BANGKOK – Global equity markets delivered a fragmented performance across Europe and Asia on Monday, one trading session after U.S. stocks retreated from their recent all-time peak, dragged down by a worse-than-anticipated reading on the world’s largest economy. Energy prices also edged lower amid ongoing geopolitical uncertainty affecting global supply chains.
In early trading hours across European exchanges, benchmark indexes showed minimal movement overall. Germany’s DAX held almost entirely steady, posting near-zero change to close the early session at 26,429.59. France’s CAC 40 dipped by a modest 0.1% to land at 8,630.45, while the United Kingdom’s FTSE 100 notched a small 0.2% gain to reach 10,773.91. Looking to futures contracts tied to major U.S. indexes, the S&P 500 future ticked up 0.1% ahead of the opening bell, while futures for the Dow Jones Industrial Average slipped 0.1%.
Across Asian markets, the picture was similarly split. Tokyo’s Nikkei 225 climbed 0.7% to hit 69,220.25, buoyed by upwardly revised GDP data from the Japanese government. The report showed the country’s economy expanded slightly faster than projected in the April-June quarter, recording a 1.1% annualized growth rate, even though private consumption and capital investment held flat and export expansion decelerated. On a quarterly basis, Japan’s GDP grew 0.3% over the first three months of the year.
In Hong Kong, the Hang Seng Index advanced 1.6% to 25,517.88, and mainland China’s Shanghai Composite Index rose 1.4% to close at 3,982.65. South Korean markets remained closed for a national holiday. Australia’s S&P/ASX 200 retreated 0.5% to 9,073.20, while Taiwan’s Taiex gained 0.1% and India’s Sensex slipped 0.3%.
The uneven global trading follows a pullback on Wall Street this past Friday, when the S&P 500 fell 0.2% and the Dow Jones Industrial Average also dipped 0.2%, after government data showed U.S. retail sales declined last month. While soft consumer spending could pave the way for the U.S. Federal Reserve to hold interest rates at lower levels – a dynamic that generally boosts asset valuations for investors – the weaker reading also signals potential economic slowing at a time when inflation remains elevated above the central bank’s target. The Nasdaq composite shed 0.3% in Friday’s session.
Market participants are turning their focus to this week’s packed earnings calendar, which will feature quarterly reports from some of the U.S.’s largest retail chains. Home Depot is set to release its results on Tuesday, followed by Target and Lowe’s on Wednesday, and Walmart on Thursday. These reports are expected to offer investors granular insight into how both businesses and consumers are navigating persistently high inflation that has eroded purchasing power across much of the economy. In addition to earnings, the Federal Reserve will publish the meeting minutes from its July policy gathering this Wednesday, giving analysts more context into the central bank’s thinking on future interest rate moves.
Stagflation, defined as a period of stalled economic growth paired with persistent high inflation, remains a worst-case scenario for markets because the Fed has no policy tools that can effectively address both problems at once. Tightening policy to curb inflation can worsen growth slowdowns, while cutting rates to stimulate growth can push already high inflation even higher.
In energy markets on Monday, benchmark crude prices fell. Brent crude, the global pricing standard, declined 0.3% to $88.24 per barrel, and U.S. West Texas Intermediate crude slipped 0.9% to $81.65 per barrel. Oil market sentiment remains jittery amid unclear prospects for a diplomatic resolution to tensions around Iran, with the critical Strait of Hormuz – a key shipping chokepoint for Middle Eastern oil and gas exports – facing disruptions that threaten global supply stability.
In currency markets, the U.S. dollar weakened against the Japanese yen, falling to 158.88 yen from 159.32 yen in previous trading. The euro ticked higher against the dollar, rising to $1.1611 from $1.1588.