Markets kicked off the day with renewed confidence as fresh economic data painted a resilient picture of the U.S. economy. Revised 2nd quarter figures showed stronger-than-expected growth, driven by robust business investment and trade, lifting the to new record highs. edged lower, reinforcing the narrative that employers remain cautious about letting go of staff amid lingering economic uncertainties.
Meanwhile, a brewing legal standoff has emerged at the Federal Reserve: Governor Lisa Cook has taken legal action against Donald Trump over his attempts to remove her from the Board, setting up an unprecedented confrontation that could rattle institutional norms. At the same time, Trump’s nominee Stephen Miran is expected to secure Senate confirmation ahead of the Fed’s September meeting, adding another layer of political drama to monetary policy.
Amid the noise, Governor Christopher Waller signaled support for a potential in September, suggesting more may follow within the next six months. Treasury markets reacted with a flattening yield curve, while the slipped for a 3rd consecutive day as traders recalibrated their expectations ahead of Friday’s data.
In Europe, the mood remains cautious as political tensions and uneven economic signals weigh on investor sentiment. Minutes from the ECB’s July meeting showed policymakers broadly content with current rate levels, viewing inflation risks as balanced for now.
But markets remain on edge, especially in France, where Finance Minister Bruno Le Maire insisted the country is not on the verge of a fiscal crisis, even as Prime Minister Francois Bayrou’s grip on power looks increasingly fragile ahead of a critical confidence vote.
Germany’s Friedrich Merz dismissed the possibility of a summit between Russia and Ukraine, casting doubt on any short-term resolution to the war. On the economic front, Rheinmetall’s billion euro investment in Bulgarian defense production marks a strategic shift in the bloc’s rearmament push, while investors kept a wary eye on Polish and Moldovan political developments, with leadership instability and pro-Russia influence concerns on the rise.
Meanwhile, European equities stumbled as earnings season peaked and uncertainty persisted. Energy prices inched higher after the latest Russian attacks on Kyiv, stoking fears of further geopolitical disruption to oil supply chains. On the charts, staged a solid rebound from key support, staying comfortably within its recent trading range. With upward momentum reinforced by improving technical signals, the outlook remains positive.
Across Asia, market dynamics are shifting rapidly. China’s yuan posted its strongest weekly gain in nearly a year, buoyed by signs that policymakers may allow greater exchange rate flexibility going forward. However, risks remain. Tech firm Cambricon issued a sharp warning to investors after a rapid share price surge, stressing it has no new products in the pipeline.
Southbound outflows intensified, with record net selling in Hong Kong, highlighting investor unease despite Morgan Stanley’s view that signs of overheating in Chinese equities remain sporadic for now. Meanwhile, in global trade, China extended tariff exemptions on key U.S. imports, while reopening to Australian canola marks a thaw in trade tensions that’s been years in the making.
In Australia, Virgin delivered a 28% profit jump, boosted by unrelenting demand for travel and a strong post-IPO performance. Elsewhere, Nvidia is reportedly in talks with U.S. regulators to continue AI chip exports to China, underscoring the delicate dance between tech ambition and geopolitical scrutiny.
As global debt risks resurface, the IMF is flagging growing fragility in bond markets—a warning that may echo across Asian economies still recovering from years of pandemic-era stimulus. Asian markets were mixed, capping off a dynamic August.
Chinese stocks led the region, with the CSI 300 surging to a 3 year high and notching a 10% monthly gain, driven by chip sector momentum. Japan’s dipped as weak industrial output and sluggish retail sales dented sentiment, even as inflation data kept rate hike expectations alive.