Weekly Review: Robust U.S. Data Drives Stocks to Record Highs

In June, U.S. consumer and producer price data hinted at the early effects of rising tariffs, but overall figures remained modest, suggesting a minimal impact so far. Inflation expectations continued to ease, with the University of Michigan’s year-ahead gauge falling to a five-month low of 4.4%. Retail sales exceeded forecasts, with core sales up 0.5%, and jobless claims dropped to their lowest level since April. Despite tariff-related uncertainty, the U.S. economy remains resilient.

The S&P 500 (+0.59%) and Nasdaq Composite (+1.51%) reached new record highs during the week, buoyed by strong corporate earnings and broadly positive economic data. In contrast, the Dow Jones Industrial Average (-0.07%) ended the week in negative territory. Earnings season kicked off on Tuesday, with major banks leading the way. JPMorgan Chase and Citigroup both delivered better-than-expected second-quarter results. Later in the week, consumer-focused companies such as PepsiCo, United Airlines, and Netflix also posted earnings that surpassed analyst forecasts. Elsewhere, chipmaker NVIDIA rallied after announcing it had received approval from the Trump administration to sell its H2O AI chips to China.

With the August 1 deadline nearing, U.S. trade talks continue. President Trump announced a deal with Indonesia involving the purchase of Boeing jets, energy, and agricultural goods, while setting U.S. import tariffs at 19%, down from a proposed 32%. U.S. exports to Indonesia will remain tariff-free, and the deal may serve as a model for other Southeast Asian countries. Meanwhile, Trump threatened 30% tariffs on the EU and Mexico, pressing for reduced barriers and tougher action on narcotics. The EU is preparing countermeasures and Canada’s PM Carney said a deal is close, though avoiding all U.S. tariffs may be unlikely.

UK inflation rose unexpectedly to 3.6% in June, the highest since January 2024, driven by higher transport and fuel costs. Services inflation held steady at 4.7%, defying expectations of a decline and signalling ongoing price pressures. Meanwhile, the labour market softened, with unemployment edging up to 4.7% - a four-year high. The FTSE 100 gained 0.57% w/w, supported in part by a weaker pound against the U.S. dollar. In Europe, the Euro Stoxx 50 dipped -0.45% w/w as investors awaited developments in U.S.-Europe trade talks.

Mainland Chinese markets posted weekly gains, with the Shanghai Composite rising 0.69% in local currency terms. In Hong Kong, the Hang Seng Index advanced 2.65%. China’s GDP grew 5.2% y/y in the second quarter, slightly below the 5.4% pace in Q1. However, the better-than-expected result is seen as reducing the urgency for additional stimulus from Beijing, according to analysts. Elsewhere in Asia, Japan’s stock market posted modest weekly gains, with the Nikkei 225 up 0.63%. Gains were limited by political uncertainty ahead of the July 20 Upper House election, where the ruling coalition risks losing its majority.

On the commodity front, oil prices fell on the week, with Brent oil dipping 2%. Gold dropped -0.16% w/w as risk sentiment improved globally.

Market Moves of the Week:

South Africa’s retail sector is gaining momentum, supported by lower inflation, Two-Pot retirement withdrawals, and falling fuel prices. Stats SA data showed retail sales rose 4.2% y/y in May, after a 5.2% increase in April. Six out of seven retail groups grew, led by textiles, clothing, footwear, and leather goods, which surged 12.5%.

In other news, China has expressed interest in strengthening supply chain cooperation with SA and expanding collaboration in sectors such as new energy and the digital economy, according to its commerce ministry. The two countries are also expected to deepen engagement under platforms like the WTO, G20, and BRICS.

UK Chancellor Rachel Reeves has announced a plan to support SA infrastructure by offering technical expertise to fast-track major projects. President Ramaphosa estimates the country needs R4.8 trillion in investment by 2030, while the Treasury has committed R1 trillion over the next three years. Meanwhile, SA is in discussions to secure a R54 billion loan from a consortium of lenders, including the World Bank, KfW, and the African Development Bank, Finance Minister Enoch Godongwana told Bloomberg TV.

The All-Share Index rose by 1.51% this week, boosted by Financials (+3.23%). The local currency strengthened against the U.S. dollar, moving to R17.73/$ from last week’s R17.93/$ level. SA government bond yields moved lower on the week, dipping 0.10%.

Chart of the Week:

Are tariffs at last beginning to push up inflation? Core goods inflation had been negative for many years before the post-pandemic spike. Its current rate is the highest in more than a decade, outside of that spike. Source: Bloomberg.

Important Information

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any Kanga Wealth Management or Strategiq product. This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy. All charts and tables are shown for illustrative purposes only.

Source: STRATEGIQ Capital, an authorised financial services provider (FSP 46624)