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24 August 2026
Weekly Market Recap
Our Global Investment Solutions team summarise the week's key market events and developments — with insights to support your client conversations and decision-making.
Key resources
Weekly Market article
Weekly Market data
Economic and political backdrop
The UK
The number of payrolled employees in the UK fell by 13,000 in July, reflecting caution on the part of employers. This was the sixth consecutive month of decline. In other jobs data, the official unemployment rate in June held steady at 4.9%, higher than the 4.8% that had been expected.
Meanwhile, official data showed that the country’s inflation rate rose to 2.9% in July, in line with expectations and reflecting the hike in the energy price cap by industry regulator, Ofgem.
The US
Long-term US Treasury yields rose early in the week, with the yield on the 30-year US Treasury bond reaching its highest level since 2007. Rising concerns around the US fiscal outlook and heavy government and corporate debt issuance—including financing tied to AI capital spending—appeared to contribute to the sell-off. Higher oil prices amid renewed tensions between the US and Iran also added to inflation concerns.
Treasuries rallied on Wednesday after the Treasury Department announced that it would at least double the size of its planned long-term debt buybacks. However, much of the move reversed late in the week as investors appeared to question whether the programme would be sufficient to offset the pressures weighing on longer-term bonds.
Meanwhile, minutes from the Fed’s July meeting indicated that meeting participants generally expected inflation to moderate through the remainder of the year, though they acknowledged “that their inflation outlooks were highly uncertain and that inflation risks were skewed to the upside,” and “policy tightening would likely be necessary if inflation did not decline.”
Data released Friday morning indicated that US business activity accelerated sharply in August. The S&P Global Flash Composite Purchasing Managers’ Index (PMI) rose to 56.0 from 54.5 in July, its highest level since April 2022. Strength was concentrated in services, where the PMI jumped to 56.8 from 54.6, while the manufacturing PMI eased to 53.2 from 53.9.
The survey also indicated that employment increased at its fastest pace since January 2025 as business confidence improved. Price pressures moderated, with selling-price inflation slowing notably, although input costs remained elevated amid higher energy prices.
Elsewhere, the Empire State Manufacturing Index and Philadelphia Fed Manufacturing Index both came in ahead of consensus estimates for August, reaching their highest levels since 2021.
Several housing market reports highlighted ongoing weakness in the sector. The National Association of Realtors reported that pending home sales dropped 2.3% from the prior month in July, falling to the lowest level since January, while Census Bureau data showed that housing starts declined more than 12% from June to a seasonally adjusted annual rate of 1.239 million.
The National Association of Home Builders also reported that its Housing Market Index—a measure of homebuilder confidence—edged up one point but remained subdued amid “economic and geopolitical uncertainty, elevated mortgage rates, and rising construction costs.” Meanwhile, Freddie Mac data showed the average rate on a 30-year fixed-rate mortgage was 6.65% for the week, down from 6.67% the prior week but above the 6.58% average a year ago.
Europe
The August reading of the eurozone flash composite PMI was 52.1, higher than both expectations and the 52 recorded in July. New orders in the eurozone increased, and export demand returned to growth for the first time in four and a half years.
The S&P Global Flash Composite PMI fell to 51.0 in August from 51.3 the previous month but remained in expansionary territory. The manufacturing sector showed signs of regained momentum, with the output index hitting a 55-month high. Services activity contracted for the fifth consecutive month.
The ZEW Indicator of Economic Sentiment for Germany, which tracks investor expectations, climbed to 34.2 in August from 26.3 in July. Investor confidence improved on the back of corporate earnings, government infrastructure spending, and exports remaining fairly resilient.
The manufacturing business climate index in France rose by more than expected in August. At 103, this was the highest level in seven months and largely reflected a recovery in personal production prospects. The overall business climate index also improved over the previous month, with retail trade seeing the biggest gain.
China
China’s economy began the second half of 2026 on a soft note as activity data moderated across the board in July. Industrial output grew 4.5% YoY, missing expectations and down from 5.3% in June, despite continued resilience in high-tech production. Retail sales increased 0.6%, down from 1% in June, reflecting persistently sluggish domestic demand.
