Global Markets Weekly Update

U.S.

Major U.S. stock indexes were mixed over the week, with the S&P 500 Index and Nasdaq Composite Index recording gains amid generally light trading volumes, while mid- and smaller-cap benchmarks lost some ground. Strong results from tech-giant NVIDIA and declining oil prices supported investor sentiment, while market participants also digested Federal Reserve Chair Kevin Warsh’s much-anticipated speech at the annual monetary policy conference at Jackson Hole, Wyoming.

Warsh vows to meet inflation target

Warsh struck what was generally seen as a hawkish tone at the conference on Friday. He said that the economy remains resilient and financial conditions do not appear restrictive, while underlying inflation has not improved enough to declare victory. Warsh reaffirmed the Fed’s 2% personal consumption expenditures (PCE) inflation target as “firm” and indicated that further tightening remains possible if inflation does not move toward target “clearly and at sufficient speed.” He also advocated a “quieter Fed,” limiting forward guidance to preserve policy flexibility, and highlighted artificial intelligence (AI)-driven investment and productivity as potentially important sources of stronger long-term growth.

The Treasury yield curve flattened in the wake of Warsh’s remarks. The two-year Treasury yield, which is more sensitive to monetary policy developments, increased following the speech as investors priced in a higher probability of a near-term rate increase from the central bank.

NVIDIA earnings fuel technology rally

Technology shares received a boost from NVIDIA, which rebounded Tuesday ahead of its highly anticipated earnings report, ending a seven-session losing streak. The chipmaker, which has the largest market cap in the S&P 500 Index, subsequently reported another exceptionally strong quarter on Wednesday, with fiscal second-quarter revenue surging 106% from a year earlier.

NVIDIA also issued stronger-than-expected revenue guidance for the third quarter and signaled continued rapid growth in spending on AI infrastructure. Investors responded enthusiastically, sending the company's shares 8.7% higher on Thursday and helping drive a broader rally in technology stocks.

Core PCE inflation in line with expectations

The headline PCE price index rose 0.2% in July and 3.7% from a year earlier, with both readings somewhat firmer than economists had anticipated. However, the core PCE index—which excludes food and energy—rose 0.2% for the month and 3.3% year over year, matching expectations and limiting the market reaction to the stronger headline figures.

Consumer surveys nevertheless continued to highlight inflation concerns. The University of Michigan’s Consumer Sentiment Index fell to 51.7 in August from 55.2 in July as consumers

grew more worried about inflation and the economic outlook. The Conference Board’s separate measure of consumer confidence also declined modestly in August.

Elsewhere, durable goods orders rose a stronger-than-expected 1.1% in July, driven largely by transportation equipment. Meanwhile, initial unemployment claims unexpectedly declined to 203,000, while the four-week moving average remained stable, suggesting that layoffs continued to be limited.

Developments in the Middle East appeared to support investor sentiment. Brent crude oil settled below $90 per barrel on Tuesday, while West Texas Intermediate fell below $81 amid hopes for a revival of energy flows through the Strait of Hormuz.

Europe

The pan-European STOXX Europe 600 Index ended the week broadly unchanged, up 0.15% in local currency terms. European equities were mixed as investors weighed mixed economic data and developments in the Middle East, with hopes for an interim framework to facilitate shipping through the Strait of Hormuz putting downward pressure on oil during the week. Technology names were supported by strong AI-related earnings. Among major stock indexes, Germany’s DAX closed 1.66% higher, France’s CAC 40 Index declined 0.98%, while Italy’s FTSE MIB slipped 0.10%. The UK’s FTSE 100 Index was almost flat, up 0.07%.

Improvement in eurozone economic sentiment

Eurozone economic sentiment improved for a fourth consecutive month in August, reaching its highest level since January and exceeding expectations, according to the latest reading of the European Commission’s Economic Sentiment Indicator (ESI) index. Confidence strengthened across businesses and consumers amid hopes for a resolution to the U.S.-Iran war. Sentiment

improved in most major economies, including France, Germany, and Italy, although Spain weakened.

