By Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.
U.S. Market – Earnings Lift Stocks as Inflation Reignites
U.S. stock markets were mixed last week, though tech-heavy indexes continued their upward momentum. The S&P 500 and Nasdaq Composite reached new all-time highs, powered by robust second-quarter corporate earnings and steady consumer spending. In contrast, the Dow Jones Industrial Average and the S&P MidCap 400 Index ended slightly lower.
The week’s corporate earnings set a positive tone. Major banks such as JPMorgan Chase and Citigroup posted better-than-expected results, signaling resilience in the financial sector. Consumer-facing giants like PepsiCo, United Airlines, and Netflix also exceeded forecasts, boosting investor sentiment. Meanwhile, NVIDIA received U.S. government approval to export its AI-focused H2O chips to China, helping the company sustain its $4 trillion market cap milestone and driving tech optimism.
On the macroeconomic front, inflation edged higher. The Consumer Price Index (CPI) rose 0.3% in June — its largest monthly increase in five months — and 2.7% year over year. Core inflation, which strips out volatile food and energy costs, ticked up to 2.9% annually. Analysts attributed part of the increase to new tariffs, particularly affecting consumer goods and footwear.
Retail sales rebounded more than expected, rising 0.6% in June after a decline the previous month, offering reassurance that consumer demand remains solid. However, markets briefly reacted to political uncertainty after reports suggested President Trump might dismiss Federal Reserve Chair Jerome Powell. The White House quickly denied the claims, calming investor nerves.
In the bond market, short-term Treasury yields dipped slightly while longer-term yields remained stable. Investment-grade corporate bonds outperformed U.S. Treasuries, supported by healthy demand for new issuance.
European Market – Stubborn Inflation in the UK, Recovery Signals in the Eurozone
European equity markets ended the week with mixed results. The pan-European STOXX Europe 600 Index remained steady, while country-level performance varied. Italy’s FTSE MIB and the UK’s FTSE 100 gained modestly, the latter helped by a weaker pound, which benefits multinational companies with overseas revenue. German and French indexes were little changed.
In the UK, inflation surprised on the upside. Headline consumer inflation rose to 3.6% in June, driven by higher transportation and fuel costs. Services’ inflation remained stubbornly high at 4.7%, indicating underlying price pressures remain elevated. At the same time, the UK labor market showed signs of softening. Unemployment rose to 4.7%, its highest level in four years, while the number of payrolled employees continued to decline. Wage growth, excluding bonuses, also moderates, falling to 5.0% year over year.
The eurozone offered some encouraging signs. Industrial production rebounded in May, rising 1.7% monthly above expectations. Gains were led by increases in energy and consumer goods output. The region’s trade surplus also widened to €16.2 billion, supported by higher exports and reduced imports.
In Germany, investor sentiment hit its highest level in over three years. The ZEW index rose to 52.7, with two-thirds of the analysts surveyed expecting economic improvement in the months ahead. Optimism was tied to potential fiscal stimulus and signs of progress in trade negotiations between the U.S. and the European Union.
Asia & Emerging Markets – Political Risk in Japan, Growth Pressures in China
Asian markets posted modest gains. In Japan, stocks edged higher as investors looked ahead to the July 20 Upper House election. The outcome could shape fiscal policy, particularly government spending. The 10-year Japanese bond yield rose to 1.53%, anticipating a more fiscally supportive government. Meanwhile, inflation cooled slightly in June, with core CPI at 3.3% year over year — lower than May’s figure. However, exports declined for the second consecutive month, weighed down by reduced shipments to both the U.S. and China.
In China, economic data was mixed. The economy grew 5.2% in Q2 — slightly slower than Q1 but still above forecasts. Analysts noted this could reduce the urgency for further stimulus. However, challenges remain. Deflationary pressures persist, and the property sector continues to struggle. New home prices fell again in June, and residential sales dropped over 12% from the previous year, marking the steepest decline of 2025.
In Hong Kong, the Hang Seng Index rallied nearly 3%, supported by tech stocks and positive sentiment around potential policy support.
With global markets responding to a mix of corporate resilience, inflationary pressures, and evolving trade dynamics, investors are watching closely for signals of stability — and opportunity — in the second half of the year.