilience.

Inflation increased to 2.7% in June, the second consecutive monthly acceleration. The increase suggested that tariffs and other price pressures could complicate the Federal Reserve's efforts to return inflation sustainably to 2%.

Federal Reserve

The Federal Reserve maintained its target range at 4.25% - 4.50% for a fifth consecutive meeting. Chair Jerome Powell continued to emphasise uncertainty surrounding tariffs, inflation and the labour market.

The decision was unusual because Governors Michelle Bowman and Christopher Waller dissented in favour of reducing rates by 25 basis points. It was the first meeting in decades to feature two governors dissenting in favour of easier policy.

Markets interpreted the division as evidence that support for an eventual reduction was increasing, although Powell avoided committing to a September move.

Labour Market

Employment remained a critical area of attention. Data available near month-end suggested that hiring had slowed considerably, increasing concern that restrictive monetary policy could eventually place greater pressure on employment.

A weakening labour market would strengthen the case for monetary easing, particularly if tariff-related inflation proved temporary.

Eurozone

The eurozone economy expanded by approximately 0.1% during the second quarter, considerably slower than the 0.6% growth recorded during the first three months of the year.

Inflation remained close to 2%, allowing the ECB to pause after a substantial easing cycle. The Governing Council left the deposit rate at 2.00%, the main refinancing rate at 2.15% and the marginal lending rate at 2.40%.

Trade uncertainty remained one of the greatest risks to the outlook. The new agreement with the United States reduced the immediate threat of extreme tariffs but still represented a significant increase in trade costs for many European exporters.

United Kingdom

UK inflation increased to 3.6%, its highest level since early 2024. Food, energy and service-sector prices contributed to the increase, complicating expectations for Bank of England policy.

The labour market weakened, with unemployment rising to approximately 4.7%. Businesses continued adjusting to higher employer National Insurance contributions and increased wage costs.

The economy nevertheless expanded strongly during the first quarter, providing some protection against immediate recession risk.

China

China's economy expanded approximately 1.1% quarter-on-quarter during the second quarter, slightly exceeding expectations. Government support, manufacturing investment and exports helped offset weak property and consumer activity.

The People's Bank of China maintained key lending rates at record lows. Policymakers continued using targeted monetary and fiscal measures to support demand.

Japan

The Bank of Japan maintained its short-term policy rate at 0.5%, reflecting a cautious approach towards further normalisation. Japanese inflation remained above target but had moderated from earlier levels.

The economy remained exposed to global trade and currency movements, particularly through automobiles, machinery and semiconductor-related exports.

Global Outlook

The July trade agreements reduced the immediate probability of a severe global trade war, but the international trading environment remained substantially more restrictive than at the beginning of 2025.

Investors continued to distinguish between tariffs being used as temporary negotiating instruments and those becoming permanent features of global commerce.

Equity Markets

Global equities advanced during July as strong corporate earnings, trade agreements and continuing artificial-intelligence investment supported risk appetite.

United States

The S&P 500 gained approximately 2.4% and reached fresh record highs. Technology and communication-services companies remained important contributors, while industrial and consumer sectors benefited from reduced tariff uncertainty.

Microsoft and Meta reported strong results late in the month, reinforcing confidence that AI-related investment was translating into greater cloud, advertising and software demand.

Technology and Artificial Intelligence

Artificial intelligence remained the dominant long-term equity theme. Demand continued for advanced processors, networking equipment, high-bandwidth memory and data-centre infrastructure.

Investors increasingly focused on monetisation rather than expenditure alone. Companies capable of demonstrating rising revenue and productivity from AI received stronger market reactions than those primarily announcing larger capital budgets.

Financials

Banks benefited from resilient economic growth, strong trading activity and improving merger-and-acquisition pipelines. Expectations that financial regulation could become less restrictive also supported valuations.

Europe

European equities advanced modestly. The Euronext 100 gained approximately 1.1%, while investors assessed the effects of the new trade agreement with the United States.

