Financial market analysis from VEB.RF conducted between August 1st and 7th
In the economic landscape of August 2025, several key developments have emerged, shaping the trajectory of global markets.
China's Economic Growth
The manufacturing PMI index in China dipped below the 50-point mark, signalling a deterioration in business conditions. However, improved demand conditions and external demand have contributed to the growth in the services sector in China, which experienced acceleration in July.
Eurozone Economic Expansion
Retail trade turnover in the Eurozone increased by 0.3% month-on-month and accelerated to 3.1% year-on-year in June. Inflation remained at 2.0% year-on-year in July, despite concerns about the negative impacts of U.S. trade policies.
U.S. Market Performance
The U.S. imposed 100% tariffs on semiconductor imports from companies without domestic production, but the US-China trade truce and the delay of higher tariffs on Chinese goods until November 10 have reduced trade tensions, supporting positive market sentiment in both the U.S. and China. This has notably helped technology stocks, including semiconductor leaders like Nvidia, which benefited from resumed sales to China, boosting investor confidence in semiconductor and tech sectors.
The U.S. Federal Reserve is expected to cut interest rates again in September 2025. The strong U.S. market, with the S&P 500 hitting new all-time highs propelled by solid Q2 earnings and the "magnificent seven" tech giants, has been further bolstered by this anticipation. Large caps outperform small caps, and growth stocks have seen valuation increases, especially in AI-related companies.
European Market Performance
European markets underperformed relative to the U.S. in July 2025, with weakness in technology, food, and automotive sectors. However, the banking sector was a strong performer. European stocks trade at significant valuation discounts to US stocks, and fiscal spending plus monetary policy in places like Germany may spur medium-term growth. There is caution around possible tariff escalations related to energy imports from Russia.
Oil and Gas Prices in Europe
While specific recent price figures are not detailed, the cautious tone regarding tariffs on countries sourcing energy commodities from Russia suggests geopolitical risks remain that could pressure energy prices and market sentiment in Europe.
Wheat Prices
Favorable weather conditions in northwest U.S. and Canadian regions have led to a decline in wheat prices.
Consumer Prices in Russia
Consumer prices in Russia continued to decline, with year-on-year inflation decreasing to 8.9%.
Labor Market Data in the U.S.
The labor market remains strong in mid-2025, supporting overall economic growth and consumer spending which benefit equities. However, the labor market is cooling faster than initially expected, with an increase in initial jobless claims at the end of July and job growth outside the agriculture sector in July being below expectations.
Apple's Investment Announcement
Apple shares surged by 8% following the company's announcement of additional investment in the U.S.
In summary, trade easing (tariff truce), anticipation of Fed rate cuts, and solid US corporate earnings have bolstered US stock markets, especially tech, while European markets are cautiously optimistic but face risks from energy tariffs and slower growth. Energy and consumer price data for Russia, wheat markets, and detailed Eurozone inflation are less detailed but imply some ongoing pressures and policy support. China’s market is benefiting from trade improvements and stimulus hopes.
- The trajectory of the technology industry, particularly semiconductors, has been positively influenced by the US-China trade truce and resumed sales to China, as seen in Nvidia's performance.
- Despite the Eurozone's underperformance in July compared to the U.S., the banking sector has shown strength, and potential fiscal spending and monetary policy in Germany may spur medium-term growth.
- The finance sector has been impacted by geopolitical risks and tariff concerns related to energy imports from Russia, potentially pressuring energy prices and market sentiment in Europe.
- In the domain of politics and general news,Apple's investment announcement boosted investor confidence, as reflected in Apple's share price increase of 8%.
