The Week That Was

Markets edged higher last week as investors grew more confident that the Fed will soon begin cutting rates and that progress may be possible in ending the Russia–Ukraine conflict. The S&P 500 rose 0.9%, led by Healthcare (+4.6%) and Consumer Discretionary (+2.5%), while the Nasdaq added 0.8%. European equities climbed 1.2%, their second consecutive week of gains, with Autos (+3.2%) and Healthcare (+3.5%) leading the way.

Economic signals were mixed. UK and Japanese Q2 GDP both surprised positively, buoyed by resilience in services and export activity respectively.

In contrast, the German ZEW survey pointed to a weaker economic sentiment reflecting disappointment on EU–US trade negotiations. In the US, retail sales came in softer than expected, but weaker jobs data and subdued inflation suggested the tariff impact on consumer prices was less severe than feared. That combination increased the odds of a September Fed rate cut and helped lift the Euro to 1.17 versus the Dollar – close to year highs.

Commodities softened, with oil (–1.7%), natural gas (–2.5%) and gold (–1.8%) all lower on expectations that a Ukraine–Russia settlement could ease sanctions.

The Week Ahead

Equity markets began the week on the front foot, with Asia trading higher overnight. Investors took comfort from President Trump’s decision to hold off on fresh tariffs on Chinese goods, which more than offset disappointment that the People’s Bank of China signalled little urgency to cut rates.

Geopolitics will stay in focus as earnings season enters its later stages. US retailers Walmart, Home Depot and Target report this week, offering important insights into the health of the consumer and the potential tariff impact on pricing and margins. The European listed names of LVMH, FBD and Ryanair are in focus for our research team this week. From a political standpoint, talks between Trump, Zelensky and European leaders on security guarantees and land swaps could mark a turning point in the war in Ukraine. Any resolution would likely act as a tailwind for the European Industrials and Materials sectors.

On the macro side, UK  core inflation (expected at 3.7% YoY) will test how much room the Bank of England has to cut rates further this year. The release of Fed minutes on Wednesday will be closely analysed, especially after July’s rare split vote at the FOMC. Thursday’s PMI data should confirm modest deceleration in industrial activity across the US and Eurozone, largely reflecting tariff disruptions. The week closes with Powell’s keynote at Jackson Hole, where markets will be searching for confirmation that the Fed is ready to begin a rate-cutting cycle.

Key market-moving events in the Week Ahead

• Geopolitical developments – Meeting between Trump and Zelensky could bring progress in ending the Russian-Ukraine conflict.
• Earnings developments – US retailers including Walmart will provide insights into consumer demand and impact of tariffs.
• Interest rate developments – Fed Chair Powell’s speech at Jackson Hole could provide clue’s on the future path of US interest rates.

This represents an extract from the Weekly markets report from Cantor Fitzgerald Ireland, If you would like more detail on individual securities or how we can help with your investment needs, please reach out.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland