USA
The U.S. economy displayed mixed signals during the week. On the positive side, Q2 GDP growth came in at a robust +3.0% annualized, beating expectations and marking a strong rebound from Q1’s slight contraction. However, July’s labor market report showed signs of cooling: non-farm payrolls added only +73,000 jobs versus expectations of +110,000, and the unemployment rate ticked up to 4.2%. Initial jobless claims declined slightly to 217,000, indicating some labor market stability. The S&P Global Composite PMI improved to 54.6, reflecting expansion in the services sector, though the Manufacturing PMI hovered near contraction territory at 49.8. Markets were initially buoyed by strong Q2 earnings from major tech companies (e.g., Microsoft, Meta), with the NASDAQ and S&P 500 reaching record highs mid-week. However, renewed trade tensions and soft jobs data triggered a sharp end-of-week selloff. The Federal Reserve held rates steady at 4.25–4.50%, with officials signaling caution amid conflicting economic indicators and political pressure to cut rates.
Europe
In the Eurozone, the macroeconomic backdrop remained fragile. Preliminary Q2 GDP data showed minimal growth of +0.1% quarter-over-quarter and +1.4% year-over-year, reflecting ongoing economic stagnation. Inflation remained sticky, with core pressures near 2%, and unemployment was steady at 6.2%. Eurozone PMI data showed continued weakness in manufacturing, while services posted a modest recovery. Investor focus remained sharply on looming U.S. tariffs, as the Trump administration threatened new levies on European imports unless trade concessions were reached by August 1. This fueled volatility across European equities, with the STOXX Europe 600 falling ~1.9%, and the CAC 40 declining over 3% during the week. Even solid earnings reports from large-cap names like Shell and Barclays were overshadowed by geopolitical uncertainty. The euro traded in a narrow range as investors weighed weak growth against the European Central Bank’s cautious stance.
Japan
In Japan, the Bank of Japan maintained its key interest rate but revised upward its economic and inflation outlooks, reflecting improving confidence in the domestic recovery. The yen strengthened slightly following the BOJ’s more hawkish tone, pressuring exporters but signaling a possible shift away from ultra-loose policy. Economic data was generally stable: industrial production and consumer sentiment showed marginal improvement, while the services sector continued to outperform manufacturing. Equity markets responded positively, with the Nikkei 225 and TOPIX posting modest gains, supported by a stronger earnings outlook and more constructive central bank guidance. However, global trade worries, particularly the ripple effects of U.S. tariffs, weighed on sentiment heading into the weekend.
China
China’s economy presented a mixed picture. Q2 GDP growth was reported at a stronger-than-expected 5.2%, prompting the IMF to upgrade its full-year growth forecast to 4.8%. Despite the headline strength, July’s official manufacturing PMI slipped further into contraction at 49.3, marking the fourth consecutive month below the 50 threshold. Weak external demand and ongoing property sector troubles continued to drag on business confidence. Chinese equity markets reflected these concerns: the Shanghai Composite declined, while the Hang Seng Index fell 1.6% on July 31 and another 1.1% on August 1, ending the week at a two-week low. Investors remained cautious amid limited stimulus signals from Beijing and growing uncertainty around U.S.-China trade dynamics. Overall, market sentiment in China was fragile despite resilient GDP figures, as soft PMIs and weak private-sector activity overshadowed headline growth.