Blog week ending, 7th August 2026
Markets:
- Global equity markets moved higher this week, led by strong gains in the US, while the ASX reached new all-time highs. Investor sentiment was supported by a robust US earnings season and softer US labour market data, which reduced expectations of Federal Reserve rate hikes.
- Around 84% of the largest 500 US companies that have reported so far have exceeded earnings estimates, well above the five-year average of approximately 78%, with aggregate profit growth tracking above 47%.
- JPMorgan CEO Jamie Dimon warned that leverage across financial markets remains elevated, noting that margin debt is at record levels, with a significant portion potentially hidden through prime brokerage borrowing arrangements.
- In local stock news, BHP shares fell after falling to reach an agreement with unions at the Fair Work Commission to halt a strike this weekend, increasing the likelihood of industrial action that could disrupt up to $260 million in iron ore exports.
- REA Group shares rose after growing its annual revenue by 11%, despite an easing housing market and flatlining listings.
- Oil prices were volatile during the week, initially falling on optimism that the US and Iran could reach a deal before rebounding on reports indicating that Iran was considering restrictions on US and Israeli ships passing through the Strait. Meanwhile, OPEC+ approved a further 188 million barrels per day production increase from September, completing the reversal of its voluntary 2023 production cuts.
Economy:
- Australia unexpectedly returned to a $1.93 billion trade surplus in June, against expectations of a deficit, as exports recorded their strongest monthly increase in four years.
- Australian credit growth accelerated to 0.8% in June. The result was above market expectations with the annual rate strengthening to 8.5%. Business credit drove the uptick, while housing credit remained resilient.
- Australian household spending surprised to the upside, growing 0.8% in June and 6% for the year. This was well above market expectations of 0.2% with the increase driven by stronger transport spending, including higher motor vehicle purchases and a rebound in air travel.
- Australian home prices fell nationally by 0.7% in July, matching June’s revised decline and marking the largest monthly falls since December 2022. Annual price growth slowed to 5.3%, down from more than 10% at the beginning of the year.
- A key Australian business activity survey remained subdued in July, with activity little changed from June. The easing energy crisis offered limited relief with elevated fuel costs continuing to pressure operations. Activity and sales dropped further.
- Several US Federal Reserve officials (Cleveland, Minneapolis, and Dallas) argued that inflation is unlikely to return to target without further policy action, advocating a gradual approach that could involve a series of smaller rate increases.
- US consumer sentiment was revised higher in July, reaching its highest level since February before the escalation in the US-Iran conflict drove fuel prices higher. Sentiment improved across all demographic groups, while inflation expectations eased.
- US manufacturing activity jumped in July, rising to its highest level since May 2022, exceeding expectations. Factory output accelerated sharply, supported by solid growth in new orders and a seventh consecutive month of expansion.
- US job openings fell 178,000 in June, worse than expected with declines concentrated in healthcare, leisure and hospitality, and wholesale trade.
- US private businesses added 44,000 jobs in July, the least in six months, following a downwardly revised 95,000 gain in June and below forecasts of 70,000. The services sector led the way.
- Eurozone manufacturing activity reached its strongest level in almost four and a half years in July, although much of the improvement reflected businesses working through existing backlogs rather than an increase in new demand.
- Eurozone inflation accelerated to 2.9% in July, up from 2.8% in June and remaining well above the European Central Bank’s 2% target. Higher energy prices were the main driver, while underlying inflation pressures also strengthened.
- UK manufacturing activity rose strongly in July from June, recording its fastest pace of expansion in private sector activity since April. The improvement was driven by renewed growth in services and the fastest increase in manufacturing output since September 2024.
- The Bank of Japan kept its short-term policy rate unchanged at 1% at its July meeting, leaving borrow costs at their highest level since September 1995 in an 8-1 vote after raising the rate in June. The board warned that that underlying inflation could exceed the Bank’s 2% target.
- Chinese business activity contracted in July, marking the lowest level since December 2022. Manufacturing output declined for the first time in five months amid softer demand and higher costs, while the services sector also slipped back into contraction.
Politics:
- Japan and the US conducted their first joint intervention to support the Japanese yen since 2011, helping drive the currency’s largest intraday gain against the US dollar since December 2023. The move marked the first coordinated US-Japan effort to support the yen since 1998 and highlighted growing concerns about the currency’s weakness.
- President Trump said he had agreed to cancel a planned strike on Iran, provided progress could be made towards a broader agreement, after Iran and several Middle Eastern nations indicated they were working on a framework to reopen the Strait. Iran denied requesting a pause in US military action and warned that any attacks on its energy infrastructure would be met with retaliatory strikes.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
