Daily market review
Eurozone activity strengthens as price pressure eases
The eurozone business survey points to firmer growth while price pressure eases. US labour data and retail sales also do not show a sudden break in demand, leaving a quick fall in interest rates far from certain.
This week’s central question
Will weaker US and Chinese demand allow rates to fall if the oil-supply risk persists?
Weekly verdict. Eurozone business surveys now show firmer activity while the pace of price growth has eased. That is a better mix for shares and bonds than weak demand alone, but the US labour market is holding up, Japan’s inflation has not faded and the oil-supply risk has not disappeared. There is therefore no solid basis to expect interest rates to fall quickly everywhere.
Price-relief signal: eurozone businesses are raising prices more slowly
Nearest answer: US economic data and oil-supply news
Market pulse
A verified start-of-day snapshot. Values can change later in the day.
New US jobless claims
206,000
Fewer new claims suggest there is still no broad surge in layoffs.
Japan consumer prices
+1.9% year on year
Inflation accelerated, so the Bank of Japan cannot ignore price trends.
Walmart sales at comparable US stores
+2.6%
Customer demand is growing even though tariff refunds also lifted total profit.
Alibaba external cloud revenue
+45%
Demand is rising fast, but new infrastructure requires large cash spending now.
Eurozone business-activity index
52.1 points
A reading above 50 indicates expansion; growth accelerated in August as price pressure eased.
01 US economy
Fewer US jobless claims arrive as Philadelphia factory activity strengthens
Facts
The United States recorded 206,000 new unemployment-benefit claims in the latest week. That was 6,000 fewer than a week earlier, while the four-week average stood at 204,000. Continuing claims rose by 18,000 to 1.799 million, which means some people who have already lost work are taking longer to find another job. In the Philadelphia Federal Reserve Bank’s regional survey of manufacturers, the general activity measure rose to 47.4 from 41.4 and the employment measure rose to 27.9 from 10.0. Companies reported slower increases in the prices they paid and charged, although both measures remained positive.
Why it matters
Fewer new claims mean companies have not begun broad-based layoffs. Higher continuing claims are a softer warning sign because they suggest that some unemployed people are finding it harder to return to work. The Philadelphia survey pushes back against the idea that US manufacturing is weakening rapidly everywhere, but it covers only one region and cannot describe the entire country. The combined message makes an immediate case for lower interest rates less convincing, without removing it altogether.
Portfolio impact
If the labour market holds up, long-dated US government-bond prices have less reason to rise solely on hopes of quick rate cuts. Equities receive a mixed message: steadier activity can support consumer and industrial-company revenue, but highly valued growth shares can be more vulnerable if markets keep expecting higher rates for longer. Banks and other companies that need to refinance debt soon should not assume that cheaper borrowing will be the base case.
Opportunity and risk
The opportunity is slower US growth without a sudden break in employment. That would be more favourable for companies reliant on domestic spending and business investment. The risk is placing too much weight on one strong regional manufacturing survey. If broader US employment or order data deteriorate later, today’s resilience signal could fade quickly.
02 European economy
Eurozone business survey shows firmer growth while price pressure eases
Facts
S&P Global’s preliminary August eurozone Purchasing Managers’ Index (PMI) measures whether surveyed businesses report expansion or contraction. A reading above 50 normally signals expansion and one below 50 contraction. The combined manufacturing and services reading rose to 52.1 from 52.0 in July, a nine-month high. The manufacturing PMI reached 52.8 from 51.9, while the manufacturing-output reading increased to 53.4 from 52.9. Services activity was unchanged at 51.7. New orders grew at the fastest pace in 40 months, export orders expanded for the first time in four and a half years, and employment increased for the first time in 2026.
Why it matters
This is an early survey signal rather than an official gross-domestic-product result, but it improves the picture for European growth. More orders usually mean more revenue for businesses and a better base for profits. At the same time, input-cost inflation was the slowest since February and output-price inflation the weakest since March. Growth is therefore strengthening without such a clear acceleration in price pressure. That reduces the risk that the European Central Bank would have to keep interest rates high for longer solely because inflation is picking up again.
Portfolio impact
Eurozone cyclical shares, industrial companies and banks could benefit if stronger orders turn into more durable revenue. Longer-dated eurozone government bonds receive a supportive signal from slower price pressure because it leaves room for lower rates later. Yet stronger activity can also lift bond yields if investors decide rate cuts will take longer to arrive. The message for the euro is mixed: better growth supports the currency, while rate expectations will determine its direction against the US dollar.
Opportunity and risk
The opportunity is a more favourable mix for European shares: growth is improving while price pressure is easing, at least for now. The main risk is that this is a preliminary survey and later data can be revised; manufacturing and services are also not moving at the same pace in every country. The next catalyst is the final August reading and new price data. They will show whether businesses can keep growing without raising prices faster.
03 Japan and interest rates
Japan’s inflation accelerated, but this is not yet a decision to raise rates
Facts
Japan’s consumer prices were 1.9% higher in July than a year earlier, after 1.6% in June. Inflation excluding fresh food was 1.8%, while inflation excluding both fresh food and energy was 1.9% year on year. Both of those core measures increased 0.3% month on month. Japan adopted a new 2025=100 statistical base from July, so technical index levels cannot be compared directly with levels calculated under the old base. Percentage price changes remain comparable and show that inflation has not disappeared.
Why it matters
For the Bank of Japan, the country’s central bank, it matters that prices rose even after removing fresh food and energy. That means cheaper energy alone would not settle the broader price question. One monthly release is neither a rate decision nor a promise that rates will rise at the next meeting. Policymakers still need to assess wages, consumption and the wider economy.
Portfolio impact
Persistent price growth can change the outlook for Japanese government bonds and the yen because investors will pay closer attention to future central-bank policy. For an investor measuring returns in euros, Japanese assets are affected by the yen as well as the price of stocks or bonds. Japanese financial companies would benefit if more normal interest rates persisted, while exporters can see the value of overseas earnings fall in yen terms if the currency strengthens.
Opportunity and risk
The opportunity lies with companies able to maintain prices and profit margins despite higher local expenses. The risk is turning one inflation reading into a full interest-rate forecast. If later data show that price growth slows again or that consumption weakens, the market view of Japanese rates could change very quickly.
Your portfolio is not an index
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04 US consumer
Walmart and Ross sales are growing, but tariff refunds also lifted profits
Facts
Walmart’s quarterly revenue rose 5.9% to $187.9 billion, while group-wide ecommerce increased 23%. Sales at comparable US stores, excluding fuel, grew 2.6%, and the company raised its FY27 revenue-growth outlook to 4% to 5% at constant currency. Ross Stores revenue rose 13% to $6.265 billion, and sales at comparable stores increased 10%. A $253 million tariff refund added about $0.60 to Ross earnings per share, while tariff refunds also improved Walmart’s quarterly profit.
Why it matters
The sales figures show real customer activity because a tariff refund cannot explain them. Walmart’s ecommerce growth and Ross’s same-store sales growth show that US consumers are still spending. Profit needs a different reading. Tariff refunds are a one-off benefit, so they should not be treated as a permanent source of company profitability.
Portfolio impact
The results are more supportive for the revenue outlook of retail, logistics, payments and advertising platforms. Retailers that can offer attractive prices and a wide product range can retain customer traffic when households compare prices more closely. In consumer shares, investors need to separate genuine sales growth from a temporary profit lift. Otherwise, the level of earnings available after tariff refunds disappear can be overstated.
Opportunity and risk
The opportunity is that customer traffic and ecommerce continue to grow after a long period of elevated prices. That helps retailers that compete through value. The risk is softer consumer demand arriving as the one-off extra profit disappears. If households reduce optional purchases, both weaker revenue and the non-repeating tariff effect would cut into earnings expectations.
05 China technology
Alibaba cloud revenue is rising quickly, but investment is reducing profit and cash flow now
Facts
Alibaba’s June-quarter revenue rose 9% to RMB268.953 billion. Revenue from cloud services sold to external customers grew much faster, by 45%. The company’s adjusted operating profit before interest, tax and amortisation, known as EBITA, fell 30% to RMB27.329 billion. Free cash flow, meaning cash remaining after operating costs and investment, was negative RMB44.670 billion. The main reason was higher spending on cloud infrastructure.
Why it matters
Forty-five per cent cloud-revenue growth shows that customer demand is real and much faster than the group’s 9% overall revenue growth. Higher sales are not yet producing higher profit or cash flow because data centres and technology equipment require substantial spending now. For investors, this is two separate stories: growth is strong, but the eventual profit and cash return still need to be proven.
Portfolio impact
For China technology shares and global artificial-intelligence infrastructure suppliers, both the direction of cloud revenue and the scale of investment matter. Heavy spending can support data-centre, network and equipment providers, while reducing the short-term profit of the companies buying that infrastructure. Investors in China or global technology funds should watch whether revenue growth is matched by improving cash returns rather than simply by bigger expenses.
Opportunity and risk
The opportunity is that current investment creates a larger cloud business and a stronger Alibaba position in China’s artificial-intelligence market. The risk is a prolonged period in which investment exceeds the cash it generates. If cloud growth slows later, the current level of infrastructure spending would be much harder to justify and profit expectations would become more vulnerable.
06 European consumer
UK retail sales fell in July, but the three-month consumer picture is still positive
Facts
UK retail-sales volumes fell 0.5% month on month in July after rising 0.7% in June. Volumes were still 1.6% higher than in July last year. Across the three months through July, retail sales rose 1.1% compared with the previous three-month period. Non-food store volumes fell 1.3% in July. The official statistics office said early sales had shifted part of summer spending into May and June.
Why it matters
One weak month points to softer consumer spending in July, but the annual and three-month views do not support a sudden break in demand. Part of the decline may reflect the timing of purchases rather than just lower household spending power. Weakness in non-food stores does show that households are more willing to delay purchases they do not need immediately. This is an important signal for European retail and consumer sectors.
Portfolio impact
Weaker sales of discretionary goods are less favourable for retailers whose revenue depends on purchases households can easily postpone. Everyday-consumer businesses tend to have steadier demand in that setting. UK consumption data can also influence expectations for sterling and UK government bonds, but one monthly reading does not define the whole economy. A portfolio should not confuse a temporary sales-calendar effect with a durable consumer downturn.
Opportunity and risk
The opportunity is that part of July’s sales simply moved into earlier months because of discounting. If so, later figures could show a steadier retail pattern. The risk is that weaker non-food sales become a persistent trend. In that case, lower optional spending would affect a wider group of UK retail and consumer shares.
Today’s portfolio compass
Stronger activity does not have to mean stronger price pressure
The key tension today is in Europe: businesses are receiving more orders while raising selling prices more slowly. If it lasts, that mix can support European shares and ease pressure on bonds. US labour data and the Philadelphia regional manufacturing survey, however, do not show a sudden break in demand, so it is unsafe to rely solely on fast rate cuts. Japan’s inflation and the risk to oil supply could also keep rates higher for longer. Consumer companies are still reporting rising sales, but one-off tariff refunds partly lifted the profits reported by Walmart and Ross Stores. Alibaba illustrates a different limit: cloud revenue can grow quickly while heavy investment temporarily reduces cash flow. Investors should judge revenue growth, recurring profit and the cost of investment separately. This view would change if European orders weaken, US employment deteriorates clearly or energy prices jump again.
Important. This is a general market commentary, not individual investment advice. Market and company data can change, and investment values can fall.
