USA
The U.S. economy delivered a mix of resilience and caution in the final week of August. The second estimate of Q2 GDP was revised upward to 3.3% annualized, reflecting stronger business investment and household spending. Labor markets remained tight, with initial jobless claims slipping to 229,000, underscoring continued employment strength. July’s core PCE inflation quickened slightly to 2.9% year-on-year, keeping the Fed’s September policy meeting in sharp focus. Equity markets hit record highs midweek, but gains were trimmed Friday as tech heavyweights, notably Dell and Marvell, warned of higher AI-server costs, dampening sentiment around the AI trade. The S&P 500, Dow, and Nasdaq ended the week modestly lower, snapping a string of record closes.
Europe
European data painted a picture of sticky inflation and weakening sentiment. Flash CPI releases showed German inflation re-accelerating to around 2.5% YoY, with France at 2.3% and Spain at 3.1%. Meanwhile, eurozone business and consumer confidence indices slipped, pointing to softer growth momentum. Political and regulatory developments also weighed on markets: in the UK, speculation about a potential levy on bank reserve holdings drove financial stocks sharply lower, pushing the FTSE 100 to its steepest weekly drop in five months. Across the continent, the STOXX Europe 600 posted its first weekly loss in four, with the CAC 40 down over 3% as political jitters amplified declines, while the DAX 40 and IBEX 35 followed the broader downtrend.
Japan
Japan’s data releases highlighted some fragility in industrial activity even as consumer spending remained steady. July industrial production fell 1.6% month-on-month, undershooting expectations, while the unemployment rate edged up to 2.7% and the job-to-applicant ratio eased to 1.20. Retail sales, however, grew a solid 2.6% year-on-year, suggesting domestic demand continues to support growth. Equity markets, after a strong August rally, saw profit-taking amid Friday’s weaker industrial output data. The Nikkei 225 eked out a 0.2% weekly gain, holding near multi-decade highs, while the broader TOPIX fell 0.8%, reflecting pressure on cyclical and industrial names.
China
China remained under pressure from soft corporate profitability and weak industrial demand. Industrial profits fell 1.5% year-on-year in July, marking a third straight monthly decline, as factory-gate deflation and subdued domestic demand weighed on margins. Investors also braced for the weekend’s PMI data, which confirmed continued contraction in manufacturing at 49.4 for August, while services activity barely expanded at 50.3. Equity markets reflected this divergence: the Shanghai Composite managed a 0.8% weekly gain, supported by defensive A-shares, while the Hang Seng slipped 1% as technology stocks remained volatile. Overall, the data reinforced concerns about China’s uneven recovery and underscored the need for further policy support.