US stocks rose last week, with the S&P 500 and Nasdaq hitting new records, boosted by strong Q2 earnings and resilient economic data. Big banks like JPMorgan and Citigroup topped expectations, followed by solid results from PepsiCo, United Airlines, and Netflix. NVIDIA surged after gaining approval to sell AI chips to China, reaching a $4.2 trillion market cap. Inflation picked up but remained within expectations. June’s CPI rose 0.3% m/m and 2.7% y/y, driven partly by tariffs. Core CPI increased to 2.9% y/y. Retail sales also rebounded, rising 0.6% in June after a May decline. Political tension flared briefly when reports suggested President Trump might fire Fed Chair Jerome Powell, though he later denied it. Bond markets reacted mildly – long-term Treasury yields stayed steady, short-term yields dipped, and corporate bonds outperformed Treasuries. Corporate bond issuance was strong and oversubscribed, signaling robust investor demand.
European stocks were mixed, with the STOXX Europe 600 Index flat amid cautious optimism over US-EU trade talks. Italy’s FTSE MIB and the UK’s FTSE 100 rose, the latter helped by a weaker pound boosting multinational revenues. In the UK, inflation jumped to 3.6% in June, driven by transport costs. Services inflation stayed elevated at 4.7%. Unemployment rose to 4.7%, the highest in four years, and wage growth slowed to 5.0%. Eurozone industrial production rebounded 1.7% in May, beating expectations, while the trade surplus widened to EUR 16.2bn. Germany’s ZEW economic sentiment index climbed to 52.7, a three-year high, on hopes of EU-US trade resolution and potential stimulus measures.
