United State
Earnings Fuel Gains Despite Inflation Concerns
Major U.S. equity benchmarks delivered a mixed performance last week. The S&P 500 and Nasdaq Composite scaled fresh highs, underpinned by robust earnings from key corporates and encouraging economic data. In contrast, the Dow Jones Industrial Average and S&P MidCap 400 posted slight losses, while the small-cap Russell 2000 ended marginally higher.
The second-quarter earnings season gained traction mid-week. JP Morgan Chase and Citigroup led the financial sector with better-than-anticipated results. Later in the week, strong reports from consumer giants PepsiCo, United Airlines, and Netflix reinforced market optimism.
Among tech names, NVIDIA surged after news emerged that the Trump administration would allow it to continue exporting H2O AI chips to China. The chipmaker recently surpassed a USD 4 trillion market cap milestone, and the announcement triggered another leg up in its rally.
Consumer Price Data & Retail Momentum
June’s consumer inflation data signaled rising price pressures. The headline Consumer Price Index (CPI) climbed 0.3% month-on-month—its largest monthly increase in five months—versus a 0.1% gain in May. Year-over-year CPI accelerated to 2.7% from 2.4%, while core CPI (excluding food and energy) edged higher to 2.9% from 2.8%.
Prices for recreational goods, household items, and footwear showed notable increases, partially offset by declining vehicle costs. Analysts attributed some of the uptick to elevated tariffs.
Retail sales also beat expectations, rebounding 0.6% in June after a sharp 0.9% contraction in May. The improvement reinforced views of steady consumer demand despite persistent inflationary forces.
Markets briefly wobbled mid-week amid rumors of President Trump potentially removing Federal Reserve Chair Jerome Powell. However, sentiment quickly stabilized when Trump publicly dismissed such intentions.
Fixed Income: Credit Outpaces Treasuries
Longer-dated U.S. Treasury yields were largely flat, while short-term yields dipped slightly amid speculation about the Fed’s leadership direction. Meanwhile, corporate bonds outshone Treasuries as investment-grade credit issuance remained strong and oversubscribed.
Index Performance Summary
| Index | Friday’s Close | Week’s Change | % Change YTD |
| DJIA | 44,342.19 | -29.32 | 4.23% |
| S&P 500 | 6,296.79 | 37.04 | 7.06% |
| Nasdaq Composite | 20,895.66 | 310.13 | 8.21% |
| S&P MidCap 400 | 3,171.73 | -0.67 | 1.63% |
| Russell 2000 | 2,239.42 | 4.59 | 0.42% |
Source: Reuters, Bloomberg, Yahoo! Finance. Data as of market close Friday.
Europe
Cautious Optimism Amid Mixed Data
The STOXX Europe 600 Index ended the week roughly flat in local currency terms, as investors monitored the latest economic prints and awaited progress in U.S.-EU trade negotiations. Among major national indices, Italy’s FTSE MIB rose 0.58%, and the UK’s FTSE 100 gained 0.57%, partly lifted by a weaker British pound. France’s CAC 40 and Germany’s DAX traded close to unchanged.
Industrial and Trade Activity Accelerates
Euro area industrial output expanded 1.7% month-on-month in May, rebounding strongly from April’s 2.2% contraction and surpassing forecasts of 0.9%. Gains in energy, capital goods, and nondurable consumer items were key drivers.
Separately, the region’s trade surplus rose to EUR 16.2 billion—up from EUR 12.7 billion a year earlier—thanks to rising exports and falling imports.
Investor sentiment in Germany, as measured by the ZEW survey, improved sharply in July. The index climbed to 52.7, its highest since early 2022. Optimism was fueled by expectations of policy stimulus and easing geopolitical tensions with the U.S.
United Kingdom
Inflation Surprises to the Upside
UK inflation unexpectedly rose in June, with annual CPI reaching 3.6%, up from 3.4% in May—marking the fastest pace since January 2024. Elevated transportation and fuel costs were key contributors. Notably, services inflation held firm at 4.7%, defying forecasts for a moderation and signaling entrenched price pressures.
Labor market data pointed to softening conditions. The unemployment rate ticked up to 4.7%, a four-year high, while payroll employment declined for the second consecutive month. Wage growth excluding bonuses eased to 5.0%, down from a revised 5.3%, though still above market expectations.
Japan
Election Uncertainty and Cooling Prices
Japanese equity markets posted modest weekly gains. The Nikkei 225 rose 0.63%, while the broader TOPIX Index gained 0.40%. Political uncertainty ahead of Japan’s July 20 Upper House elections limited investor enthusiasm. A potential loss of majority for Prime Minister Shigeru Ishiba’s ruling coalition is seen as a pivotal moment.
Markets are closely watching how the next government approaches fiscal stimulus and structural reforms. The yield on 10-year Japanese government bonds edged up to 1.53% from 1.49%, anticipating a more pro-spending cabinet. The yen depreciated slightly to the mid-JPY 148 per U.S. dollar range.
CPI and Trade Softens
Japan’s core CPI eased to 3.3% in June from 3.7% in May, missing consensus forecasts. Energy subsidies were a major factor in the moderation.
Exports fell 0.5% year-over-year in June, missing expectations for growth. Weak demand from the U.S. and China—particularly for autos, components, and pharmaceuticals—weighed on shipments. The U.S. has confirmed a 25% reciprocal tariff on Japanese goods starting August 1, although negotiations for a bilateral deal are ongoing.
China
Growth Holds, but Property and Deflation Woes Linger
Chinese equities ended the week higher. The CSI 300 advanced 1.09%, and the Shanghai Composite edged up 0.69%, while the Hang Seng Index surged 2.84%.
Q2 GDP grew 5.2% year-over-year, down slightly from 5.4% in Q1 but surpassing market expectations. The better-than-expected data may ease pressure on Beijing to introduce aggressive stimulus in the near term.
Nonetheless, concerns persist. Factory-gate prices recorded their steepest decline in two years in June, reflecting a deflationary environment. Retail activity remains weak, and trade risks loom large with a temporary U.S.-China deal set to expire in mid-August.
China’s housing downturn continues to drag on the broader economy. New home prices in 70 cities fell 0.27% month-on-month in June, and secondary home values dropped 0.61%. Residential sales plummeted 12.6% year-over-year, the sharpest contraction in 2025 so far.
Other Markets
Indonesia: Trade Deal and Rate Cut
Indonesia gained positive headlines after securing a trade agreement with the U.S., which reduced proposed tariffs from 32% to 19%. The country also committed to major U.S. purchases, including 50 Boeing aircraft and substantial energy and agricultural imports.
In response to subdued inflation and to support growth, Bank Indonesia lowered its benchmark interest rate from 5.50% to 5.25% following its July policy meeting. Officials highlighted the need to stabilize the rupiah and sustain economic momentum.
Peru: Policy Steady Amid Mixed Signals
Peru’s central bank opted to leave interest rates unchanged at 4.50% during its July 10 meeting. Inflation held steady at 1.7% in June, while core inflation edged lower.
While global inflation expectations have ticked higher due to trade uncertainty, domestic projections in Peru remain anchored. The central bank noted that forward-looking inflation expectations remained within the 2.0–3.0% target range.
