Titan Wealth International Weekly Financial Market Review

While corporate earnings continued to beat expectations, investors remained wary as long-dated Treasury yields rose and inflation pressures persisted. Global sentiment was mixed, with emerging markets outperforming developed peers.

Global Markets End on a Positive Note

Global equity markets ended the week on a positive footing, buoyed by stronger-than-expected US retail sales data and continued momentum in corporate earnings.

However, the backdrop was far from one-sided, as investors contended with fresh signs of inflationary pressure and another surge in long-dated Treasury yields.

US Indices Hit New Highs, But Breadth Remains Narrow

In the US, the S&P 500 and Nasdaq both closed at record highs, gaining around 1% and 1.5% respectively.

The tech-heavy Nasdaq is now up nearly 8% year-to-date, driven by persistent optimism around artificial intelligence and resilient consumer demand.

However, gains were less broad-based beneath the surface, with small-cap stocks underperforming and the Dow Jones Industrial Average finishing the week marginally in the red.

Economic Data Signals Strength in Consumption

US economic data was mixed but generally constructive. Retail sales rose 0.6% in June, reversing a sharp 0.9% decline in May, pointing to continued strength in consumer spending despite tighter credit conditions.

Inflation remained a central concern, however, with the consumer price index (CPI) rising 2.7% year-on-year—up from 2.4% in May—while producer prices (PPI) eased to 2.3%, the lowest level since September 2023.

Corporate Earnings Season Off to a Strong Start

The second-quarter corporate earnings season began in earnest last week, and thus far, companies have beaten expectations.

Approximately 12% of companies have reported earnings, and of these, 86% have exceeded forecasts, which is well above the 10-year average of 75%. Among these, financial companies have offered the largest upside surprises thus far.

Treasury Yields Climb as Inflation Concerns Persist

Meanwhile, US Treasury yields continued to climb, with the 30-year yield rising above 5.00% for the first sustained period since 2007, briefly touching 5.07% midweek.

The steepening yield curve reflects a growing consensus that inflation may prove more persistent than previously anticipated, prompting a reappraisal of the Federal Reserve’s likely path.

Market pricing still anticipates two quarter-point rate cuts by year-end, with the first expected in September, though conviction has waned somewhat.

Global Equity Performance Mixed; EMs Outperform

Internationally, equity performance was more uneven. European and Japanese equities drifted slightly lower over the week, with subdued sentiment weighing on risk appetite.

In contrast, emerging market equities outperformed, led by gains in China (+3.8%) and Taiwan (+3.1%), as investors responded positively to stimulus measures and improving trade data.

Dollar Strengthens; Commodities Mixed

Currency markets saw the US dollar strengthen for a third consecutive week, supported by rising yields and resilient US macro data. Commodities posted a mixed performance.

The Bloomberg Commodity Index advanced 1.3%, though oil prices slipped by 1.4% and gold remained flat.