Global Highlights
U.S. Markets
U.S. equities ended the week lower as escalating Middle East tensions pushed Brent crude close to $110 per barrel before easing on Friday. Higher energy prices renewed inflation concerns and pushed Treasury yields higher. Consumer sentiment also weakened for a second consecutive month, with the headline index falling to 47.8 from 51.7 in August.
European Markets
European equities came under pressure as the U.S.–Iran conflict and risks around the Strait of Hormuz pushed oil and European natural-gas prices higher. Rising energy costs increased inflation concerns and lifted government bond yields. The ECB raised its key policy rate by 25 bps to 2.5%, while UK GDP grew 0.4% in July.
Asian Markets
Japanese equities declined as a stronger yen and expectations of near-term Bank of Japan tightening weighed on exporters and growth stocks. Higher oil prices also raised concerns about imported inflation. Chinese equities fell despite a RMB 360 billion capital-support package for major state-owned financial institutions.
Weekly Spotlights
All eyes were on the U.S. CPI report, which was expected to provide further clues on the Fed’s September decision. August inflation remained firm, with headline CPI at 3.4% year-on-year, broadly in line with expectations, while core CPI rose 0.3% month-on-month, above the expected 0.2%. Following the release, market expectations for a 25-bps rate hike increased to around 85%–87%, from roughly 70% before the report.
Market Performance
| Asset Name | Weekly Closing Level | Weekly % Return |
|---|---|---|
| S&P 500 | 7,656.98 | -1.65% |
| DJIA (Dow Jones) | 52,573.29 | -2.16% |
| Nasdaq Composite | 26,333.04 | -1.48% |
| Nikkei 225 | 64,011.34 | -6.84% |
| FTSE 100 | 10,650.44 | -0.93% |
| Shanghai Composite | 3,888.11 | -0.99% |
| Sensex (BSE) | 74,781.76 | -4.14% |
| ADX Index (UAE) | 10,112.26 | 0.65% |
| Gold | 4,390.00 | -1.07% |
| Brent Oil (USD/bbl) | 104.47 | -1.65% |
Outlook
The Fed faces a difficult balancing act at its September 16 meeting, weighing a resilient labour market against persistent inflation and higher energy prices. This could keep markets volatile and highly sensitive to incoming economic data. Despite the near-term uncertainty, we remain constructive on equities. We believe diversification across regions, sectors and company sizes remains important. We continue to see opportunities in U.S. large- and mid-cap stocks, emerging markets and international value equities. Any meaningful market pullback could provide an opportunity to gradually add to quality equity exposure. In fixed income, we continue to favour short-dated and longer-dated investment-grade bonds, offering a combination of income, quality and diversification.
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Disclaimer
This commentary is provided for informational purposes only and does not constitute investment advice. For detailed insights, contact our investment team.
