Global equity markets delivered mixed performance over the week, with US technology stocks advancing on strong AI-related earnings, European markets showing wide dispersion, and mainland Chinese equities emerging as the strongest global performers.
In the United States, the Nasdaq Composite gained 0.97% to close at 26,402.42, while the S&P 500 advanced 0.46% to 7,711.76. The Dow Jones Industrial Average was essentially flat, declining 0.07% to finish the week at 53,559.99.
The week was shaped by two opposing forces. Nvidia delivered second-quarter results that exceeded already elevated expectations, with revenue doubling year-on-year and its fiscal 2028 revenue growth forecast coming in well above consensus. Nvidia shares gained 7.3% on Thursday, reinforcing momentum across the broader AI trade, while Salesforce advanced 11% following its own bullish outlook.
Part of that momentum was reversed on Friday following Fed Chair Kevin Warsh's Jackson Hole speech. Warsh warned that inflation is not meaningfully slowing and that the Federal Reserve still has "work to do." Other Fed officials also indicated that current rates may be accommodative and that action could be required soon. Money markets subsequently fully priced in a rate increase by December, pushing short-term Treasury yields sharply higher and weighing on equities.
European markets were mixed, with considerable divergence between major indices. Germany's DAX gained 1.39%, while the Euro Stoxx 50 advanced a more modest 0.28%. France's CAC 40 was the regional laggard, declining 1.15%.
European markets faced three primary headwinds. The first was the global repricing of interest rate expectations following Jackson Hole. The second came from hawkish comments by ECB Executive Board member Isabel Schnabel, who indicated that rates need to rise further as energy-driven inflation is likely to remain above 2% for an extended period. The third was renewed political uncertainty in France, which placed particular pressure on major French banks.
Despite these headwinds, underlying corporate performance remained resilient. Among Stoxx 600 companies, banking revenue beats outnumbered misses by 33 to 3, while industrial products recorded 36 beats compared with eight misses.
The FTSE 100 declined 0.28% over the week. Falling oil prices initially provided support to UK stocks and bonds, but the index gave back those gains following the hawkish shift in global rate expectations. Its significant energy weighting also created mixed effects as crude prices declined early in the week before recovering on renewed US-Iran tensions.
Mainland China delivered the strongest equity performance globally. The Shanghai Composite gained 2.30%, while the CSI 300 advanced 1.47%. Better-than-expected manufacturing data supported sentiment, with August PMI coming in at 49.8 compared with expectations of 49.5. Mainland investors also remained active buyers of Hong Kong-listed equities through Stock Connect.
The Hang Seng nevertheless declined 0.19%, weighed down by volatility in property companies following the announcement that maximum mortgage terms would be extended from 30 to 40 years.
Japanese equities also advanced, with the Nikkei 225 gaining 0.83% and the broader Topix rising 1.30%. Banks benefited from expectations for higher interest rates, while technology and chip-equipment companies came under pressure following the hawkish shift in US monetary policy expectations. Yen weakness provided some support to Japanese exporters.
Overall, global equity markets continue to balance strong corporate earnings and AI-related momentum against increasingly hawkish monetary policy expectations. US technology and mainland Chinese equities led weekly gains, while Friday's repricing of interest rate expectations highlighted the continued sensitivity of global markets to central bank policy.
