Weekly Investment News
Major US equity indices ended the week mixed. The core personal consumption expenditure (PCE) price index was released on Friday. This inflation measure, a preferred indictor by the Fed, showed a 0.2% increase in prices for July, aligning with expectations. The year over year increase was slightly below consensus at 2.6%. Investors, however, reacted positively to the data, which suggests that inflation remains subdued and close to the Fed’s target, ahead of the September meeting where the first rate cut in over four years is anticipated. Additionally, chip giant Nvidia’s share price dropped sharply on Wednesday despite the company’s revenue hitting a record of $30 billion for the three months to July. This reaction highlights the ongoing challenge for Nvidia to exceed increasingly ambitious market projections.
In Europe, major equity indices showed gains for the week as slower inflation supported the argument for a potential interest rate cut by the European Central Bank (ECB) in September. Annual headline inflation in the eurozone slowed to 2.2% in August, down from 2.6% in July and approaching the ECB’s target of 2%. Core inflation, which excludes volatile food and energy prices, edged down to 2.8% from 2.9%. However, services inflation, a key metric for policymakers, rose to 4.2% from 4.0% the month prior. Additionally, the German economy fell back into contraction. German GDP growth in the second quarter of the year shrunk by 0.1% between April and June.
In Japan, markets ended the week higher, wrapping up a volatile month. Major Japanese indexes have regained much of the ground lost in early August, which followed the Bank of Japan’s (BoJ’s) interest rate hike in late July. The earlier sell-off was primarily driven by concerns about US economic growth and the rapid unwinding of the yen carry trade.