German growth outlook continues to improve

Germany’s economic backdrop showed further signs of improvement. Final data showed that gross domestic product expanded by 0.3% in the second quarter, ahead of the 0.2% consensus estimate. The Ifo business climate index also rose more than expected to 88.8 in August from 86.7, its strongest reading in a year, with both current conditions and expectations improving. The data reinforced hopes that Germany is emerging from its prolonged period of economic stagnation.

France under pressure as growth stalls and inflation rises

Revised data showed that the French economy stagnated in the second quarter, while annual inflation unexpectedly accelerated to 2.4% in August, up from 2.1% the previous month. Investors focused on divergent policy proposals ahead of next year’s presidential election and the country’s elevated debt burden.

Inflation pressures remain uneven across the region

Elsewhere, inflation data highlighted continuing divergence within Europe. Spain’s annual inflation rate accelerated sharply to 4.3% in August from 3.6% in July, slightly above expectations and its highest level since early 2023. Core inflation in the country declined to 2.9%.

UK consumer backdrop remains subdued

UK macroeconomic data released over the week pointed to weakness in consumer activity. The CBI survey showed that UK retail trade conditions deteriorated in August, with the index falling sharply to -48 from the -26 registered in July and significantly lower than the -24 that had been expected.

Japan

Japan’s stock markets advanced over the week, recovering some of the previous week’s losses as a pullback in oil prices helped improve investor sentiment. Technology and semiconductor stocks were volatile around NVIDIA’s earnings release, although the U.S. semiconductor and artificial intelligence (AI) computing company’s stronger-than-expected results and upbeat outlook reinforced confidence in continued global AI-related demand. The Nikkei 225 Index gained 0.59%, while the broader TOPIX Index rose 1.95%.

The yen weakened slightly over the week, moving from around JPY 159 against the USD toward the 160 level. Expectations for further Bank of Japan (BoJ) policy tightening remained high but were already largely reflected in market pricing. BoJ Deputy Governor Ryozo Himino stressed the need to adjust monetary policy in a timely manner and highlighted upside inflation risks, reinforcing expectations for further tightening without explicitly signaling a September rate hike.

JGB yield rises amid expectations for tighter monetary policy

In the fixed income market, the yield on the 10-year Japanese government bond (JGB) rose to 2.93%, from 2.88% at the end of the previous week, amid growing expectations for further BoJ policy tightening. The Tokyo-area core consumer price index (CPI) accelerated to 1.8% year over year in August, from 1.7% in July and in line with expectations, while a measure excluding both fresh food and energy rose to 2.0%. Separate data showed that the services producer price index (SPPI), which measures prices charged between businesses for services, rose 3.6% year over year in July, accelerating from 3.4% in June. Together, the releases added to signs of persistent inflation and strengthened the case for a near-term BoJ rate hike.

Fiscal policy also remained in focus after Prime Minister Sanae Takaichi sought to reassure investors that the government would keep borrowing under control despite plans for increased spending, emphasizing the importance of maintaining market confidence in Japan’s fiscal sustainability. Takaichi also indicated that the government could draw on its foreign-exchange reserves to help fund a planned two-year reduction in the consumption tax on food, although uncertainty remains over how the measure will ultimately be financed.

China

China equities were mixed during the week, with mainland markets proving more resilient than Hong Kong as semiconductor and artificial intelligence (AI)-related shares rallied strongly midweek. An early sell-off following Alibaba’s large equity placement was partly offset later in the week as strong results and an upbeat outlook from NVIDIA supported sentiment toward AI hardware and semiconductor companies, although trading became more selective on Friday.

The CSI 300 Index declined 0.21% week over week, while the Shanghai Composite Index rose 1.21% and the Hang Seng Index fell 1.63% in local currency terms, according to FactSet. Hong Kong lagged as weakness among several large internet and consumer companies earlier in the week outweighed gains in selected technology stocks.

