Uncertainty persisted over when the Strait of Hormuz would fully reopen and when the conflict might be resolved, with the US threatening further economic pressure on Iran. Oil rallied on the back of this, with Brent crude up 5.3% for the week. Sentiment around artificial intelligence stocks has seen sharp swings recently, but this week the mood was generally positive. This came after strong earnings from the likes of CoreWeave and Super Micro Computer, although some names still sold off as they failed to meet lofty expectations.
US consumer prices rose in line with forecasts for July, while Thursday's producer price data came in slightly below consensus. Together, the prints cooled expectations of a Federal Reserve rate hike in September. Stocks slipped on Friday after weaker-than-expected retail sales. For the week, the S&P 500 rose 0.4%, having notched a record close on Thursday. Meanwhile the Nasdaq Composite added 0.1%, the Dow Jones Industrial Average fell 0.6% and the small-cap Russell 2000 outperformed, up over 1%. The 10-year Treasury yield rose early in the week as higher oil prices stoked inflation concerns, before easing back on the softer inflation data.
Europe's STOXX 600 touched a fresh record high mid-week, driven by strong corporate earnings and an energy-sector boost from rising oil prices. It pulled back from those highs, however, as investors grew more focused on inflation risks tied to the escalating Middle East conflict. The index ended the week down 0.3%, snapping a four-week winning streak. Most regional markets also declined, though Germany's DAX bucked the trend.
Equity performance was stronger in Japan during a holiday shortened week. The Nikkei 225 was up 4.7%, led by technology stocks following solid earnings updates. The yen was weaker against the dollar, despite the recent US and Japan intervention to prop up the currency. In China the Shanghai Composite dropped 0.3% with losses in precious metal stocks offsetting advances in consumer and property names. The latter found support as Beijing authorities relaxed home buying rules for non-local residents. The Hong Kong Hang Seng lost 2.2% as internet names lost momentum.