US equities rebounded on Friday as investors used the week’s sharp sell-off as a buying opportunity. The Dow Jones Industrial Average gained 1.0%, outperforming the S&P 500 and Nasdaq, which each rose 0.4%. Most sectors finished higher, led by materials, although utilities underperformed. Strong corporate results and resilient economic activity also supported sentiment, with the preliminary S&P Global Composite PMI reaching its highest level since March 2022. Nevertheless, higher Treasury yields remained a key headwind, with the 10-year yield rising to 4.73% and the 30-year yield reaching 5.27%.
For the week as a whole, the S&P 500 fell 1.4% and the Nasdaq dropped 2.1%, while the Dow lost 0.9%, marking the first weekly declines for the S&P 500 and Nasdaq after three straight weeks of gains. The bond market moved to centre stage, as rising long-term yields raised concerns over borrowing costs, valuations and the attractiveness of equities relative to bonds. The rise in yields persisted despite moderating inflation and weaker employment data, as investors weighed heavier government borrowing, a growing supply of debt, geopolitical risk and a higher term premium. Treasury buyback plans offered only brief relief. Markets are now looking for clearer signals on fiscal policy and the Federal Reserve’s interest-rate outlook.
Asian markets start the week on the back foot
Asian equities were subdued on Monday, with investors cautious ahead of further US sanctions on Iran and amid elevated oil prices and bond yields. South Korea was particularly weak, with Samsung falling sharply, while Chinese and Hong Kong markets also faced pressure. Japan’s Nikkei slipped, reflecting broader risk-off sentiment across the region.
US equity futures were little changed overnight after Wall Street suffered weekly losses, with S&P 500, Nasdaq 100 and Dow futures all broadly flat as investors focused on elevated Treasury yields and Middle East tensions. Investors are now looking towards Nvidia’s results, the Jackson Hole symposium and July’s PCE inflation reading, all due later this week.
European markets close out a losing week with a Friday bounce
European equities ended Friday’s session higher, supported by banks and luxury names. The Euro STOXX 50 rose 0.6% and the broader STOXX Europe 600 gained 0.5%. Despite the Friday recovery, both indices posted weekly losses of 1.3% and 0.6%, respectively, as elevated bond yields, firmer oil prices and renewed inflation worries weighed on sentiment through the week.
Currencies and commodities: a softer dollar and oil off its highs
The US dollar remained under pressure on Monday after significant losses last week, with the dollar index around 98.8, as rising Treasury yields heightened concerns over US debt. EUR/USD stood at 1.1678, reflecting continued euro strength against the greenback. Markets are now watching for July’s PCE inflation print and any signal from the Fed’s Jackson Hole gathering.
Oil prices eased in early trading as investors booked profits following a strong two-week rally. Brent crude held above $93 a barrel, while WTI slipped below $86. The market remains focused on Washington’s expected package of tougher sanctions against Iran and the risk of further restrictions on shipping through the Strait of Hormuz, heightening concerns over supply disruptions. US Treasury Secretary Scott Bessent warned of severe economic consequences for Iran as Washington prepares to impose what he called its toughest-ever sanctions, after Iran threatened to halt oil exports and restrict shipping through the strait, raising concerns over renewed disruption to global energy supplies and markets.
Growth holds up in the US as Eurozone inflation expectations ease
US services activity accelerated sharply in August, with the services PMI climbing to 56.8, its highest reading in 20 months, offsetting softer manufacturing growth. The composite PMI came in at 56.0, consistent with annualised third-quarter growth of close to 3%. Supply-chain strain and elevated price pressures remain a concern, though hiring intentions have improved as geopolitical and tariff-related uncertainty has eased somewhat.
In the euro area, consumers’ 12-month inflation expectations eased to 2.9% in July, down from 3% previously, while three-year expectations slipped to 2.7% and five-year expectations held at 2.4%. Uncertainty around the inflation outlook remains elevated. Income growth expectations edged down to 1%, spending expectations held at 3.6%, and broader sentiment improved modestly, with home-price expectations strongest among lower-income households.
Stocks and sectors in focus
Samsung Electronics
Samsung shares fell more than 8% after its 110 trillion won ($80 billion) shareholder return plan disappointed investors. The 30 trillion won buyback element was smaller than rival SK Hynix’s 40 trillion won programme, and the limited detail on further returns added to the disappointment. Profit-taking after Samsung’s recent strong run also played a part.
Alibaba
Alibaba shares fell sharply after well-known investor Michael Burry exited his position and rotated into JD.com, citing concerns over Alibaba’s AI spending and weakening returns on invested capital. The pressure was compounded by a $10.2 billion share placement intended to fund further AI investment, which will increase Alibaba’s share count by around 3.7% and dilute existing shareholders.
