Weekly Markets Monitor

Global markets faced heightened geopolitical risks and signs of slowing growth. Middle East tensions lifted energy prices, while the US eased sanctions on Russian diesel. Meanwhile, US fiscal and trade deficits widened, consumer sentiment weakened and Fed minutes were hawkish. In Europe, German activity slowed and UK services softened. In Asia, China’s holiday spending was uneven and the RBI raised rates by 25bps to 5.5%, its first hike in nearly four years. 

Geopolitical tensions and energy markets remained in focus last week, while investors also watched US data for clues on the Fed's policy path. A weaker-than-expected jobs report and stable PCE inflation reduced expectations of near-term rate hikes. Elsewhere, inflation accelerated in the Eurozone and Tokyo, China announced fresh growth-support measures and the Reserve Bank of Australia raised rates. 

Geopolitics was in the spotlight last week. While the Trump-Xi summit resulted in a two-month extension of the US-China trade truce, the stalemate in the US-Iran conflict persisted, keeping energy prices elevated and inflation concerns in focus. Economic data presented a mixed picture across major economies: business activity strengthened in the US, Eurozone and India, but softened in Japan and the UK. Meanwhile, US labor markets continued to reflect strength.   

Central bank policy was the dominant theme last week, with the Fed and BoJ hiking and the BoE holding. At the same time, escalating tensions in the Middle East heightened concerns over oil supply disruptions, adding to inflationary pressures as inflation firmed in the Eurozone, UK, Japan and India. Meanwhile, the US economy continued to show resilience, led by strong retail sales and fewer jobless claims, while China's updates pointed to continued uneven growth, with export- and technology-led sectors remaining strong while domestic demand stayed weak. 

Last week, US-Iran tensions intensified and broadened, pushing oil prices and inflation fears higher. In the US, stronger-than-expected August inflation raised investor expectations of a Fed rate hike. Meanwhile, the ECB raised rates, Eurozone growth was revised higher, and UK economic activity exceeded expectations. In China, exports strengthened and inflation firmed, while the government announced a major recapitalization of eight banks and insurers. In Japan, wage growth accelerated. 

Stronger-than-expected US economic data dominated the week, reviving rate-hike expectations, while escalating US-Iran tensions and fresh sanctions added to geopolitical risks. US labour market and business activity data remained robust, Europe saw a rise in inflation and weaker retail sales, China's manufacturing sector remained under pressure, Japan's services sector stayed resilient despite weak consumption, and India's Q2 GDP growth of 7.8% y/y exceeded expectations.

Geopolitics intensified last week on expanded Iran sanctions and escalating trade tensions with Canada. A hawkish message from Fed chair Warsh at Jackson Hole jolted markets. On the data front: US inflation remained sticky and consumer confidence weakened, while Eurozone growth surprised to the upside. In China, industrial profit growth continued to slow. Japan's rising inflation increased chances of BOJ tightening, and India's industrial production exceeded expectations.

Last week, markets were driven by geopolitical tensions and policy surprises. The expiry of the US-Iran ceasefire and threats of economic and military retaliation heightened geopolitical uncertainty, while the US Treasury's surprise announcement of bond buyback increases added to volatility. 

Last week, global economic updates delivered a blend of signals, while US-Iran talks showed little progress. In the US, subdued inflation, weak retail sales and softer consumer sentiment reduced expectations of near-term rate hikes. In the Eurozone, Q2 growth surprised to the upside and inflation remained contained. Meanwhile, deflation concerns resurfaced in China, while inflation stayed elevated in both Japan and India. 

Geopolitical concerns eased as talks on access through the Strait of Hormuz continued.  Economic updates were uneven across major economies: in the US, resilient business activity and strong corporate earnings contrasted with a cooling labour market; Eurozone manufacturing improved; China’s exports stayed strong even as domestic activity moderated; Japan’s consumer spending weakened further; and in India, the RBI kept rates unchanged while business activity moderated.  

Last week was marked by shifting monetary policy expectations, fragile geopolitical conditions in the Middle East, and volatility across equity and currency markets. The Fed, BoE, and BoJ all held rates amid dissenting votes.

Geopolitical tensions re-escalated last week as the conflict around the Strait of Hormuz intensified (though paused late on Friday) and the US unveiled fresh tariffs.

Geopolitical tensions escalated last week, while economic data pointed to divergence. In the US, inflation softened; consumer demand and labor markets stayed resilient. In the Eurozone, the trade deficit widened and industrial production fell.

Geopolitics resurfaced last week as the US-Iran ceasefire came under strain. US data pointed to softer services activity, a wider trade deficit and hawkish Fed messaging. 

Economic updates were at the fore last week. In the US, weak jobs data and softer manufacturing activity reduced expectations of near-term Fed tightening.