Market Analysis Summary - Week of 3 Aug 2026

Last Week's Recap

The Federal Reserve (Fed), Bank of England (BoE), and Bank of Japan (BoJ) all maintained their current interest rates, despite increasing hawkish dissent among policymakers. In China, both factory and services PMIs fell into contraction, indicating a slowdown in economic activity.

Key Highlights

• Fed's Stance: Fed Chair Kevin Warsh held rates steady, with three policymakers dissenting for a hike. This lack of clarity unsettled investors, leading to a spike in the 30-year Treasury yield to 5.27%, the highest since 2007.
• BoE and BoJ: The BoE held its rate at 3.75% with rising hawkish dissent, while the BoJ maintained its rate at 1% but issued warnings about inflation overshooting.
• China's Economic Activity: China's manufacturing PMI dropped to 49.2, indicating contraction, while the non-manufacturing PMI fell to 49.0, the lowest since December 2022.

Markets in Focus

US mega-cap earnings showed a split performance, with the Hang Seng Index rallying on signals of stimulus from Beijing, while the Nikkei 225 was dragged down by a semiconductor rout.

• US Mega-Cap Performance: Apple and Meta saw declines, while Microsoft and Amazon benefited from strong cloud revenue growth.
• Hang Seng Index: The HSI rose 3.7%, its best week since September 2025, driven by expectations of increased domestic demand and fiscal support from Beijing.
• Nikkei 225: The index fell 0.4% due to a semiconductor sell-off, with Kioxia's shares plunging 17% despite record revenue.

The Week Ahead

The upcoming week will focus on US non-farm payrolls, ISM PMIs, and inflation data from China, alongside significant corporate earnings, including SpaceX's first results as a public company.

• US Labor Market: June's non-farm payrolls added only 57,000 jobs, below expectations, but unemployment decreased to 4.2%.
• ISM Surveys: The ISM manufacturing and services PMIs will provide insights into sector performance and inflation trends.
• China's Inflation Data: The producer price index (PPI) rose to 4.1% YoY, while consumer price index (CPI) growth softened to 1.0%, indicating weak consumption demand.

Key Macro Events This Week

Important economic indicators and corporate earnings to watch include:

• US non-farm payrolls and unemployment rate on August 7
• China inflation rate and PPI on August 9
• Corporate earnings from SpaceX, Palantir, and biotech firms like Eli Lilly and Novo Nordisk

Conclusion

The market remains in a state of flux, with central banks holding rates steady amidst mixed economic signals. Investors should closely monitor upcoming economic data and corporate earnings to gauge market direction.