USA
During the last week, U.S. economic data indicated a gradual cooling of the economy while maintaining resilience in key areas. Initial jobless claims fell to 217,000—a three-month low—while continuing claims edged higher to 1.955 million, suggesting a stable labor market. The Conference Board’s Leading Economic Index (LEI) declined 0.3% in June, reinforcing the narrative of slowing momentum, while the services PMI improved to 52.8, pointing to steady domestic demand. Despite subdued Q1 GDP growth, advance estimates for Q2 hinted at a modest 0.8% quarterly rebound. Fed Chair Jerome Powell reaffirmed a cautious stance, emphasizing a data-dependent approach. On the corporate front, earnings season continued with mixed results—Alphabet impressed with strong Q2 numbers, while Tesla disappointed, contributing to a modest weekly gain in the S&P 500 (+0.6%) and a stronger rally in the Nasdaq (+1.5%).
Europe
The eurozone economy showed tentative signs of expansion with the July flash composite PMI rising to 51.0, its highest in 11 months. Services led the gains, while manufacturing remained under pressure. Inflation stabilized around 2.0%, aligning with the European Central Bank’s (ECB) target, prompting the ECB to maintain rates at 2.0%. President Lagarde expressed a cautious outlook, signaling that further rate cuts in 2025 are unlikely. The U.K. market outperformed peers, with the FTSE 100 reaching record highs on the back of strong corporate earnings from companies like BT Group, Lloyds, and Howden Joinery. The broader STOXX Europe 600 and DAX 40 posted modest gains, supported by improving economic sentiment and a stable policy environment, though ongoing geopolitical uncertainty and sluggish consumer confidence continued to weigh on the recovery.
Japan
In Japan, economic indicators painted a picture of persistent inflation and moderate recovery. Tokyo’s core CPI rose 3.1% in July, remaining well above the Bank of Japan’s 2% target. Although Q1 GDP showed a slight annualized contraction of –0.2%, forward-looking indicators such as the Coincident Economic Index (CEI) improved modestly, hinting at gradual stabilization. With inflation expectations firming and wage growth gaining momentum, markets speculated that the BOJ might adopt a more hawkish tone in its upcoming July 30–31 policy meeting. Nonetheless, the central bank is expected to keep interest rates at 0.5% for now. Japanese equities, including the Nikkei 225 and TOPIX, held steady, supported by inflation-linked corporate earnings and improving domestic sentiment, despite export-related headwinds from a weakening global manufacturing cycle.
China
China's economic performance in the first half of 2025 surprised to the upside, with GDP expanding 5.3% year-over-year, driven by strong industrial output (+6.4%), resilient services growth (+5.5%), and stable retail sales (+5.0%). The Q2 growth rate reached 5.2% y/y and 1.1% q/q, signaling sustained post-COVID recovery momentum. Positive sentiment was further bolstered by expectations of a renewed U.S.–China trade truce and robust corporate earnings, especially in technology and consumer discretionary sectors. Major firms like Xiaomi and Tencent reported double-digit earnings growth, fueling rallies in both the Shanghai Composite and Hang Seng indices. While structural challenges such as weak private consumption and industrial overcapacity remain, foreign investors returned to Chinese equities, encouraged by improving macro conditions and government support for domestic innovation and capital markets.