Global markets ended the week with a mixed tone as investors weighed stronger-than-expected US inflation data against growing optimism over monetary easing elsewhere. Equity inflows surged worldwide, but performance varied sharply across regions, reflecting diverging economic conditions and policy signals.
Asia
Asian markets were subdued after a hotter-than-expected US Producer Price Index dampened hopes for an aggressive Federal Reserve rate cut. The MSCI Asia-Pacific index excluding Japan slipped, dragged down by China and Hong Kong where weak data reinforced concerns over sluggish growth. Japan’s Nikkei, however, managed gains supported by robust second-quarter GDP figures, underscoring resilience in the world’s third-largest economy.
Europe
European equities advanced, buoyed by easing trade tensions and cautious optimism on the economic outlook. The STOXX Europe 600 climbed, with France’s CAC 40 and Italy’s FTSE MIB leading gains. Germany’s DAX also rose modestly, while the UK’s FTSE 100 registered a smaller uptick. Sentiment improved further after the Bank of England delivered a rate cut to 4 per cent, signalling a dovish tilt aimed at cushioning a slowing labour market.
United States
US markets extended gains with the S&P 500, Nasdaq and Dow hitting fresh highs, led by small-cap outperformance. Optimism around economic growth was tempered by the surprise inflation reading, which limited expectations for large rate cuts in the coming months. Retail sales showed resilience, but consumer sentiment weakened, highlighting lingering concerns over household purchasing power. Investors are now focused on signals from policymakers ahead of the Jackson Hole symposium.
Latin America
Latin American markets remained cautious, with attention fixed on Bolivia’s elections. Investors are watching closely for potential policy shifts that could either bolster or unsettle sentiment across the region. Broader markets traded sideways, reflecting a lack of new catalysts and continued sensitivity to global monetary policy signals.
Africa and Arab region
In the Middle East, Dubai’s ambition to strengthen its role as a global financial hub drew attention, though challenges around transparency and infrastructure persist. African markets saw limited direct movement in global flows, but analysts noted similarities with Asia’s fragmented financial integration, pointing to the need for deeper capital market reforms to attract sustained international investment.
London
London markets were lifted modestly by the Bank of England’s decision to ease rates. The FTSE 100 gained as investors interpreted the move as supportive for businesses and households facing slower economic activity. The rate cut, while modest, marked a turning point in policy direction and placed the UK in line with wider European efforts to shore up growth.
Outlook
The week’s developments underline the competing pressures of persistent inflation in the United States and policy easing elsewhere. With equity funds seeing nearly $20 billion in inflows globally, appetite for risk remains intact. However, diverging regional trajectories highlight uncertainty that will continue to shape markets in the weeks ahead.
REFH – Newshub, 16 August 2025
