U.S. Stocks Take a Short Break Before the Labour Day Long Weekend
Week’s Summary
At the end of the week, the market’s mood was a bit of a mixed bag. Most big caps slipped a touch, but small‑caps were out for a win.
What’s Happening?
- Small‑cap rally: The Russell 2000 kept climbing, marking its third straight week of gains.
- Dow’s rollercoaster: The Dow Jones briefly hit a new high, only to backtrack into the red by Friday.
- Calm trading: Activity was on the quieter side, but still enough to keep the ticker scrolling.
Star of the Show: NVIDIA
Everyone’s eyeballs were on the world’s most valuable company. Nvidia delivered earnings that beat expectations, easing worries that tech overvaluation was a myth. Still, the stock took a little dip after the good news—classic “sell the news” moment.
Politics & Fed Buzz
- President Trump ousted Fed Governor Lisa Cook after allegations of mortgage fraud. Cook is filing a lawsuit to stop it, putting Fed independence under the microscope.
- Fed’s Christopher Waller called for a 25‑basis‑point rate cut in September, with the possibility of more cuts in the next six months due to a sluggish job market and slowing economy.
Economic Data in a Nutshell
- Inflation: Core PCE held steady at +0.3% month‑over‑month in July—exactly what the market anticipated.
- Spending sticks: Consumer spending grew 0.5% and personal income up 0.4%.
- GDP look‑back: Second‑quarter growth revised to a solid 3.3% annualized, thanks to stronger consumer and business activity.
- Confidence dip: The Conference Board’s consumer confidence index fell to 97.4 in August, hinting at job and income worries.
- Labour resilience: Initial jobless claims slipped modestly to 229,000.
- Bond market: Treasury yields shrank on short‑ and intermediate‑terms, buoyed by strong auction demand and Fed‑independence concerns.
All in all, the markets are holding steady, ready for the long holiday break, while key economic signals and political drama keep everyone on their toes.
Europe
European Stocks Take a Dip: What’s Brewing In the Eurozone?
Over the past week, the STOXX Europe 600 tumbled almost 2%, signalling a hit to investor confidence across the continent. A bundle of worries – from the U.S. Fed’s autonomy to fresh tariff skirmishes, French political uncertainty, and a fading belief that the Ukraine crisis might settle – have left traders uneasy.
Top‑Tearing Performers and the Nations Behind Them
- France’s CAC 40 led the pack of losers, falling over 3%.
- Germany’s DAX and the UK’s FTSE 100 followed suit, each wrapping up the week on the long side.
ECB Minutes: A Split‑Personality Outlook
The European Central Bank’s July meeting minutes painted a picture of internal discord:
- Some members flagged downside risks – slowing growth and a stronger euro could push inflation lower.
- Others kept their eyes peeled for upside surprises, warning that energy prices and currency volatility might reignite inflationary pressures.
During the Jackson Hole symposium, ECB officials hinted that a rate cut in September is probably a no‑go. Yet, they didn’t rule out a cool‑down on later‑year talks if the economy looks worse.
Inflation: A Patchwork Picture Across the Euro‑Bloc
New data keeps the ECB’s nerves taut:
- Germany’s harmonised inflation climbed to 2.1 % in August, a smidge higher than analysts had guessed.
- Spain’s consumer prices nudged up by 2.7 %, a flat from July.
- France, for a change, saw inflation dip to a mere 0.8 %.
These mixed signals illustrate the tough balancing act the ECB must perform to keep inflation in check across a continent with varied economic climates.
UK’s Retail Sales: Still in the Down‑Hill Streak
Retail sales in the UK have been in a slump for an unprecedented 11 months straight. Shoppers are facing the toughest price hikes since late 2023, according to the Confederation of British Industry survey, a clear reminder that cost pressures are far from over.
While markets might be feeling the chill today, remember – the money in Europe’s financial pot is far from empty. Stay tuned, keep your options open, and above all, let’s hope the blues lift sooner than later.
Asia-Pacific
Japan and China: A Week in Stocks with a Pinch of Sarcasm
Japan’s Market: The “Hot & Cold” Dance
- Nikkei 225? It gave us a tiny “up‑beat” lift, a modest bump that leaves us wondering if the bears are still taking a nap.
- TOPIX? The broad basket took a bite out of a pile—down while the Nikkei pulled a little win.
- Why the split? The big institutional players, in typical “end‑of‑month” fashion, decided it was a good time to squeeze out some profit and shift cash to bonds.
- Inflation in Tokyo hit 2.5% in August, a smidge above the Bank of Japan’s own 2% sweet spot, raising eyebrows and a couple of coffee mugs.
- Unemployment slid sharply to 2.3%—a data point that felt a bit like an unexpected plot twist, potentially nudging the BoJ toward fresh rate hikes.
- Industrial production took a little dip—down 1.6% in July—reminding us that the economy’s sprint has a few lonely puddles.
China’s Rally: The Liquidity Party
- Your favorite index, the CSI 300, marched forward, up almost 3% over the week and piling a solid 10% growth for August. Pros!
- It’s a liquidity‑driven fiesta; the inflow of cash and retail fans has pushed turnover to record highs. Analysts warn, though, the ride may feel more like a roller‑coaster than a steady climb.
- Industrial profits held afloat, declining just 1.5% in July—thanks to tech companies stepping up while the retail and factory crews show slower tempo.
- Market chatter: more policy support is on the horizon in September—anybody else feeling the pressure from a slower growth wave?
Bottom line: Japan’s stocks are a mixed bag—Nikkei doing a subtle step forward, TOPIX taking its shoes off, while China is riding the liquidity wave, but with the cautionary note that fundamentals aren’t leaping as high. Grab your coffee, get your popcorn, and keep an eye on the next round of policy moves and economic surprises.
Summary
Global Markets: Balancing High Fives and Political Head‑Llamas
Investors around the world are walking a tightrope—holding on to the thrill of solid corporate earnings while juggling a storm of politics and policy twists.
What’s Happening In These Key Regions?
- U.S. Market: Inflation is still steady, GDP numbers are getting an upward polish, and we’re catching hints of resilience. But folks in town are feeling a bit sluggish in confidence, and folks are talking tough about the Fed’s independence.
- Europe: Inflation’s playing a crooked game—some pockets are hot, others are lukewarm—while political volatility keeps everyone on their toes.
- Asia: The scene is split:
- Japan: Sit tight, because the central bank might start tightening the money supply soon.
- China: Stock indices are red‑eye climbing, even though economic signs look a little shaky.
Why This Matters as we Charge into Q4
With the year’s final quarter already on the horizon, the buzz is that both central bank moves and political developments will dictate the direction of the markets. Capital flows will act like a cat on a keyboard—sometimes swishy, sometimes latching onto unexpected keys.
Investor Takeaway
Keep your eyes on the central bank announcements and political headlines. The markets will feel those shifts sharply, almost as if riding the waves of a giant, majestic roller‑coaster.
