There were reports of progress towards a deal to reopen the Strait of Hormuz, sending Brent crude prices lower. While there was a slight wobble on Thursday, where some vessels could be barred from transiting through the Strait, for the week Brent ended 7.2% lower. Following recent weakness, there was renewed optimism around artificial intelligence names, helping to propel a broader tech rally. Earnings reports for the week were also generally favourable. Of note was SpaceX which delivered its first set of results since going public; while its quarterly revenue nearly doubled, its stock initially sold off on higher spending. It was still higher for the week helped by the wider tech rally, even after its initial lock-up period expired.
The S&P 500 ended the week at a record high and gained 3.6% overall. The Dow Jones Industrial Average had logged a record high earlier in the week and was up 3.0%, while the tech heavy Nasdaq Composite jumped 5.2%. Both the S&P 500 and Nasdaq saw their best week since April. Stocks also got a boost on Friday after the non-farm payrolls report came in weaker-than-expected. This cooled expectations for a September rate hike from the Federal Reserve. In response Treasury yields declined, pulling back from the gains seen in the previous week. The 10-year yield ended at 4.64%.
European markets advanced as investors assessed prospects for a US-Iran deal, whereby oil prices declined. Technology shares also tracked the gains seen from Wall Street and were the best performing sector for the week. There were individual stock swings tied to earnings reports, but overall they were largely positive. The softer US jobs report also boosted sentiment on Friday. For the week the pan-European STOXX 600 added 1.7%, its fourth consecutive weekly advance as well as the index ending at a record close. Regional indices also notched gains, although UK indices saw a more muted rise.
Japanese markets also benefited from robust corporate earnings, with the Nikkei 225 up 1.9% for the week. There was also a rally in artificial intelligence names although they pulled back towards the end of the week. Perhaps more in focus was the currency market. It was confirmed that in the previous week US and Japanese authorities made a coordinated intervention to help prop up the yen, with both countries signaling they would be prepared to step in again if needed. The currency did give back some of the gains during the week. In China, the Shanghai Composite was up 2.8% helped by strength in technology names. Bucking the wider positive trend, the Hong Kong Hang Seng was down 0.8%. This was driven by declines in insurers and other financial names being dragged down by reports that authorities will start taxing offshore insurance income.