USA
The U.S. economy maintained moderate momentum during the week. July inflation data showed headline CPI at 2.7% y/y and core at 3.1% y/y, indicating a gradual easing from earlier peaks. Q2 GDP growth rebounded to +3.0% annualized, supported by strong consumption, while the labor market remained stable, with weekly jobless claims at 224,000, still historically low. Investors, however, grew cautious ahead of FOMC meeting minutes and flash PMI surveys due later in the week, both expected to shed light on the Fed’s policy stance. Equity markets reflected this cautious tone: the S&P 500 and Dow slipped modestly, while the Nasdaq hovered near record levels, supported by strength in technology stocks and AI-related momentum.
Europe
Economic activity slowed in the euro area, with Q2 GDP expanding just 0.1% q/q compared to +0.6% in Q1, underscoring weaker domestic demand. Inflation remained close to target, with the July HICP flash estimate at 2.0% y/y, though the final reading is due mid-week. Markets are also awaiting the UK’s July CPI release, which is expected to confirm persistent services-driven inflation. Equity markets were mixed, with the STOXX Europe 600 flat, while the FTSE 100 outperformed modestly on strength in large-cap defensives. The DAX and CAC 40 traded sideways as investors positioned for Thursday’s flash PMIs, a critical gauge of euro area demand resilience in the face of softer global trade and tariff-related uncertainty.
Japan
Japan’s economy showed signs of resilience, with Q2 GDP rising +0.3% q/q, boosted by exports even as domestic consumption stayed weak. Survey data pointed to challenges in manufacturing, while services continued to expand modestly. Equity markets remained a bright spot, with the Nikkei 225 and TOPIX reaching record highs on Aug 18, supported by corporate earnings and a weaker yen that bolstered exporter sentiment. Gains were slightly pared on Aug 19 as investors awaited July CPI figures due Friday and flash PMIs on Thursday, which will provide clarity on whether price pressures remain sticky and if services demand can offset manufacturing weakness.
China
Economic data highlighted a patchy recovery, with July industrial production up 5.7% y/y and retail sales up 3.7% y/y, both weaker than expected, pointing to fragile domestic demand. Policymakers remain cautious, with the People’s Bank of China maintaining the loan prime rate at 3.0% (1-year) and 3.5% (5-year), signaling a balance between growth support and currency stability. Despite mixed fundamentals, the Shanghai Composite rallied to its highest close since 2015, driven by enthusiasm in A-shares and strong earnings in select sectors. The Hang Seng Index lagged, weighed by property-sector concerns and profit-taking in technology shares. Looking ahead, markets are closely watching the Aug 20 LPR fixing and any further policy signals, which could determine whether momentum in Chinese equities sustains or stalls.