Nvidia and the memory chip squeeze
Rising memory chip costs are pushing up prices for Nvidia’s AI servers, with some large customers facing increases of more than 15% for systems due to ship early next year. Samsung, SK Hynix and Micron have all gained pricing power as AI-related demand surges. Higher input costs could add pressure on hyperscalers and complicate already ambitious data-centre expansion plans.
SoftBank
SoftBank is planning to raise ¥1 trillion ($6.3 billion) through a seven-year retail bond, the largest corporate offering of its kind in Japan, to help fund its growing commitments to OpenAI and wider AI infrastructure. The bonds are expected to carry a coupon of between 4.3% and 4.9%, underlining how quickly SoftBank’s financing needs are growing as it accelerates its AI-related investment programme.
Nvidia and Perplexity
Nvidia is reportedly in talks to invest in Perplexity as part of a funding round that could value the AI startup at more than $30 billion, over 50% above its previous valuation. Perplexity’s annualised revenue has climbed above $750 million, helped in part by growing use of its AI agent tools, underscoring continued investor appetite for fast-growing AI businesses.
Boeing
Boeing’s engineers, scientists and technical staff rejected a proposed contract and voted overwhelmingly to authorise a strike, adding to pressure on the planemaker amid ongoing production and safety challenges. Around 17,000 members took part in the vote, with nearly 90% supporting strike action. The union will resume negotiations, but any work stoppage would only begin after October 6.
Monte Paschi, Banco BPM and Banca Generali
Monte Paschi launched all-share offers worth a combined €34 billion for Banco BPM (€25.3 billion) and Banca Generali (€8.7 billion), stepping up its defence against Intesa Sanpaolo’s takeover approach. If completed, the deal would create a bank worth roughly €70 billion with €450 billion in assets and a stronger presence in northern Italy and in wealth management. Shareholders are set to vote on the plan on 29 October.
Volkswagen
Volkswagen CEO Oliver Blume said the group’s overhead costs run more than 30% above those of its peers, with around 50,000 jobs representing the scale of the savings needed rather than a fixed target. The company plans to halve the complexity of its model range, and some plants may face capacity pressure. Blume warned that competition, particularly from Chinese carmakers, is likely to intensify further.
What the analysts are saying
Citi
Citi remains overweight equities and views any pre-midterm weakness as a buying opportunity, citing positive earnings revisions, improving liquidity and lower expected volatility in fixed income. The bank favours US equities while staying cautious on emerging Asia and AI-related stocks, framing any pullback in AI-linked names as “AI indigestion” rather than a rates-driven correction.
UBS
UBS raised its S&P 500 earnings and index targets, pointing to stronger corporate profits, resilient economic growth, a patient Fed and accelerating AI adoption. The bank now expects earnings per share of $350 in 2026 and $400 in 2027, alongside index targets of 8,100 and 8,400. Key risks flagged include higher oil prices, a resurgence in inflation and AI returns falling short of expectations.
Bernstein
Bernstein sees major technical hurdles ahead for SpaceX’s direct-to-device ambitions, including signal loss, battery drain and antenna limitations, arguing satellite connectivity is better suited to supplementary coverage than as a primary mobile service. The firm favours an MVNO-style partnership with mobile carriers instead, while remaining bullish on SpaceX’s dominance in launch services and its push into AI-driven orbital data centres.
Evercore ISI
Evercore ISI initiated coverage of MongoDB with an Outperform rating and a $525 price target. Analyst Kirk Materne highlighted Atlas, which accounts for around 75% of revenue, as the key growth driver, alongside strong first-quarter results, improving customer retention and growing enterprise adoption. Rising AI-related workloads were flagged as a potential source of further upside.
Barclays
Barclays downgraded Renault to Equal Weight, citing tougher competition in Europe and doubts over the carmaker’s ability to deliver the substantial cost savings required through 2028. The bank trimmed its 2026 to 2028 EBIT estimates by between 3% and 6%, despite solid first-half results and margins. Barclays continues to favour Volkswagen, while noting that successful cost execution at Renault could support upgrades from 2027 onward.
What to watch this week
This week is set to be another pivotal one for markets. Nvidia, Marvell, CrowdStrike and Salesforce are all due to report earnings. Markets will also focus on the Jackson Hole Symposium and Fed guidance, alongside US PCE inflation, personal income and spending, durable goods and payroll revisions. In Europe, ECB accounts, confidence and inflation data, plus Asian rate decisions, will be watched.
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