Meanwhile, fixed asset investment slumped 6.7% from a year earlier over January to July, deepening from the 5.7% contraction through June. Although the disappointing data were partly attributed to disruptions from extreme weather conditions, the broad-based downturn may pressure policymakers to ramp up fiscal support to achieve the annual growth target.
China’s property sector continued to drag on economic activity, with real estate investment shrinking 19.2% YoY through the first seven months, steeper than the 18% drop in the first half. At the same time, new home prices dipped by 0.1% in July from the prior month, matching June’s pace. That said, the annual rate of declines narrowed modestly.
Against this backdrop, authorities continued to roll out supportive policies to stabilise sentiment. The State Council will allow residents to withdraw their Housing Provident Fund (HPF) savings for more purposes, such as renovations and management fee payments, starting 20 September. In addition, contributors who use HPF savings to pay rent will no longer need to meet certain thresholds. Meanwhile, Shanghai further eased restrictions on homebuyers, lowering minimum down payment requirements for second-home purchases beyond the city’s outer ring road.
Shares of Hangzhou-based humanoid robot maker Unitree Robotics ended 460% higher on their trading debut in Shanghai on 19 August. The stock initially rallied by over 600% before paring gains, giving the company a market value of CNY 342 billion based on its closing price on Wednesday. The initial public offering (IPO) was more than 8,000 times oversubscribed by retail investors, signalling strong interest in “embodied AI” companies. Embodied AI refers to one of six future industries outlined in China’s latest five-year plan. It was the latest high-profile technology IPO in China, following memory chipmaker CXMT’s blockbuster listing on 27 July.
Japan
The yield on the 10-year Japanese government bond (JGB) climbed to a 30-year high of around 2.93% early in the week amid expectations for further Bank of Japan (BoJ) policy tightening and mounting fiscal concerns following the government’s recently announced plans to cut the consumption tax. Weaker-than-expected second-quarter gross domestic product (GDP) data provided some counterweight to these pressures. The JGB yield subsequently retreated before rising again on Friday, as firmer inflation data reinforced expectations for a near-term rate hike. It ended the week around 2.88%, broadly unchanged from the previous week.
Japan’s economic growth unexpectedly slowed in the second quarter, with GDP expanding 1.1% on an annualised basis, short of consensus expectations for 2.0% growth and down from a revised 1.9% in the first three months of the year. Capital expenditure was the main drag, while private consumption was also weaker than expected, likely reflecting consumers’ reluctance to spend amid rising living costs. Robust exports helped offset some of this domestic weakness.
Consumer inflation accelerated for the second consecutive month in July, and at the fastest pace since January, strengthening the case for a near-term BoJ rate hike. The nationwide core consumer price index rose 1.8% year over year (YoY) in July, in line with consensus and up from 1.6% in June.
Meanwhile, Japan’s trade deficit widened sharply in July as imports surged 27.8% year over year, driven in large part by higher energy costs following the surge in crude oil prices. Exports remained robust, rising 23.2%, supported by strong shipments of automobiles and semiconductors and other electronic components.
Australia
The Westpac-Melbourne Institute Consumer Sentiment Index lifted 6.0% month-on-month (MoM) in August, supported by the decision of the Reserve Bank of Australia (RBA) to leave the cash rate unchanged. Consumer confidence also picked up sharply in August, but remained below the historical average. Australian employment fell 15,900 in July, below expectations for an increase. Compositionally, the decline was driven by part-time employment (-32,200), while full-time employment rose 16,300. The unemployment rate rose 3bps to 4.46%, while the participation rate fell 16bps to 66.85%. Hours worked declined 0.6% MoM. Wage growth, however, held at 0.8% quarter-over-quarter (QoQ), in line with market consensus but slightly below the RBA’s August forecast. Private sector wages increased 0.7% QoQ and showed clearer signs of slowing, but were offset by stronger public sector wage growth of 0.9% QoQ.