Alibaba placement puts AI investment returns in focus

Alibaba’s HKD 80 billion (USD10.2 billion) equity placement weighed on Hong Kong technology shares early in the week and renewed investor scrutiny of the capital required to develop AI infrastructure and the potential returns on that investment. Alibaba completed the placement on Wednesday and said it would use the proceeds to expand computing infrastructure, develop hyperscale AI data centers, and upgrade its cloud infrastructure. Sentiment toward AI-related shares subsequently improved after NVIDIA reported strong quarterly results and an upbeat outlook, supporting a midweek rally in mainland semiconductor and AI-hardware companies. Momentum became more selective on Friday as some AI-related shares gave back earlier gains, while software and several large-cap technology companies strengthened in Hong Kong.

Developments among Chinese AI companies also highlighted the increasingly competitive domestic ecosystem. Z.AI unveiled its lower-cost GLM-5.3-Flash model and said it ran entirely on Chinese AI chips during testing, while MiniMax reported a 283% year-over-year increase in

first-half revenue. Alibaba also released its Qwen3.8-Flash model, which the company said offers improved performance at lower training costs. The week’s trading reflected increasingly differentiated investor sentiment toward China’s AI ecosystem, with enthusiasm for semiconductor, AI-infrastructure, and software companies accompanied by greater scrutiny of capital spending and monetization prospects among some internet platforms.

Industrial profits reinforce uneven growth narrative

China’s industrial profit growth slowed for a third consecutive month in July, rising 11.2% year over year compared with 15.1% in June. Profits increased 17.6% in the first seven months of 2026, easing from 18.7% in the first half. Performance varied significantly across industries. Profits in computer, communications, and other electronic-equipment manufacturing more than doubled in the January–July period, supported by demand associated with AI and computing infrastructure, while profits declined in industries including automobiles and electrical machinery.

The data reinforced signs of an uneven economic recovery, with technology- and export-related industries continuing to perform relatively well while parts of the economy more exposed to domestic demand remained under pressure. A similar pattern was evident in equity markets during the week, with technology-related areas generally proving more resilient than several consumer-oriented segments.

Other key markets

Canada

Growth improves while investors weigh renewed trade tensions

Canadian equities were mixed over the week, with the S&P/TSX Composite reaching a record closing high before ending the week lower. Financials were an important source of support early in the week as several of Canada’s largest banks reported stronger-than-expected quarterly results. Investors also continued to assess renewed U.S.-Canada trade tensions and the potential implications of additional tariffs and retaliatory measures for business activity, inflation, and the broader growth outlook.

On the economic front, Canada’s economy expanded at a stronger-than-expected pace in the second quarter, with growth supported by exports, household consumption, and business investment following a softer start to the year. However, preliminary data suggesting little growth in July pointed to a more moderate pace heading into the third quarter. External balances also improved, with Canada recording its first current-account surplus in four years. The Canadian dollar weakened through much of the week before recovering somewhat on Thursday, alongside firmer oil prices and the stronger external-balance data.

Colombia

Revised budget and pension ruling keep fiscal outlook in focus

Fiscal policy remained in focus after the government presented a revised 2027 budget totaling approximately COP 635 trillion. While the headline figure was higher than previously proposed,

the revised plan incorporated obligations that had previously been underbudgeted, including pensions, health care, payroll, electricity subsidies, and university funding, while removing uncertain revenues. At the same time, the proposal included reductions in more discretionary areas, including capital expenditures and spending on goods and services. The government indicated that the budget represents a starting point rather than its intended fiscal outcome and plans to introduce a Fiscal Consolidation Law with additional measures aimed at reducing the primary deficit and stabilizing public debt.

Adding to the fiscal debate, the Constitutional Court upheld most of the pension reform approved under former President Gustavo Petro. The measure expands the public pension system, establishes a basic benefit for older Colombians, and directs a larger share of mandatory pension contributions into the public pillar. The near-term fiscal effects are expected to be relatively limited, as part of the contributions will initially accumulate in a savings fund to finance future obligations. Over time, however, the reform could increase fiscal costs and spending rigidity as those accumulated assets are drawn down, adding to the longer-term adjustment challenges facing the government.