Global stock markets found momentum last week and extended gains, most notably in Japan. Encouraging data out of the US, including further Q2 earnings releases, helped soothe fears of a US recession, while data out of the UK showed that the economy grew well in Q2. As we turn our attention to the week ahead, attention remains largely focused on the US, with the Jackson Hole Symposium and increasing attention on the November US elections.
Last week
- Global markets rose well last week, supported by encouraging US data.
- Japanese markets gained 6.3%, continuing to recover much of the ground lost at the start of the month.
- The VIX has recovered substantially from the heightened levels seen a few weeks ago but remains somewhat elevated.
- Oil was also a key focus for the week, with meaningful daily swings, but ended the week only a little lower than where it had started.
This week
- Economic data will be light today, therefore investor focus is likely to be drawn to the US Democrats Convention in Chicago, where investors will seek to gain clarity on Kamala Harris’s policy positions.
- As we go through the week, we will be looking at inflation data, starting with Europe and Canada on Tuesday, and Japan on Friday.
- The US Federal Reserve will release their July FOMC minutes on Wednesday ahead of kicking off the Jackson Hole Symposium. Investors will be paying close attention to Fed Chair Powell’s speech on Friday for hints on monetary policy, including whether rates may be lowered in September.
Equity returns are in GBP, Oil is in USD. Gold is shown in GBP. Bond returns are all shown in GBP. Source Bloomberg.
More detail:
- Global stocks rose by 2.7% last week, led by Japan, while more modest returns were delivered by the emerging markets, up around 1%. Japanese equities rose 6.3%, with returns back in the pack year to date. Markets were supported by positive data from the US, including low US weekly jobless claims and retail sales coming in ahead of expectations for July.
- While it was a quieter week for earnings, corporate activity supported markets higher. Walmart’s share price jumped on higher sales outlook, while UBS captured attention for profits beating forecasts. It wasn’t just Q2 earnings, with markets surprised by Starbucks announcing the hiring of Chipotle’s CEO – this was very well received by markets, following several challenging years. Albeit not due until next week, attention is already being given to NVIDIA’s results, due 28 August.
- In the UK, it was confirmed that the economy grew well in Q2, with Q2 GDP up 0.6% after a strong Q1 (up 0.7%). However, little growth was seen in June, with retail sales hit by wet weather, and indicators pointing towards a weaker second half of the year. Output per head remains weak in the UK – it is rising but still lower than levels seen in 2019, before the COVID-19 pandemic.
- Global energy markets experienced notable daily swings last week, prompted by a variety of factors. As we started the week, we saw oil rising due to the prospect of war shrinking supply. These concerns faded as we went through Tuesday. Oil dropped lower on Wednesday when the US surprised markets with rising crude stockpiles. Concerns of geopolitical tension re-surfaced on Thursday – this combined with good US economic data drove oil prices back up. We ended the week with energy prices being influenced by demand concerns in China. All in all, oil ended a little lower for the week.
The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.
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