Defence, banks and infrastructure-related companies remained supported, while automobile and export-oriented manufacturers faced a more challenging tariff environment.

United Kingdom

The FTSE 100 gained approximately 4.0%, substantially outperforming several international benchmarks. Banks, defence businesses, mining companies and internationally diversified groups contributed positively.

Sterling weakness also supported multinational constituents by increasing the domestic-currency value of overseas earnings.

Japan

The Nikkei gained approximately 2.7%. Trade negotiations with the United States reduced uncertainty facing Japanese exporters, particularly automobile manufacturers.

China and Hong Kong

Chinese equities advanced, with the Shanghai market gaining approximately 3.3%. Technology shares remained supported by domestic AI development and improving investor confidence.

Property remained the principal weakness, while consumer and internet companies attracted selective investment.

Emerging Markets

Emerging-market equities generally advanced as trade tensions moderated and Chinese growth proved somewhat stronger than expected.

Indicative July Performance

Fixed Income Markets

Fixed-income markets produced modest positive returns overall, although policy uncertainty and government borrowing continued to create substantial variation across maturities and regions.

US Treasuries

Treasury markets remained focused on Federal Reserve policy, inflation and fiscal borrowing. Stronger economic data reduced immediate expectations of a rate cut, while evidence of weakening employment later increased expectations of future easing.

The two dissents at the July Federal Reserve meeting indicated growing disagreement about how long restrictive rates should be maintained.

European Government Bonds

European government bonds remained supported by subdued economic growth and the ECB's substantial prior easing. The decision to hold rates suggested policymakers considered the current 2.00% deposit rate close to an appropriate level.

UK Gilts

UK bond markets remained volatile as higher inflation reduced expectations of rapid Bank of England easing. Weak employment and business activity provided an offsetting source of support.

Corporate Credit

Investment-grade and high-yield credit remained supported by strong risk appetite and resilient company earnings. Spreads remained relatively tight.

Private Credit

Private-credit markets remained active as sponsors pursued acquisitions and refinancing. Competition from banks and public debt markets continued to reduce margins for high-quality borrowers.

Investors remained focused on cash-interest coverage and the ability of weaker portfolio companies to refinance without relying upon rapid central-bank easing.

Foreign Exchange

The US dollar strengthened during July as resilient economic activity and the Federal Reserve's decision to maintain rates supported its relative yield advantage.

US Dollar

The dollar recovered part of the weakness experienced earlier in 2025. Stronger growth and reduced expectations of an immediate Federal Reserve cut contributed to the move.

Euro

The euro weakened modestly as the ECB held its deposit rate at a considerably lower level than comparable US rates.

Sterling

Sterling declined by approximately 3.9% against the dollar during July. Higher UK inflation was offset by labour-market weakness and concern about domestic economic momentum.

Japanese Yen

The yen remained sensitive to the large interest-rate differential between Japan and the United States. The Bank of Japan's decision to maintain rates limited support for the currency.

Chinese Renminbi

The renminbi remained relatively managed as trade relations stabilised. Domestic monetary policy remained considerably more accommodative than in the United States.

Commodities

Energy prices advanced strongly during July, while precious metals weakened and industrial commodities benefited selectively from improving trade sentiment.

Oil and Energy

Oil gained approximately 6.7% during the month as geopolitical uncertainty and concerns surrounding Russian supply supported prices.

OPEC+ production increases limited the upside, while the outlook remained dependent upon global growth and the enforcement of sanctions affecting Russian exports.

Gold

Gold declined by approximately 1.5% as risk appetite improved and the dollar strengthened. The metal nevertheless remained close to historically elevated levels after its substantial gains earlier in 2025.

Copper and Industrial Metals

Copper remained supported by electricity-grid, renewable-energy and data-centre demand. Trade de-escalation improved the near-term manufacturing outlook.

Iron Ore

Iron ore remained dependent upon Chinese steel production and property conditions. Infrastructure and manufacturing support partly offset weak residential demand.

