Global equity markets ended the week mixed as data pointing to slowing inflation in the United States and positive corporate earnings were offset by uncertainty stemming from developments in the Middle East. Investors turned their attention to the minutes of the U.S. Federal Reserve's (Fed) meeting, which will be released next week.
U.S. rate expectations shifted
U.S. consumer prices rose 0.1 percent month on month and 3.4 percent year on year in July. Annual inflation fell to its lowest level in the past four months, while annual core inflation stood at 2.5 percent, its lowest level since February.
The Producer Price Index was unchanged month on month in July and rose 4.7 percent year on year. Producer inflation coming in below market expectations and the continued decline in energy costs helped revive expectations of an interest-rate cut.
Market pricing showed that the probability of a Fed rate hike in September fell below 50 percent. Expectations that the bank would raise rates by the end of the year also weakened. Cleveland Fed President Beth Hammack reiterated her view that interest rates should be raised to bring down high inflation.
Geopolitical developments limited risk appetite
News reports that the United States could maintain its naval blockade against Iran indefinitely limited optimism in the markets. Pakistani government sources announced that the United States and Iran had agreed to extend the 60-day ceasefire set to expire on Aug. 17.
The parties approved the extension with the mediators, while contacts continued over the length of the extension. Treasury Secretary Scott Bessent also said that the United States would soon announce unprecedented economic measures against Iran.
Technology stocks led U.S. markets
On the New York Stock Exchange, the S&P 500 rose 0.36 percent and the Nasdaq 0.14 percent on a weekly basis, while the Dow Jones fell 0.56 percent. Optimism over artificial intelligence and data-center investments helped offset geopolitical pressure on the markets.
Nvidia announced that it had formed a strategic partnership with six financial institutions to mobilize more than $500 billion in third-party capital for the development of artificial intelligence infrastructure. Super Micro Computer shares gained 28 percent, Micron Technology shares rose 10.7 percent, Oracle shares increased 2.4 percent and Nvidia shares gained 0.5 percent.
Next week, investors in the United States will follow the Fed meeting minutes, as well as industrial production, housing-market data, initial jobless claims and Purchasing Managers' Index data for the manufacturing and services sectors.
European and Asian markets moved in different directions
European stock markets declined, except in Germany, under the impact of developments in the Middle East, economic data and rising oil prices. On a weekly basis, the FTSE 100 fell 1.44 percent, the CAC 40 0.90 percent and Italy's MIB 30 0.25 percent, while the DAX rose 0.41 percent.
The eurozone economy grew 0.4 percent quarter on quarter and 1 percent year on year in the second quarter. Annual inflation in Germany rose to 2.8 percent in July, while the U.K. economy grew 0.4 percent over the same period. In Europe next week, investors will follow remarks by European Central Bank President Christine Lagarde and regional inflation data.
A study by Netherlands-based Triodos Bank estimated that extreme heat and prolonged drought in Europe could cause approximately 180 billion euros in damage to the European Union economy. The study projected that France's gross domestic product could decline by approximately 1.4 percent and that the country's economy could contract 0.6 percent year on year.
Optimism toward the technology sector supported risk appetite in Asian markets. South Korea's Kospi index rose 11.49 percent, ending a seven-week losing streak, while the Nikkei 225 gained 4.74 percent. The Hang Seng fell 2.15 percent and the Shanghai Composite Index declined 0.33 percent.
China's inflation rose 0.5 percent year on year in July, while producer prices increased 3.5 percent, with both figures coming in below expectations. Japan recorded a current-account deficit of 92.3 billion yen, while producer inflation rose 7.2 percent year on year.
Commodity prices rose
On a weekly basis, the yield on the U.S. 10-year Treasury note rose 2 basis points to 4.70 percent, while the dollar index increased 0.1 percent to 99.7. Gold rose 0.8 percent to $4,376 an ounce, while the price of October Brent crude futures rose 6 percent to $88.5 a barrel.
Turkish markets ended the week higher
On Borsa Istanbul, the BIST 100 index rose 2.85 percent on a weekly basis, closing at 14,172.26 points. The dollar/Turkish lira exchange rate ended the week at 47.8820, up 0.4 percent.
Fatih Karahan, governor of the Central Bank of the Republic of Türkiye, announced that the year-end 2026 inflation forecast had been raised to 28 percent. Karahan said inflation was projected to fall to 15 percent at the end of 2027 and 9 percent at the end of 2028, before stabilizing at 5 percent over the medium term.
Karahan said the outlook for diesel, natural gas and non-energy commodity prices had contributed to the 2-percentage-point revision to the 2026 forecast. He added that the impact of regulations concerning the sliding-scale fuel-tax system had also been reflected in the forecasts.
In Türkiye next week, data on the budget balance, the house price index, the consumer confidence index, the real-sector confidence index and the capacity utilization rate in the manufacturing industry will be released.
