Global markets turned more cautious as rising government bond yields, renewed tensions surrounding Iran and higher oil prices weighed on risk appetite. US equities finished the week lower, while oil, precious metals and cryptocurrencies recorded strong gains.
Softer US inflation supported markets during the week, but weaker retail sales and renewed geopolitical tensions complicated the outlook for interest rates, oil and global equities.
Softer-than-expected US labour market data and another strong week of corporate earnings helped global equity markets rally to record highs during the first week of August. July's surprise decline in nonfarm payrolls prompted investors to reduce expectations of further Federal Reserve tightening, while resilient technology earnings continued supporting risk appetite.
Resilient economic data and another strong week of corporate earnings helped support global markets, even as central banks continued signalling caution on inflation. With the Federal Reserve holding interest rates steady and policymakers reinforcing a data-dependent approach, investors remained focused on whether economic strength can continue without reigniting price pressures. The result was another week of selective positioning, with investors continuing to favour resilient earnings, stronger fundamentals and quality businesses.
Financial markets adopted a more cautious tone this week as rising energy prices reignited inflation concerns, offsetting encouraging signs that global economic activity remains resilient. While economic data from the United States, Europe and the United Kingdom pointed to continued growth, investors questioned whether central banks will be able to begin easing interest rates as quickly as previously anticipated.
