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Inflation data and Iran conflict in focus

Investors began the week weighing the inflationary and economic repercussions of the Iran conflict, which has kept oil prices elevated and tanker traffic through the Strait of Hormuz disrupted. US equities ended Friday modestly lower after weak retail-sales and consumer-confidence figures, while Asian markets were broadly higher on Monday, led by technology shares. Gold, silver and bitcoin all started the week slightly higher, while the US Dollar Index slipped.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Markets eye inflation and Middle East tensions

This week, market participants will continue to monitor the conflict in Iran and its implications for energy markets, inflation and the global economic outlook. Inflation data will be in focus, with the UK and euro area releasing July Consumer Price Indices on Wednesday, followed by Japanese inflation figures on Friday. The Federal Reserve’s July meeting minutes, due on Wednesday, will offer further insight into policymakers’ assessment of the US economy and inflation. August Purchasing Managers’ Indices from the euro area, UK, Japan and US on Friday will provide a timely update on global business activity. Earnings season is slowing, but results from home-improvement retailer Home Depot on Tuesday and retail giant Walmart on Thursday will offer fresh insight into the resilience of US consumer spending after July’s unexpectedly weak retail-sales data.

Asian stocks rise on technology gains

Asian equities mostly advanced on Monday as technology shares benefited from reduced expectations of a near-term Federal Reserve rate increase after weak US data last week. Japan’s Nikkei 225 rose 0.4%, despite annualised GDP growth of 1.1% in the second quarter, which was weaker than expected as private consumption and business investment contracted. Mainland China’s CSI 300 rose 1.3%, and Hong Kong’s Hang Seng Index rose 1.8%, led by chipmakers and Alibaba, while South Korean markets were closed for a public holiday. Australia’s S&P/ASX 200 declined 0.5%.

US stocks decline on economic concerns

US equities ended lower on Friday after July retail sales fell unexpectedly and University of Michigan consumer sentiment weakened more than anticipated in August, raising concerns over economic momentum while supporting expectations of steady interest rates. US retail sales fell 0.6% in July, reversing a 0.2% increase in June and undershooting market expectations, while core retail sales, which exclude automobiles, petrol, building materials and food services, declined 0.4% after rising 0.4% in June. The Nasdaq 100 slipped 0.1% to 30,046.14 points, though it gained 1.1% over the week, while the Dow Jones Industrial Average lost 0.2% to 53,732.41 points and fell 0.6% for the week. The S&P 500, which had reached a record high on Thursday, declined 0.2% to 7785.76 points but still added 0.4% over the week.

Euro-area economy expands in second quarter

Euro-area gross domestic product (GDP) increased 0.4% in the second quarter, accelerating from no growth in the first quarter, Eurostat reported on Friday. Annual growth strengthened to 1% from 0.5%, while EU GDP rose 0.5% quarter-on-quarter and 1.2% year-on-year. Employment increased 0.1% from the previous quarter in both the euro area and the EU, with annual growth at 0.5% in each region. The Euro Stoxx 50 was little changed at 6539.59 points, while Germany’s DAX rose 0.5% to 26,440.31 points and France’s CAC 40 declined 0.2% to 8636.80 points.

Swiss GDP accelerates in second quarter

Swiss gross domestic product grew 1.5% in the second quarter, accelerating from 0.4% in the first quarter and marking its fastest quarterly expansion since 2021, according to data released on Friday. Growth was driven mainly by the chemicals and pharmaceuticals industries, while services also expanded and goods exports increased 0.6% in real terms. The figures predate new US tariffs on Swiss goods introduced in late July, while the government expects below-average growth of 0.9% for the full year. The Swiss Market Index declined 0.6% to 14,390.67 points.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BHP.

Economic data in focus: Empire State Manufacturing Index (14:30) and Canadian Consumer Price Index (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.