Agricultural Commodities

Agricultural markets continued to respond to weather, trade policy and Black Sea supply conditions. Tariff negotiations remained particularly important for US - China agricultural flows.

Digital Assets

Digital assets advanced during July as institutional investment, regulatory progress and strong global risk appetite supported demand.

Bitcoin

Bitcoin reached a new record above $120,000 during July before ending the month around $116,500.

Spot ETF inflows and continued corporate treasury purchases supported demand, while investors increasingly treated Bitcoin as an established component of the broader alternative-asset market.

Ethereum

Ether also advanced as investors anticipated a more supportive regulatory environment and continued institutional adoption of tokenised financial assets.

Institutional Adoption

Banks, asset managers and public companies continued expanding custody, treasury and tokenisation initiatives.

Risk Considerations

• Digital-asset valuations remained historically elevated.
• Corporate treasury purchases increased concentration risk.
• ETF flows remained important to liquidity.
• Leverage could amplify future corrections.
• Regulatory implementation remained incomplete.

Private Equity

Private-equity conditions continued to improve during July as trade agreements reduced policy uncertainty and public markets reached new highs.

Deal Activity

Transaction pipelines strengthened across technology, healthcare, financial services, business services and industrial sectors. Greater trade visibility improved confidence in earnings forecasts.

Financing

Leveraged-loan, high-yield and private-credit markets remained accessible for high-quality borrowers. Competition between financing providers allowed sponsors to negotiate improved pricing.

Base rates remained relatively high, limiting the total amount of leverage that could be used prudently.

Exits

Record public equity valuations strengthened the potential IPO environment. Sponsors also pursued trade sales and secondary buyouts as valuation confidence improved.

Fundraising

Fundraising remained selective, with investors favouring managers capable of demonstrating realised exits and distributions rather than unrealised valuation gains alone.

Secondaries

Secondary-market activity remained robust as institutions continued using the market to manage private-asset allocations and generate liquidity.

CE Global Private Equity Observations

• Trade agreements improved transaction visibility.
• Strong public markets supported exit planning.
• Financing competition improved borrower terms.
• High base rates continued to limit leverage.
• Operational growth remained central to underwriting.

Artificial Intelligence & Technology

Artificial intelligence remained one of the strongest drivers of equity-market performance during July as major technology companies demonstrated continued demand for cloud and AI services.

Cloud Computing

Microsoft, Meta and other technology groups reported strong growth connected to artificial intelligence and digital infrastructure. Capital expenditure remained exceptionally high.

Investors increasingly rewarded companies able to demonstrate clear revenue growth from their AI investments.

Semiconductors

Demand remained strong for advanced processors, memory and networking equipment. Export restrictions involving China continued to influence product strategy.

Enterprise Adoption

AI adoption expanded within software development, customer support, advertising, financial analysis and internal administration.

Data Centres

Data-centre developers continued competing for grid connections, electricity, land and cooling infrastructure. Power availability remained one of the sector's most significant constraints.

Technology Risks

• Capital expenditure remained exceptionally large.
• Valuations assumed substantial future AI revenue.
• Export restrictions continued to affect China sales.
• Electricity constraints could delay projects.
• Increasing competition could reduce model and software pricing.

Sector Spotlight

Data-Centre Real Estate

July's sector spotlight examines data-cententre real estate as artificial-intelligence investment continued to generate exceptional demand for computing infrastructure.

Demand Growth

Cloud providers and AI developers required increasingly large facilities capable of supporting high-density computing workloads. Demand extended beyond traditional technology centres into markets offering electricity and development capacity.

Power Availability

Secured electricity connections became one of the most valuable attributes of suitable sites. Projects without committed power could face delays measured in years.

Location

Developers increasingly considered regions with access to renewable generation, natural gas, nuclear power and high-capacity transmission infrastructure.

Cooling

Higher-density processors increased demand for liquid cooling and specialist mechanical systems, creating additional infrastructure requirements.

