Home > Weekly Recap > Jobs Miss Lifts Rate-Cut Hopes as Oil Drops and Tariff Deadline Nears | Weekly Recap: 4 Aug – 8 Aug 2025

Jobs Miss Lifts Rate-Cut Hopes as Oil Drops and Tariff Deadline Nears | Weekly Recap: 4 Aug – 8 Aug 2025

Aug 11, 2025 6:54 AM

Economic Overview

Markets carried the rate-cut conversation forward this week, but the tone shifted from speculation to near-certainty after softer US labour figures reinforced July’s weakness. Traders are now pricing more than 60bps of Fed easing by year-end, with September looking like the earliest realistic pivot.

In the UK, the BoE trimmed rates to 4%, but it was a close call, with nearly half the committee wanting to hold steady. While the decision itself was last week’s news, sterling’s recovery suggested investors were reassessing the odds of a rapid follow-up cut. Domestic data continued to point to an economy struggling for traction. Services growth was barely positive and manufacturing remained in contraction.

The Eurozone stayed in a holding pattern with inflation steady near the ECB’s 2% target, but Germany stole headlines by unveiling a €100bn investment fund aimed at infrastructure and industry. Hopes for movement in Ukraine peace talks also provided a mild sentiment lift.

China’s trade data offered a mixed picture. The PMIs, CPI, and PPI confirmed weak domestic momentum, but exports and imports unexpectedly rose, likely due to firms front-loading shipments ahead of the 12 August US tariff deadline.

Equities, Bonds & Commodities

After the rough week before, stocks bounced back. In the US, the S&P 500 added 2.4%, the Nasdaq jumped nearly 4%, and the Dow was up 1.3%. Tech stocks did a lot of the heavy lifting, Apple rallied after announcing a $100bn US investment plan, Palantir impressed with earnings, and chipmakers got a boost from tariff exemptions tied to local expansion plans.

Europe’s STOXX 600 rose 2.2%, helped by talk of Ukraine peace and solid company earnings. Germany’s DAX and France’s CAC 40 gained between 2% and 3%, while the UK’s FTSE 100 lagged at just 0.3% locally, thanks to a stronger pound.

In Asia, Japan’s Nikkei 225 jumped 2.5% to its highest level in 30 years, helped by an easing in trade tensions with the US and strong tech earnings. Chinese equities were up just 0.8%, capped by the weak macro backdrop and limited stimulus.

Treasury yields fell right after the jobs miss but drifted higher into Friday. The 10-year ended around 4.28% and the 2-year near 3.75%. There was a spike in futures activity mid-week that stirred some volatility, and auctions didn’t see strong demand. UK gilt yields ticked up a touch, while German Bunds stayed steady at around 2.5%.

Brent crude slid for six sessions in a row, closing near $66. Slower demand from China, bigger inventories, and even the prospect of peace in Ukraine all added to the downside pressure. Gold was near record highs at about $3,430 an ounce.

Sector Performance

Consumer Discretionary led the way with a 2.6% gain, bouncing back from last week’s drop as travel, retail, and luxury names saw buyers return. Consumer Staples weren’t far behind, and Technology stocks got a lift from earnings and hardware policy relief.

On the downside, Health Care fell 1.5% after a disappointing obesity drug trial from Eli Lilly dragged pharma lower. Utilities were slightly weaker as rising yields reduced their dividend appeal. Energy ended flat, with earlier gains wiped out by crude’s slide.

Sector Performance

Graph showing sector performance. Consumer discretionary leads at 2.55%, while health care is last at -1.48%.

Source: FE Analytics. All indices are total return in US dollars. Past performance is not a reliable indicator of future performance. Data as of 8 August 2025.

Regional Markets

Japan stood out with a 3.5% gain, thanks to tariff relief and solid earnings. Europe (excluding the UK) added about 2%, supported by better sentiment and earnings resilience.

North America rose around 1%, as tech gains were offset by weaker defensives. The UK was up just under 1%, but a stronger pound held back the local figure to 0.3%. China’s modest 0.8% rise reflected the tug-of-war between trade gains and growth worries.

Regional Performance

Graph showing regional performance. Japan leads at +3.53% while China is last at 0.77%.

Source: FE Analytics. All indices are total return in US dollars. Past performance is not a reliable indicator of future performance. Data as of 8 August 2025.

Currency Markets

The dollar fell 1% for its longest losing streak since April. EUR/USD climbed to 1.16 and GBP/USD to 1.34 after the BoE’s cut. The yen jumped after the US jobs miss, with USD/JPY dropping from about 151 to the mid-147s before steadying.

Most emerging market currencies benefited from the softer dollar. The yuan stayed close to 7.20. The Indian rupee slipped a little on new tariff headlines, while the Australian and Canadian dollars found support from stronger commodity prices.

Outlook & The Week Ahead

Looking to 11-15 August, the focus will be US CPI on Wednesday and PPI on Thursday, plus Fed meeting minutes. In China, July’s industrial production, retail sales, and investment numbers will be closely watched for any sign of fresh stimulus.

Europe’s final Q2 GDP and CPI are also due, alongside speeches from ECB, BoE, and Fed officials. On the earnings front, Cisco, Applied Materials, Deere, Adyen, and Swiss Re are all set to report.

Geopolitics remains a key risk, with the 12 August US-China tariff deadline and Ukraine ceasefire talks both in play. After this week’s recovery, markets will be looking for confirmation that the optimism around rate cuts has legs, or whether the next batch of data pulls the mood back the other way.