Stock indexes returned to growth amid renewed hopes for a September Fed rate cut

The Dow Jones Index (US30) rose by 1.34% by the end of Monday. The S&P 500 Index (US500) gained 1.47%, and the tech-heavy Nasdaq (US100) closed 1.95% higher. The indexes’ growth was fueled by renewed hopes for a September Fed rate cut following a weak July employment report and a downward revision of data from previous months. In response, President Trump fired the head of the Bureau of Labor Statistics and stated he would name a replacement this week. Meanwhile, updated tariffs ranging from 10% to 41% added additional pressure, although Switzerland and the EU signaled an openness to negotiations. Mega-cap tech stocks led the gains as traders focused on strong earnings, with 82% of S&P 500 companies reporting better-than-expected results so far. Palantir jumped 4.2% ahead of its post-market earnings release, Nvidia was up 3.5%, and Amazon gained 1.5%.

European stock markets were mostly higher yesterday. The German DAX (DE40) increased by 1.42%, the French CAC 40 (FR40) closed up 1.14%, the Spanish IBEX35 (ES35) gained 1.84%, and the British FTSE 100 (UK100) closed 0.66% higher on Monday. The FTSE 100’s Monday gains were driven by a sharp rise in British bank stocks after a favorable Supreme Court ruling on a motor finance case. Shares of Lloyds Banking Group surged over 8% to their highest level since 2015, while Barclays climbed 1.5%. HSBC and Standard Chartered also saw gains. The ruling overturned a lower court decision, easing fears of massive compensation payouts related to mis-selling car loans. The Financial Conduct Authority is now estimating a potential redress amount of £9 billion, significantly lower than earlier market fears of up to £30 billion. The ratings agency RBC upgraded Lloyds, the largest player in the UK car finance market, calling the court decision an “event that removes significant pressure on the stock.” BP shares also rose nearly 2% ahead of its earnings report as investors anticipate new insights into the company’s return to traditional energy sources.

The Swiss franc weakened to 0.81 against the US dollar as concerns about newly announced US tariffs overshadowed modest Swiss inflation growth. On August 1st, the Trump administration announced 39% tariffs on Swiss exports, higher than the 31% tariffs announced in April, with the measures taking effect on August 7th. If the tariffs remain in place, they are expected to intensify disinflationary pressure in Switzerland. Meanwhile, inflation in July grew slightly to 0.2% year-over-year, which was higher than the 0.1% expectation but still near zero. The subdued price growth, combined with rising external risks, suggests that the Swiss National Bank may resort to further negative interest rate cuts. The Swiss Manufacturing PMI fell to 48.8 in July from 49.6 in June, signaling a deeper downturn in the sector.

WTI crude oil prices fell to $66.3 per barrel on Monday as traders digested the OPEC+ decision to increase production and growing geopolitical uncertainty. The group confirmed a widely anticipated production increase of 547,000 barrels per day starting in September, completing the phased unwinding of voluntary cuts enacted in 2023. While the move was expected, it heightened expectations that global oil supply could outpace demand this year, potentially leading to a buildup in inventories. Traders are also monitoring potential US actions on Russian oil flows. President Trump has threatened to impose additional sanctions on countries buying Russian oil, specifically targeting India, with possible measures taking effect as early as August 8th.

The US natural gas prices fell below the $3/ 3/MMBtu mark, nearing a low not seen since November 2024, as production outpaces demand. According to LSEG, average output in the Lower 48 states reached 107.5 billion cubic feet per day in July, surpassing June’s record of 106.4 billion cubic feet per day. As a result, the latest EIA data showed a larger-than-expected injection into storage of 48 billion cubic feet for the week ending July 25th, exceeding forecasts of 38 billion cubic feet.

Asian markets were mostly higher yesterday. The Japanese Nikkei 225 (JP225) fell by 1.25%, the Chinese FTSE China A50 (CHA50) rose by 0.52%, the Hong Kong Hang Seng (HK50) gained 0.92%, and the Australian ASX 200 (AU200) had a positive result of 0.02% yesterday.

Hong Kong stocks dropped to 24,711 on Tuesday morning, reversing the previous session’s gains. Investors cautiously awaited China’s July trade data and upcoming inflation figures amid concerns over rising trade barriers and weak domestic demand. Consumer stocks fell while real estate, financial, and tech stocks saw modest gains. Further losses were contained by an overnight rally on Wall Street amid some bargain hunting after Friday’s decline and increased bets on a September rate cut. Meanwhile, according to a private survey, China’s services activity grew at its fastest pace in 14 months in July.