Private-Market Opportunities

• Powered land and development sites
• Data-centre construction
• Electrical infrastructure
• Liquid-cooling systems
• Fibre connectivity
• Backup generation and energy storage

Principal Risks

Large capital requirements, lengthy grid connections and rapid improvements in computing efficiency created the possibility of overbuilding in weaker locations.

Investment Perspective

Data-centre demand remained structurally attractive, but investors increasingly needed to distinguish between projects with contracted customers and secured power and those based primarily upon speculative future demand.

Regulatory Update

Trade agreements, technology export controls, artificial intelligence and digital assets remained the principal regulatory themes during July.

US - European Union Trade Agreement

The United States and European Union reached a framework imposing a 15% US tariff on most EU goods. Businesses began assessing the effect upon margins, pricing and sourcing.

US - Japan Trade Agreement

A separate agreement reduced the threat of significantly higher tariffs on Japanese exports, including automobiles, while increasing expectations of Japanese investment in the United States.

Federal Reserve Governance

The two dissenting votes at the July Federal Reserve meeting demonstrated increasing policy disagreement as officials balanced inflation against labour-market risks.

Artificial Intelligence

International companies continued preparations for staged EU Artificial Intelligence Act requirements while adapting to a more permissive federal approach in the United States.

Digital Assets

US policymakers continued developing legislation addressing stablecoins, market structure and the division of regulatory responsibilities.

Compliance Priorities

• Incorporate new US - EU tariff rates into forecasts.
• Review US - Japan trade arrangements and sourcing implications.
• Maintain semiconductor export-control screening.
• Continue EU AI Act implementation.
• Monitor developing digital-asset legislation.
• Update private-market valuations using current public comparables.

Looking Ahead

Markets entered August with equities near record highs, improving trade visibility and increasing debate over whether the Federal Reserve should begin reducing rates.

Federal Reserve

Employment data would be critical to the September decision. Evidence of substantial labour-market weakening could strengthen support for the rate cut already favoured by two policymakers.

Bank of England

The Bank of England's August meeting would determine whether rates were reduced again despite inflation running above target.

European Central Bank

The ECB appeared increasingly likely to remain on hold after bringing the deposit rate to 2.00%. Incoming growth and inflation data would determine whether additional easing became necessary.

Tariffs

Investors would monitor implementation of US trade agreements and negotiations with countries that had not yet secured new arrangements.

US Economy

The durability of second-quarter growth would be examined carefully because import volatility had distorted recent GDP figures.

Corporate Earnings

Technology results would remain particularly important as investors assessed whether unprecedented AI capital expenditure continued to produce accelerating revenue.

Digital Assets

Bitcoin's move beyond $120,000 increased the probability of both further institutional participation and short-term profit-taking.

Private Markets

Improved financing and exit markets could support greater deal activity during the second half of the year. Entry-price discipline would become increasingly important as public valuations rose.

CE Global Private Equity Perspective

July reinforced the resilience of global markets following the severe tariff disruption experienced earlier in 2025. Trade agreements reduced some of the extreme downside scenarios, but global commerce remained more fragmented and expensive than before the escalation.

Artificial intelligence continued to generate exceptional investment opportunities across software, semiconductors, data centres, power and specialist infrastructure. The increasingly high valuations associated with these themes require careful differentiation between genuine contracted demand and speculative growth.

CE Global Private Equity believes that attractive opportunities remain across digital infrastructure, healthcare, financial services, cybersecurity and supply-chain technology. Businesses with recurring revenue and limited sensitivity to trade barriers remain particularly attractive.

Strong public markets create improved exit opportunities, but also require greater discipline when establishing new private-market entry valuations. Conservative leverage and operational value creation remain essential.

This market review is provided for general information and discussion purposes only. It does not constitute investment, legal, tax or other professional advice, nor an offer or solicitation to purchase or sell any security, financial instrument or investment product. Market values can rise or fall, and past performance is not a reliable indicator of future results.