Markets slid after surprisingly strong wholesale inflation data trimmed rate-cut expectations. Meanwhile, signs of a softer labour market tempered the outlook, keeping hopes alive for a modest easing in monetary policy. Elsewhere, corporate earnings delivered mixed signals across Europe and Australia, balancing optimism in some sectors with caution in others.
US equities edged lower on Thursday, with the DOW down -0.2%, the S&P 500 slipping -0.1%, and the NASDAQ also falling -0.1%. Despite the decline, the S&P 500 and NASDAQ had each notched record highs earlier in the week. The pullback followed a hotter-than-expected producer prices report, which showed the fastest pace of producer inflation in three years for July, amid rising goods and services costs and lingering tariff uncertainty. New jobless benefits reports showed applications for welfare are falling. Investors still expect inflation to rise and are pricing in a quarter-percentage-point rate cut next month, given labour market weakness and increasing consumer prices. Deere & Co dove -7.4% after announcing a lower quarterly profit and tightening its annual earnings forecast, due to tariff impacts. In rates markets, the US two-year and 10-year yields each rose 5bp, to 3.74% and 4.29% respectively.
European equities rose on Wednesday, with the Stoxx 600 gaining +0.6% and the FTSE 100 up +0.1%, marking their highest close in over two months. Aerospace, defence, and financial stocks led the rally, buoyed by strong corporate earnings and rising expectations of increased European defence spending. New data revealed British economic growth was unexpectedly strong in the second quarter, despite trade tariff impacts and a weaker labour market. Insurers rose +0.9% on strong second-quarter corporate results; London’s Admiral booked a record high and surged +6.6%, while Aviva gained +2.6% to its highest since 2007, also raising its interim dividend for the last period.
Australian equities gained on Thursday, with the ASX 200 leaping +0.5%, surpassing a new intra-day record high. Earnings season progressed and the third-largest bank, Westpac (+6.3%), posted its June-quarter results, booking its largest one-day gain since 2020. July's jobs report was as expected, revealing 24,500 jobs were created last month, up from 1,000 in June; meanwhile, unemployment fell to 4.2% from 4.3%. Traders are still anticipating a quarter-percentage-point rate cut at the November meeting. Heavyweight telecom provider Telstra shed -2.6%, despite a new A$1b share buyback programme after reporting a record profit and announcing FY26 earnings forecasts which were slightly lower than expected.
Asian equities slid: China’s CSI 300 and Shanghai Composite shed -0.1% and -0.5% respectively; Hong Kong’s Hang Seng shed -0.4%; Korea’s Kospi shifted +0.1%; and Japan’s Nikkei 225 lost -1.5%. In New Zealand, the NZX 50 rose +0.5%.
WTI crude leapt +2.2% to US$64.03/bbl, gold shed -0.4% to US$3,340.97/oz, iron ore lost -0.4% to US$102.03/MT.