In This Edition:
SOFTER US INFLATION SUPPORTS SENTIMENT AS GROWTH SIGNALS BECOME MORE MIXED
Cooling core and producer inflation eased concerns around further Federal Reserve tightening, although weaker consumer data and higher oil prices leave the outlook finely balanced.
EUROPEAN MARKETS NAVIGATE HIGHER ENERGY COSTS AND PERSISTENT POLICY CONSTRAINTS
Energy pressures, industrial disruption and elevated UK inflation expectations continue to complicate the region’s growth outlook and reinforce a cautious approach from policymakers.
ASIAN MARKETS DIVERGE AS JAPAN OUTPERFORMS AND CHINA LOSES MOMENTUM
Technology strength and a weaker yen lifted Japanese equities, while softer Chinese markets and continued property support highlighted uneven economic conditions across the region.
GLOBAL ASSET MARKETS REFLECT RENEWED ENERGY AND GEOPOLITICAL PRESSURES
Equity performance was mixed and developed-market bond yields moved higher, while the sharp rise in oil prices reinforced the importance of inflation and geopolitical risks for investors.
SOUTH AFRICA FACES LABOUR MARKET WEAKNESS AND INVESTMENT UNCERTAINTY
Rising unemployment, subdued industrial activity and regulatory challenges weighed on the domestic outlook, contributing to weaker equities and higher government bond yields.
MARKET MOVES OF THE WEEK
CHART OF THE WEEK
Softer US inflation supports sentiment as growth signals become more mixed
After several data-heavy weeks, markets entered a quieter period, with investor sentiment remaining constructive and volatility falling back towards its 2026 lows despite ongoing geopolitical uncertainty in the Middle East. Inflation remained the key focus, with signs of renewed moderation helping to ease concerns around persistent price pressures and supporting fresh highs in parts of the US equity market. With the Federal Reserve’s next policy meeting only in September, attention now shifts to incoming labour market and inflation data.
US equities ended the week mixed as softer inflation and positive AI-related earnings were balanced against higher oil prices, uncertainty around the Strait of Hormuz and weaker consumer data. Smaller companies outperformed, while the S&P 500 posted a modest gain and the Dow Jones declined. Headline inflation rose 3.4% year on year in July, while core inflation eased to 2.5%, with producer prices also coming in softer than expected. This reduced expectations of another Fed rate increase in September, although policymakers continued to caution that inflation risks remain.
Consumer data was less supportive, with retail sales falling 0.6% in July and consumer sentiment weakening in August. While this points to some moderation in household demand, steady economic growth and supportive earnings expectations continue to underpin markets. Investors will be watching closely to see whether inflation can continue to ease while the US economy maintains its momentum.
European markets navigate higher energy costs and persistent policy constraints
European markets were mixed as higher energy prices and shifting sector leadership influenced sentiment. Rising gas and fuel costs added pressure to industrial activity, while extreme heat disrupted French nuclear generation and low water levels on the Rhine affected German logistics. Despite these challenges, eurozone investor confidence returned to positive territory in August. In the UK, second-quarter GDP grew by 0.4%, although industrial activity remained subdued, while persistent inflation concerns kept government bond yields elevated.
Looking ahead, UK labour market and inflation data will be important for the Bank of England. Wage growth is expected to moderate further, but higher energy costs could push headline inflation back towards 2.9%, reinforcing the case for a cautious approach to monetary policy.
Asian markets diverge as Japan outperforms and China loses momentum
Japan was the standout major equity market, with the Nikkei 225 gaining 4.74% and the TOPIX rising 3.00%. Strong technology earnings, semiconductor demand and a weaker yen supported equities, although persistent inflation and currency weakness increased speculation that the Bank of Japan could raise rates again. Producer inflation remained elevated at 7.2% year on year, while the 10-year government bond yield rose to 2.87%.
Chinese markets lost momentum as the week progressed, with the Hang Seng declining 2.15% amid weakness in large technology shares and mixed earnings. Inflationary pressures continued to ease, with consumer inflation slowing to 0.5% and producer inflation to 3.5%. Policy support remained focused on the property sector, with Beijing relaxing homebuying restrictions, while Hong Kong announced plans to broaden the Hang Seng Tech Index to include more AI and robotics companies.
Global asset markets reflect renewed energy and geopolitical pressures
Overall, global markets delivered a mixed performance. The S&P 500 and Nasdaq gained 0.36% and 0.14% respectively, while the Dow Jones fell 0.56%. The Euro Stoxx 50 rose 0.24% and the FTSE 100 declined 1.38%, while Japan significantly outperformed other Asian markets. Government bond yields moved higher across major developed markets. Brent crude oil gained 7.72% for the week and is now 45.42% higher year to date, while gold rose 0.80%. Bitcoin declined 3.02% and remains 28.17% lower in 2026.
South Africa faces labour market weakness and investment uncertainty
Turning to South Africa, the labour market weakened in the second quarter, with the official unemployment rate rising to 33.6% from 32.7%, while the number of unemployed people increased to 8.5 million. Employment declined across seven of the ten sectors tracked, highlighting continued pressure on households and the broader economy.
There were, however, some tentative signs of improvement in industrial activity. Manufacturing production increased 0.9% month on month in June, while mining output rose 0.3%. On an annual basis, both sectors remained in contraction, although the pace of decline moderated, with manufacturing down 1.7% and mining down 4.0%.
Elsewhere, the Constitutional Court blocked Shell-led offshore exploration along the Wild Coast, overturning an earlier ruling that had allowed the project to proceed. The decision follows years of legal challenges and again highlights the importance of regulatory certainty and policy execution in attracting long-term investment into South Africa’s energy sector.
Against this backdrop, South African markets had a difficult week. The JSE All Share Index fell by 2.94%, led by a 6.00% decline in industrial shares, taking the sector’s year-to-date loss to 10.32%. Financials and resources also moved lower, declining by 1.64% and 1.36% respectively, while listed property fell by 1.62%. The rand weakened slightly against major currencies, with the US dollar closing the week at R16.17, while the South African 10-year government bond yield increased to 8.60%.
The information contained in this recording/presentation is for general information purposes only and should not be construed as, nor does it constitute, financial, tax, legal, investment or any other advice. Carrick does not guarantee the suitability or potential value of any products or investments discussed herein. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services, or any other content contained in this recording for any purpose. Carrick accepts no responsibility for the suitability or accuracy of the information or for any errors or omissions that may occur. Therefore, any reliance you place on such information is strictly at your own risk. This material is provided for general information purposes only and is not personal advice to anyone to invest in any fund or product. Information taken from trade and other sources is believed to be reliable, although Carrick does not represent this as accurate or complete and it shouldn’t be relied upon as such. All material, content, and information provided by Carrick is the intellectual property of Carrick Group and its affiliates, unless otherwise stated. No part of this material may be copied, reproduced, distributed, published, or used for any commercial purpose without Carrick’s prior written consent, and is provided solely for non-commercial use. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting an investment.
