This week in China, data revealed some moderation in the region’s economic momentum. Factory output grew 4.5% year on year in July, down from 5.3% in June. Compounding this, consumers also kept their purses firmly in their pockets, with retail sales growing by just 0.6%, compared with 1% in June. The significance of the data is being treated with some caution, with markets reluctant to interpret it too negatively at this stage.

Markets have started the week cautiously, with equities consolidating after last week’s strong rally. US equities have edged marginally lower, while European markets have remained relatively resilient, supported by stronger earnings.

Markets had a generally positive week this week, with equities rising, oil prices easing, and investors closely watching central bank policy, AI-driven growth, and developments in Japan’s currency market.

Comments from President Trump on Monday suggested that diplomatic efforts to repair relations with Iran remain underway, with the US President stating that negotiations had been constructive and a deal could be reached in the near term. Iran, however, denied reports that it had requested talks with the US.

Markets had plenty to digest this week but got off to a positive start. UK inflation unexpectedly fell to 2.6% year-on-year in June from 2.8% in May, driven largely by lower motor fuel prices, particularly diesel, and easing food costs as input prices declined for the first time since January amid lower Brent crude prices.

This week, attention turned to comments from President Donald Trump, who threatened to reinstate restrictions targeting Iranian oil exports and proposed imposing a 20% toll on vessels transiting the Strait of Hormuz. The remarks raised concerns over potential supply disruptions and were enough to send brent crude oil futures up to $87 dollars per barrel. Despite the rally in energy prices, equity markets remained resilient, supported by a softer-than-expected US inflation report.

Global markets enjoyed a positive start to the week as easing energy prices and continued optimism surrounding artificial intelligence (‘AI’) supported investor sentiment, while attention remained focused on monetary policy, geopolitical developments and political events across Europe.

With relatively few major macroeconomic developments to drive markets this week, investors refocused on AI and big tech, providing fresh momentum for U.S. equities. Renewed buying interest in large-cap technology and semiconductor stocks helped push the Nasdaq and S&P 500 higher, underscoring continued confidence in companies expected to benefit from continuing adoption of artificial intelligence.

So far this week, investor attention has been split between developments in UK politics, progress in Iran-related peace talks, and fresh news from the world’s largest technology firms.

This week, markets have been driven by the sharp drop in oil prices following the U.S.–Iran peace framework, the powerful relief rally in global equities led by tech and the SpaceX IPO, and shifting expectations ahead of new federal reserve chair, Kevin Warsh’s first monetary policy meeting.