Market Developments
The US equities extended their advance for a second straight week, with NVIDIA’s fiscal second-quarter results reinforcing that the AI investment cycle remains intact: revenue of USD 96.2 billion, guidance of USD 108 billion for the current quarter, and a roughly 70% growth outlook for fiscal 2028. The result helped the S&P 500 and Nasdaq add about 0.5% and 0.4% respectively, even as the week saw the largest US equity fund outflow since March. Inflation, not growth, drove the week’s policy repricing: July headline PCE held at 3.7% and core PCE at 3.3% and the real consumer spending was flat, and Q2 GDP was confirmed at 1.5% even as corporate profits rose sharply, pointing to moderate real growth accompanied by persistent price pressure rather than recession risk. Fed Chair Kevin Warsh’s Jackson Hole address added a hawkish twist to the curve, reaffirming that the Fed still has work to do unless inflation clearly returns to the 2% target; the 2-year yield rose to 4.36% while the 10- and 30-year ended near 4.73% and 5.21%, compressing the 2s30s spread by about 18 basis points over the week.
Elsewhere, the moves that dominated the prior week partly reversed: Brent crude fell more than 5% to USD 89.31 as Hormuz flows improved unevenly and deal rumors resurfaced, while gold futures lost 3.25% as the dollar and short-end yields rose, easing near-term overextension without displacing gold’s strategic case tied to fiscal and geopolitical risk. The pullback in oil supported sentiment across Europe and Asia, where the Stoxx 600 was relatively flat (0.1%) and Germany’s GDP and Ifo readings pointed to continued recovery from stagnation, even as France’s growth stalled and inflation accelerated to 2.4%. Japanese equities advanced as the yen weakened toward 160 against the dollar and the 10-year JGB yield rose on growing expectations of further Bank of Japan tightening, while in China mainland indices proved more resilient than Hong Kong (-1.6%), where Alibaba’s HKD 80 billion placement weighed on the index before AI-linked names recovered on NVIDIA’s results. In India, SENSEX declined 0.4% on the week (Nifty 50 down 0.31%) in a defensive rotation that favored IT, metals and pharma over FMCG, oil and gas, and autos.
