The Week That Was

Global equities moved lower on renewed tensions in the Middle East and bond market volatility. The S&P 500 fell just 1.4%; however, the decline was more pronounced for Irish-based investors as the euro strengthened by almost 1.0% vs the dollar, passing the 1.16 $/€ level.

This weakness was a key driver of the 5.6% rally in gold and global commodities more broadly. European equities fell by a modest 0.5% as strength in healthcare offset declines elsewhere. Global bonds declined 0.7% in euro terms as yields at the long end rose on higher inflation expectations, issuance and renewed concerns on mid-term fiscal sustainability.

Summary Economic Releases

The Week Ahead

Asian markets moved marginally lower this morning on geopolitical uncertainty and tech weakness. A capital-raising plan to fund investments in AI saw Alibaba fall by 8.9% with weak demand for Anthropic’s Fable 5 also weighing on sentiment. Brent declined modestly to $93.1 a barrel as investors await details of US economic sanctions on Iran later today, whilst US bond yields trended marginally lower despite US-Canada trade talks collapsing over the weekend.

Financial markets face a pivotal week, with Nvidia earnings, the Federal Reserve’s Jackson Hole symposium and US PCE inflation likely to set the tone heading into September. The Fed’s preferred inflation measure, core PCE, is expected to hold steady at 3.3% in July and is therefore unlikely to materially alter Kevin Warsh’s thinking ahead of his first Jackson Hole speech as Chair on Friday. Markets will be looking for greater clarity on the communication framework and policy outlook, as the removal of forward guidance has accentuated the move higher in longer-dated yields since Warsh became Chair. In Europe, data is lighter, although the German IFO should point to strengthening economic momentum in August, consistent with last week’s robust PMIs.

On the corporate side, Nvidia takes centre stage, with results providing another major test of the durability of the AI investment cycle. While a beat/raise quarter is expected, the magnitude of any upgrade, potential upside to its $1tn revenue outlook and more specific guidance for CY27 will be key for stock and sector direction. AI monetisation will also be in focus when Salesforce report, whilst investors will want evidence that US distribution disruption is easing for Pernod Ricard. Closer to home, ICG’s EGM on the proposed management buyout looks set for rejection unless the 20% of investors who have reportedly rejected the deal change their votes.

From a portfolio perspective, the recent dislocation in bond markets has increased the attractiveness of shorter-duration, high-quality fixed income, where yields remain compelling with less sensitivity to moves further out the curve. Gold also remains a valuable portfolio diversifier against ongoing policy and geopolitical uncertainty. Meanwhile, despite delivering a 14% return in euro terms year-to-date, the forward P/E multiples of the global equity market have de-rated by 7.5% on strong earnings. Whilst this provides a healthier valuation backdrop, stabilisation in the bond markets will be important for that earnings strength to translate into further market gains.

Opportunities this week:

• Apple (Overweight PT $360 c. 16% upside) – Review of recent topics
• IRES REIT (Overweight PT €1.39, +24% upside) – Recap on HY26 results and management meeting.
• Diageo (Overweight PT £22.20 +29% upside) – Recap on FY27 guidance and CMD

Written by John Mullane, CIO, Cantor Fitzgerald Ireland

This is an extract from the Weekly Markets Report by Cantor Fitzgerald Ireland. For more detail on individual securities, or to discuss how we can support your investment needs, please get in touch.