US stocks climbed last week with the S&P 500 and Nasdaq reaching record highs, supported by trade deal announcements with Japan, Indonesia, Philippines, and the EU. Value stocks led gains while earnings were mixed as Alphabet rose on strong results and AI optimism, but Tesla declined on weaker performance. S&P Global’s flash PMI showed stronger business activity in July driven by services growth, while manufacturing contracted. Existing home sales fell 2.7% in June as high mortgage rates and tight supply pushed the median price to a record 435,300 dollars. Treasury yields declined slightly and investment-grade bonds outperformed as spreads narrowed. The bank loan market was highly active with Monday marking the 4th-largest new issue day in history, mostly consisting of repricing deals.
European stocks rose as hopes for an EU-US trade deal lifted sentiment, despite the EU warning of possible counter-tariffs. The ECB kept interest rates at 2% and signaled a cautious but firm stance on inflation, helping the euro strengthen. Eurozone business activity picked up slightly in July, with the PMI rising to 51.0. In the UK, retail sales grew 0.9% in June but missed expectations. The UK’s economic activity also slowed, as the PMI slipped to 51.0 and signs of a weaker job market emerged due to rising business costs.