Canada
The dominant story of the past week in Canada is the collapse of US-Canada trade talks and the imposition of 50% US tariffs on about USD 20 billion of Canadian goods—including plywood, liquor, and electrical equipment—with Prime Minister Mark Carney suspending negotiations and vowing matching retaliation. Domestically, July Consumer Price Index (CPI) inflation came in slightly above consensus at 3.0% YoY, though the overshoot was almost entirely gasoline-driven with core measures (CPI-median 2.0%, CPI-trim 1.9%) remaining anchored near the Bank of Canada's 2.25% policy rate target, leaving rate expectations broadly unchanged. June retail sales beat estimates (0.6% MoM), and second-quarter GDP growth was revised sharply higher to 3.2% annualised.
Markets
Equity markets
Last week, the MSCI All Country World Index (MSCI ACWI) lost -0.9% (14.7% YTD).
The S&P 500 Index finished the week -1.4% lower (12.9% YTD) as elevated Treasury yields, renewed US-Iran tensions, higher oil prices, and weakness in semiconductor and artificial intelligence (AI)-related shares broadly weighed on investor sentiment. Mixed takeaways from several retail earnings reports also appeared to contribute to the week’s cautious tone.
Large-cap growth stocks underperformed their value counterparts, while small caps underperformed large caps. The Russell 1000 Growth Index returned -2.3% (3.8% YTD), the Russell Value Index -0.5% (23.3% YTD), and the Russell 2000 Index -1.6% (22.6% YTD). The technology-heavy Nasdaq Composite fell -2.0% (13.1% YTD).
In Europe, the MSCI Europe ex-UK Index ended the week -0.8% down (12.7% YTD). Investors were unnerved by the sell-off in global government bonds, inflationary pressures, and uncertainty about whether the US and Iran can reach a lasting peace agreement. Major stock indices were mixed. Germany’s DAX Index retreated -1.1% (6/7% YTD), France’s CAC 40 Index fell -1.8% (6.8% YTD), and Italy’s FTSE MIB Index decreased -1.7% (20.8% YTD). Switzerland’s SMI rose 0.5% (12.2% YTD). The euro strengthened against the US dollar, closing the week at USD 1.17 for EUR, up from 1.16.
The FTSE 100 Index in the UK bucked the downward trend, adding 0.7% (11.6% YTD), while the FTSE 250 Index of smaller companies shed -0.6% (12.5% YTD). The British pound appreciated against the US dollar for the week, closing at USD 1.36 per GBP, up from 1.35.
Japan’s stock markets declined sharply over the week, as renewed Middle East uncertainty, higher oil prices, and rising bond yields prompted a broader risk-off move, with technology and semiconductor stocks particularly weak. The TOPIX Index dropped -3.1% (20.8% YTD), and the TOPIX Small Index lost -1.5% (20.3% YTD). The yen fluctuated around the JPY 159 level against the US dollar over the week and remained historically weak, with expectations for further BoJ policy tightening balanced against elevated oil prices and the wide US-Japan interest rate differential.
In Australia, the ASX 200 Index declined by -0.3% (6.6% YTD), dragged down by below-expectation earnings from retailers and banks, as well as weaker labour market data. Australian government bond yields moved higher with the curve largely unchanged. The Australian dollar strengthened 0.9% against the US dollar.
In Canada, the S&P/TSX Composite lost -0.3% (17.1% YTD).
Emerging markets and other markets
The MSCI Emerging Markets Index was up 1.2% (24.5% YTD). The Brazilian market contributed positively, while the Chinese, South Korean, Taiwanese, and Indian markets contributed negatively.
China equities diverged over the week, with Hong Kong-listed shares outperforming mainland benchmarks. Mounting worries about faltering economic momentum weighed on mainland sentiment as July data showed a broad slowdown in economic activity. The CSI 300 Index, the main onshore benchmark, retreated -0.9% (1.4% YTD), while the Shanghai Composite Index slid -0.5% (flat YTD). Notably, semiconductor and robotics names pulled back in tandem with other chip stocks globally, despite some positive earnings updates and the stellar performance of humanoid robotics company Unitree Robotics following its stock market debut. In contrast, Hong Kong's benchmark Hang Seng Index jumped 3.6% (3.6% YTD), led by strength from health care stocks. The MSCI China Index, which primarily comprises offshore-listed stocks, rose 2.8% (-5.7% YTD).
