Friday 8 August 2025

End the week

8 August 2025

U.S. equities rebounded strongly from last week’s pullback, with the Nasdaq Composite leading the charge to a new record high. The S&P 500 and Russell 2000 also posted solid gains, while the S&P MidCap 400 lagged but still closed higher.

Apple was a major driver of sentiment after announcing an additional $100 billion U.S. manufacturing investment on top of its previously pledged $500 billion. The move is expected to exempt the company from steep semiconductor tariffs. Apple’s stock jumped 13.33% for the week.

Trade policy developments continued to grab headlines. The Trump administration’s latest tariff round took effect Thursday, but with several partners reaching deals beforehand, the reaction was muted. Tariffs on Indian goods will be doubled to 50% due to Russian oil imports, while talks with Switzerland collapsed, leaving levies at 39%.

Markets are now pricing in a roughly 90% chance of a Federal Reserve rate cut in September, following comments from Fed officials pointing to slower labor market conditions and moderate inflation. President Trump nominated Stephen Miran to the Fed Board, which some view as favoring looser policy.

Economic data was mixed:

ISM Services PMI fell to 50.1 in July, just above contraction territory.

Jobless claims rose to 226,000, with continuing claims hitting their highest since late 2021.

Prices within the services sector surged to their highest since October 2022.

Treasuries weakened as yields moved higher, but municipal bonds and investment-grade corporates outperformed, with high yield recovering alongside improved macro sentiment.

The STOXX Europe 600 gained 2.11% on strong earnings and renewed optimism over a potential Ukraine-Russia resolution. Italy’s FTSE MIB (+4.21%), Germany’s DAX (+3.15%), and France’s CAC 40 (+2.61%) outperformed, while the UK’s FTSE 100 edged up 0.30%.

The Bank of England cut rates by 25 bps to 4%, citing labor market weakness. The vote was split 5–4 after a rare second-round ballot. Inflation is forecast to peak at 4% in September before easing.

Eurozone retail sales rose for a third month in June, up 0.3% MoM and 3.1% YoY. However, German industrial production slumped 1.9% in June, the weakest since 2020, with orders falling for a second month.

Japan’s Nikkei 225 rose 2.50% and TOPIX gained 2.56%, supported by strong earnings. The yen traded in the 147 range against the USD.

Trade relations with the U.S. eased concerns as Washington clarified that a 15% auto tariff would replace—not stack on top of—existing duties. The 10-year JGB yield fell to 1.49% as BoJ policymakers debated the timing of possible rate hikes.

Real wages fell 1.3% YoY in June, and household spending growth slowed sharply to 1.3% from 4.7% in May.

Chinese stocks gained, with the CSI 300 up 1.23% and the Shanghai Composite up 2.11%. July exports rose 7.2% YoY to $322B, driven by strong demand from Europe, Southeast Asia, and Australia, offsetting a 22% drop in U.S.-bound shipments.

The yuan’s weakness boosted competitiveness, and the services PMI jumped to 52.6 — the fastest pace in 14 months.

The RBI kept its repo rate at 5.50%, citing strong domestic growth and evolving tariff risks after the U.S. announced a 50% tariff on Indian goods. Inflation has eased for eight straight months, though the central bank raised its longer-term CPI outlook to 4.9%.

The Czech National Bank held its two-week repo rate at 3.50%, citing persistent inflation pressures. Policymakers aim to keep credit growth moderate to avoid overheating.

This is a market commentary for informational purposes only. Figures as of August 8, 2025.