The Week That Was

Equity markets were mixed last week as geopolitical tensions and mixed earnings weighed on sentiment. The S&P 500 finished broadly flat, though it notched its fourth consecutive month of gains in August. Energy (+2.5%) and Financials (+0.7%) were the standout sectors. The Nasdaq slipped 0.2%, pressured by cautious revenue guidance from Nvidia.

In Europe, equities fell 2.0%, led by France (-3.3%), as political uncertainty around a parliamentary confidence vote on budget cuts unsettled investors. That anxiety also pushed the spread between French and German 10-year bond yields back to recent highs. Economic data was a mixed bag: German inflation came in slightly above expectations, while Irish retail sales in July were lifted by strong car demand.

Across the Atlantic, U.S. Q2 GDP was revised higher and consumer confidence improved in August. Meanwhile, the Fed’s preferred inflation measure was in line with forecasts, leaving expectations of a September rate cut unchanged. In commodities, Gold (+2.3%) and Silver (+2.1%) benefited from haven buying, with the latter closing in on its highest level since 2011.

The Week Ahead

Markets opened this week on a mixed note: Hong Kong gained on upbeat manufacturing data from China, easing tensions with India, and a strong update from Alibaba, while Japanese equities slipped as tariffs weighed on corporate margins and investors took profits in tech.

Politics and economics will remain front and centre as earnings season enters its final stretch. In Ireland, updates are due from Grafton Group, Uniphar and Cairn Homes, while Datalex will hold an EGM at which shareholders are expected to approve a delisting. In the U.S., Broadcom and Salesforce are the key releases this week in a reporting season showing S&P 500 earnings up 11.9% year-on-year, close to double the pace in Europe. The Magnificent 7 have led the charge (+26.6%), but the broader index has also delivered a solid +8.1%.

In politics, developments in France will be closely watched ahead of next week’s confidence vote which could result in a new Prime Minister or snap elections. In the US, President Trump is expected to appeal to the Supreme Court after a federal ruling struck down his “reciprocal” tariffs.

On the economic front, Eurozone core inflation is expected to hold steady at 2.2% YoY in August, though stronger industrial activity keeps the ECB’s rate-cut outlook finely balanced. In the U.S., releases on Tuesday and Thursday should confirm industrial activity in the US stepped up in August. Japan’s wage data on Friday could support further rate hikes, while the closely watched US Non-Farm Payrolls report is forecast to show 75K jobs added. Historically, August payrolls often underwhelm, however it’s likely only a negative print would put a larger 50bps Fed rate cut firmly on the table for September.

Key Market-Moving Events This Week

• US August Employment Report – closely watched amid recent labour market weakness
• Earnings Releases – Grafton, Cairn Homes, Uniphar, Salesforce
• Political Developments – Trump’s prospective tariff appeal, French political developments ahead of next week’s confidence vote

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.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland