US equities ended the week mostly flat, although the labour market surprised on the upside, adding 162,000 jobs in August, well above the 55,000 forecast and a notable step up from July’s revised 21,000.
Weekly market updates are provided by Zurich Ireland.
Unemployment held steady at 4.1%, pointing to continued labour market resilience. Business activity also remained solid. The PMI eased to 54.6 from 55.6, missing the 55.4 forecast but still marking an eighth consecutive month of expansion.
Cost pressures, however, remain persistent; the prices index held at 71.1, meaning raw-material costs have now risen for 23 consecutive months.
Overseas, geopolitical tensions weighed on sentiment. Fresh strikes between the US and Iran near the Strait of Hormuz pushed oil prices sharply higher early in the week, dragging European equities lower and pushing bond yields higher. This added to inflation concerns in the eurozone.
Headline inflation rose to 3.3% from 2.9%, driven largely by higher energy costs. There was some reassurance as core inflation eased to 2.4% from 2.5% and services inflation cooled to 3.0%, suggesting the energy-driven pickup has not yet fed through more broadly.
Markets continue to price in a 25bp deposit-rate hike ahead of the ECB’s interest rate decision this week.
Japan saw similar pressure, with rising government bond yields fuelling expectations of further Bank of Japan tightening and weighing on growth stocks. A sharply stronger yen added further pressure on exporters.
Attention now turns to the BoJ’s 17–18 September meeting, where policymakers will assess whether persistent inflation justifies another rate increase.
Equities
Global stocks finished up by 0.1% in euro terms and up 0.1% in local terms last week. Year-to-date global markets are up by 14.8% in euro terms and up by 13.6% in local terms. The US market, the largest in the world, finished up 0.2% in euro terms and up 0.1% in local terms.
Fixed Income & FX
The US 10-year yield finished at 4.8% last week. The German equivalent finished at 3.3%. The Irish 10-year bond yield finished at 3.5%. The Euro/US Dollar exchange rate finished at 1.16, whilst Euro/GBP finished at 0.86.
Commodities
Oil finished the week at $92 per barrel and is up 61.1% year-to date in euro terms. Gold finished the week at $4,430 per troy ounce and up 3.7% year-to-date in euro terms. Copper finished the week at $14,490 per tonne and is up 17.7% year-to-date in euro terms.
The week ahead
Monday 7th September
Eurozone GDP data is reported.
Thursday 10th September
ECB Interest rate decision.
Friday 11th September
US CPI data is released.
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