Market Highlights: Inflation, GDP, and Profits Data

📈 Inflation Data in the US and China

In the upcoming week, the focus will be on inflation data releases in both the US and China. On Thursday, the US will release its July inflation data, which will be closely watched by investors. This data will provide insights into whether price pressures are easing, potentially influencing the Federal Reserve’s decisions on interest rates. Meanwhile, China will release its July inflation data on Wednesday. Investors are concerned about deflation risks in the world’s second-largest economy. Additionally, China will release its trade figures on Tuesday, providing further context on the economic outlook. The country’s rebounding economy has faced challenges recently due to weakening domestic and international demand.

📉 Stock Market Rally Pauses
The US stock market experienced a pause in its rally, with Wall Street closing lower on Friday. The S&P and Nasdaq reported the largest weekly declines since March. The near-term trajectory of the stock market may be influenced by Thursday’s inflation data, as investors watch for signs of moderating consumer prices. Rising Treasury yields are also contributing to market uncertainty.

💼 Eurozone Data
On Friday, the UK will release its second-quarter GDP data. The data is expected to show a slight improvement, indicating that the economy remains stable. However, concerns persist due to the recent rate hike by the Bank of England to 5.25%. The bank has also warned of prolonged high borrowing costs, which may impact economic growth in the coming years. Germany will release its industrial production data on Monday, expected to show a decline due to global demand slowdowns, particularly from China. The German economy stagnated in the second quarter, with weak purchasing power and higher interest rates impacting growth.

⚠️ Market Outlook
Looking ahead, replicating the high returns of the last decade is unlikely without continued fiscal and monetary interventions. The excess debt accumulated since the financial crisis, coupled with low growth and inflation, may result in lower returns compared to the previous decade. Investors should be prepared for more modest returns and potential market corrections as fundamentals and asset prices align.

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