Weekly market commentary

Market review

Global stocks and bonds rose over the week. Equity markets were mainly supported by increased expectations the Federal Reserve could cut interest rates as soon as September after the better-thanexpected US consumer price index (CPI) inflation print. The week also saw decent UK economic growth data, an extended trade truce between China and the US, and a mix of economic data from Asia.

The US CPI print for July 2025 was the most closely watched data point this week. Given that there was a large negative revision to nonfarm payrolls earlier in the month, all eyes were on the CPI print to determine whether the Federal Reserve could cut interest rates in September. The US CPI print year-on-year came in at 2.7% for July 2025 which was below expectations of 2.8%. The market now assigns a 94% chance the Federal Reserve will cut interest rates at its September meeting which boosted global equity and bond prices. However, the mood was dampened by the producer price index coming in above expectations at 3.3% year-on-year vs expectations of 2.5% in July 2025, which was the largest increase in producer prices since July 2022.

China and the US also extended their trade truce for another 90-days. As a reminder, the tariff war escalated post-Liberation Day between the two nations which saw US tariffs go as high as 145% on Chinese imports, however this number was reduced to an additional 30% tariff rate as a truce was agreed in mid-May. President Trump did manage to broker a deal this week which would see 15% of Nvidia and AMD revenues on AI chip sales to China be paid to the US government.

Looking to data coming out of Asia. Japanese stocks were given a boost as annualised GDP growth in Q2 2025 came in at 1% (vs 0.4% expected) and the country also saw decent upward revisions to its Q1 growth data. Meanwhile in China, retail sales growth – a measure of spending in an economy – rose 3.7% over the year in July 2025 and missed estimates of a 4.6% rise. The latest figure marked the weakest growth in retail sales since December 2024.

Outlook

While trade tensions continue to simmer in the background, markets appear to be taking comfort in resilient earnings and signs that trade negotiation may be prevailing over escalation. The coming weeks will be key in assessing whether this optimism is justified. Data driven central banks continue to be in focus, with potential divergences in monetary policy occurring as inflationary forces, labour markets and growth come under the spotlight.

Movers table