Market recap: A strong start to the week
Equity markets started the week on a positive note, recovering from Friday’s losses as investor sentiment turned optimistic. The rally was fuelled by weaker-than-expected U.S. labour data and easing tariff concerns, raising hopes for potential interest rate cuts. The 10-year U.S. Treasury yield dropped to 4.20%, its lowest level in three months, further supporting equities.
Sector and index performance overview
Equity sector performance varied across the board, with key indices seeing notable gains and energy lagging.
Major index gains
Nasdaq Composite: +2.0% to 21,053.6
S&P 500: +1.5% to 6,329.9
Dow Jones Industrial Average: +1.3% to 44,173.6
The rebound was particularly strong in small-cap and large-cap technology stocks. The energy sector, however, lagged behind, dragged by a 1.8% drop in oil prices. The decline followed OPEC+’s decision to fully reverse its 2023 voluntary output cuts.
Economic data points to labour market cooling
Recent labour data suggest softening in the U.S. jobs market, adding weight to expectations for Fed easing.
Labour market figures released last week indicated that the U.S. economy added only 73,000 jobs, significantly below expectations. Revisions to previous months further reduced the average pace of job growth to its slowest since 2020. While the unemployment rate ticked up slightly to 4.2%, jobless claims remain relatively stable, pointing to underlying resilience in employment.
Rate cut expectations build
Bond markets are now pricing in a 90% chance of a Federal Reserve rate cut in September, with another expected by year-end. Upcoming economic releases, including ISM services data and productivity figures, as well as comments from Fed officials, will be closely watched.
With around two-thirds of S&P 500 companies having reported, earnings are tracking at 8.2% growth year on year, stronger than expected, offering further support for equities heading into the second half of the year.
Global equity market highlights
Here’s a snapshot of how global equities performed across regions.
Asia-Pacific
Asian markets traded mostly higher.
South Korea’s KOSPI rose 1.6%
Australia’s ASX 200 gained over 1%
Japan’s Nikkei and TOPIX saw modest increases
China and Singapore edged higher
Hong Kong’s Hang Seng dipped 0.2%
Europe and U.S. futures
European equities also surged:
STOXX 50: +1.5%
STOXX 600: +0.8%, with banks and insurers leading gains
Meanwhile, U.S. equity futures climbed as corporate earnings continued to roll in, with Palantir soaring 4% post-earnings and Hims & Hers Health dropping 13% on weaker revenues.
Commodity and currency market update
Commodity and currency markets reflected the broader macro sentiment, especially around oil and dollar movements.
Oil prices held steady in Tuesday’s Asian session after falling sharply on supply increase concerns and weak demand outlook. U.S. sanctions on Russian oil buyers, including China and India, have yet to offset broader bearish pressures.
Currency moves
U.S. Dollar Index: Stable around 98.7
Euro: Trading near 1.1555, supported by Fed rate expectations and a softer USD
Key economic indicators and central bank views
Recent economic data and central bank commentary highlight both resilience and uncertainty in global markets.
China’s Services PMI climbed to 52.6 in July, its fastest growth in over a year, driven by strong demand and export orders. However, broader economic challenges remain, including weak exports and subdued business confidence.
In the U.S., San Francisco Fed President Mary Daly indicated that rate cuts are becoming more likely due to labour market weakness, suggesting that more than two cuts could be needed if job losses persist without inflation relief.
Global corporate highlights
Several major global companies posted earnings or made strategic announcements that influenced their stock prices.
Notable performances
Palantir: Raised revenue forecast due to AI demand (Shares +4%)
MercadoLibre: Missed profit targets as shipping costs rose in Brazil
Spotify: Shares rose 5% after Premium price hikes across several regions
Broadcom: Launched advanced Jericho4 chip to support AI and data centre networks
Berkshire Hathaway: Shares fell 3% on Kraft Heinz write-down and leadership concerns
Tesla: Awarded Elon Musk a $29bn pay package to retain CEO role amid strategic shift
Banking and financials in focus
Financial institutions and banking stocks also saw notable movements amid key developments.
BP: Rose 1.8% after discovering a major oil field in Brazil
Credit Agricole: Increased stake in Banco BPM to 20.1%
Lloyds: Upgraded by RBC after a Supreme Court ruling reduced legal risks
Chinese AV firms: UBS rated Pony.ai and WeRide as ‘Buy’ on robotaxi potential
Analyst rating updates and forecasts
Analyst upgrades, downgrades, and macro forecasts shaped investor sentiment in specific sectors.
Wells Fargo: Cut Lululemon’s price target due to margin and demand concerns
Barclays: Upgraded Air France-KLM, Lufthansa, and IAG on improved outlooks
Citi: Raised gold price forecast to $3,500/oz due to macroeconomic uncertainty
Political developments to watch
Key geopolitical and legal developments are also making headlines.
Brazil’s Supreme Court placed ex-President Jair Bolsonaro under house arrest for breaching restraining orders during his coup plot trial. Justice Alexandre de Moraes, recently sanctioned by the U.S., cited repeated violations. The move has heightened tensions with Washington, where President Trump imposed tariffs and condemned the court’s actions as politically driven and undemocratic.
Upcoming events to watch
Markets today will turn their attention to key economic data and earnings releases.
U.S. ISM Services PMI
U.S. Trade Balance
Earnings Reports from AMD, Pfizer, Caterpillar, BP, Diageo, Infineon, DHL
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