Weekly Market Recap

Equity markets

Last week, the MSCI All Country World Index (MSCI ACWI) rose 0.3% (15.0% YTD).

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,

The S&P 500 Index finished the week up 0.5% (13.0% YTD). 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 signalled 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. The technology-heavy Nasdaq Composite rose 0.9% (14.0% YTD).

Large-cap growth stocks performed roughly in line with their value counterparts, while small caps underperformed large caps. The Russell 1000 Growth Index returned 0.3% (4.1% YTD), the Russell Value Index 0.4% (23.8% YTD), and the Russell 2000 Index -1.5% (20.8% YTD).

In Europe, the MSCI Europe ex-UK Index ended the week marginally up 0.1% (12.8% YTD). European equities were mixed as investors weighed uneven 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. Germany’s DAX Index added 1.7% (8.5% YTD), France’s CAC 40 Index fell -1.0% (5.8% YTD), and Italy’s FTSE MIB Index decreased -0.1% (20.6% YTD). Switzerland’s SMI was down -0.4% (11.7% YTD). The euro fell back against the US dollar, closing the week at USD 1.16 for EUR, down from 1.17.

The FTSE 100 Index in the UK was broadly flat for the week, adding 0.1% (11.7% YTD), while the FTSE 250 Index of smaller companies was up 1.0% (13.6% YTD). The British pound fell against the US dollar for the week, closing at USD 1.35 per GBP, down from 1.36.

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 AI computing company’s stronger-than-expected results and upbeat outlook reinforced confidence in continued global AI-related demand. The TOPIX Index gained 2.0% (23.1% YTD), and the TOPIX Small Index was up 1.8% (22.4% YTD). The yen weakened slightly over the week, moving from around JPY 159 against the USD toward the 160 level.

In Australia, the ASX 200 Index rose by 0.6% (7.2% YTD). In Canada, the S&P/TSX Composite lost -0.2% (16.9% YTD).

Emerging markets and other markets

The MSCI Emerging Markets Index was up slightly 0.1% (24.5% YTD). Brazil and Taiwan contributed positively, while the Chinese, South Korean and Indian markets contributed negatively.

China equities were mixed during the week, with mainland markets proving more resilient than Hong Kong as semiconductor and 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. Hong Kong lagged as weakness among several large internet and consumer companies earlier in the week outweighed gains in selected technology stocks.

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 centres, 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.

The CSI 300 Index, the main onshore benchmark, retreated -0.2% (1.3% YTD), while the Shanghai Composite Index gained 1.2% (1.2% YTD). In contrast, Hong Kong's benchmark Hang Seng Index fell 1.5% (2.0% YTD). The MSCI China Index, which primarily comprises offshore-listed stocks, fell -1.1% (-6.8% YTD).

Fiscal policy remained in focus in Colombia after the government presented a revised 2027 budget totalling 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.

Fixed income markets

Last week, the Bloomberg Global Aggregate Index (hedged to USD) edged up 0.1% (0.3% YTD), the Bloomberg Global High Yield Index (hedged to USD) added 0.2% (3.3% YTD), and the Bloomberg Emerging Markets Hard Currency Aggregate Index was also up 0.2% (1.4% YTD).

Over the week, the 10-year Treasury yield fell by 2bps to 4.72% from 4.74% (up 55bps YTD). The 2-year Treasury yield, in contrast, rose by 11bps, ending the week at 4.35% from 4.24% (up 87bps YTD).

Over the week, the 10-year German Bund yield increased by 2bp, ending at 3.28% from 3.26% (up 42bps YTD). The 10-year UK gilt yield was flat, again ending the week at 5.06% (up 58bps YTD).