In Indonesia, the central bank left its benchmark interest rate unchanged this week, holding steady at 5.75%. The pause followed a period in which the bank had raised rates multiple times to counter sharp currency weakness, and this week's decision kept the companion deposit and lending facility rates unchanged as well. The rupiah has recovered from the record lows it reached earlier in the year and strengthened modestly in recent weeks.
The currency's recovery has been supported in part by a broadly weaker U.S. dollar, which has eased pressure on emerging market currencies generally, including the rupiah. Indonesian government bond markets and equities have remained relatively calm alongside the steadier currency, a contrast to the volatility seen earlier in the year when the rupiah's slide prompted the central bank to raise rates outside its normal policy schedule. The rate hold was consistent with policymakers’ efforts to preserve rupiah stability while keeping inflation within target and supporting economic growth.
In Brazil, equities faced a difficult stretch this month as foreign investors withdrew a substantial amount of money from stocks listed on the country's main exchange, marking one of the largest such pullbacks on record. Selling accelerated into this week, compounding a losing streak in the Ibovespa that had already been building after news that one of Brazil's best-known retailers filed for bankruptcy protection, citing billions of reais in outstanding debt. The filing also raised concerns about Brazil's credit environment and weighed on bank shares, with several financial institutions listed among Casas Bahia's creditors.
Adding to the uncertainty, Brazil's electoral court temporarily barred presidential candidate Pablo Marçal from participating in debates and accessing public campaign funds while it considers a challenge to his candidacy, a ruling that came just as the country's two leading candidates formally launched their campaigns ahead of the October vote. Some foreign investors have pointed to the approaching election as a key reason for reducing their exposure to Brazilian assets, alongside broader competition for capital from other markets. Despite the outflows, Brazilian stocks and the real recovered some ground later in the week, with equities snapping their losing streak and the currency strengthening against the dollar.
Fixed income markets
Last week, the Bloomberg Global Aggregate Index (hedged to USD) edged down -0.1% (0.3% YTD), the Bloomberg Global High Yield Index (hedged to USD) gave back -0.2% (3.1% YTD), and the Bloomberg Emerging Markets Hard Currency Aggregate Index retreated -0.1% (1.2% YTD).
Over the week, the 10-year Treasury yield increased by 5bps to 4.74% from 4.69% (up 57bps YTD). The 2-year Treasury yield rose by 7bps, ending the week at 4.24% from 4.17% (up 76bps YTD).
Over the week, the 10-year German Bund yield increased by 6bp, ending at 3.26% from 3.20% (up 40bps YTD). The 10-year UK gilt yield rose by 2bps, ending the week at 5.06% from 5.04% (up 58bps YTD).
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Our Weekly Market Recap is designed to keep you updated on the previous week's major events and developments. It includes:
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Global Investment Solutions Team
Yoram Lustig, CFA, PRM™
Head, Global Investment Solutions, EMEA
Yoram Lustig is the head of Global Investment Solutions, EMEA, and a portfolio manager in the Multi-Asset Division. He also is the chair of the UK and European Investment Committees and a member of the Multi-Asset Steering Committee.
Michael Walsh, CFA, CAIA®, FIA
Solutions Strategist
Michael Walsh is a London-based solutions strategist on the Multi-Asset Solutions team for EMEA. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price International Ltd.
Eva Wu, CFA
Associate Solutions Strategist
Eva Wu is an associate solutions strategist on the Multi-Asset Solutions team in the Multi-Asset Division. She is a vice president of T. Rowe Price International Ltd.
Matt Bance, CFA
Solutions Strategist
Matt Bance is a solutions strategist and portfolio manager on the Multi-Asset Solutions team for the Europe, Middle East, and Africa region. He is a vice president of T. Rowe Price International Ltd.
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