Weekly market update: Monday 10 August 2026

Global markets begin the week in an unusually upbeat mood. US shares finished last week at a record high after a surprisingly weak July jobs report cooled expectations that the Federal Reserve might raise interest rates again, and the Nasdaq Composite posted its best week since April. European shares also closed at an all-time high, and the FTSE 100 notched a fourth consecutive weekly gain.

The other big story was energy. Reports of progress towards an agreement that could reopen the Strait of Hormuz sent oil prices sharply lower during the week, easing some of the inflation pressure that has built up through the summer. Bond yields fell on both sides of the Atlantic as a result.

Over the weekend, though, some of that optimism was tested. Iran denied it was in direct talks with the US over reopening the waterway, and Houthi forces claimed a drone strike on a Saudi Aramco refinery at Jizan. Oil has edged back above $84 a barrel, and this week’s main event — Wednesday’s US inflation report — will show how much of the earlier energy shock has fed through to consumer prices.

At a glance

Market mood: Optimistic, but watchful

What’s driving markets: A weak US jobs report has reduced the perceived risk of further Federal Reserve rate rises, while lower oil prices last week eased inflation concerns. Renewed Middle East tensions are pulling in the other direction.

Biggest event this week: US July inflation data on Wednesday, the first full reading since energy prices spiked.

Key risk: That inflation comes in hotter than expected, or that fresh disruption to oil supply undoes last week’s progress on energy costs.

 

Market snapshot

Levels as at 9am on Monday 10 August, with the move over the past week in brackets.

Equity index levels are Friday 7 August closing prices, as markets had not yet traded when this was written; commodity, bond and currency levels are the most recently available early on Monday 10 August rather than an exact 9am snapshot. Weekly moves are calculated against levels from approximately one week earlier and are rounded.

Past performance is not a reliable guide to future performance.

 

What happened last week?

US

All three major US indices gained ground, with several notching fresh record highs. The Nasdaq Composite led the way with a 5.2% weekly rise, followed by the S&P 500 at 3.6% and the Dow at around 3% — the strongest week for US shares since April. Technology and semiconductor shares, which had a difficult July, were the biggest contributors.

The turning point came on Friday. The Bureau of Labor Statistics reported that US employers shed 23,000 jobs in July, against expectations for a gain of roughly 80,000, and revised the previous two months sharply lower. The unemployment rate unexpectedly ticked down to 4.1%. Weak hiring is not usually welcome news, but in the current environment it reduced the chance that the Federal Reserve would need to tighten policy further: the market-implied probability of a September rate rise fell to around 42% from roughly 55% before the report.

Business surveys painted a more resilient picture. The ISM manufacturing index rose to 55.6 in July, its highest reading since 2022, while services activity stayed in expansion at 54.1 — though the prices component climbed again, a reminder that cost pressures have not gone away. US Treasuries gained, with the 10-year yield easing to about 4.64% from 4.74% a week earlier.

UK

The FTSE 100 rose 0.30% over the week, closing at 10,901.09 on Friday and completing a fourth consecutive weekly advance. The UK index has less exposure to high-growth technology than the US market, so it participated less in the tech-led rally, but its weighting towards energy, financials and defensive sectors has served it well through a volatile summer.

UK economic data was encouraging. The services PMI returned to growth at 52.1 in July after two months of contraction, and manufacturing improved to 52.8, with businesses reporting stronger demand and easing input costs. Employment in the service sector remained subdued, and firms continued to flag uncertainty about energy prices.

Gilts rallied alongside global bonds. The 10-year gilt yield fell more than 10 basis points to around 4.90%, its lowest since early July, as the drop in oil prices reduced expectations that the Bank of England would need to tighten policy further. That said, yields remain high by the standards of recent years, and the Bank is still balancing inflation risks against a soft growth backdrop.

Rest of world

European shares had a strong week, with the Stoxx Europe 600 up 1.70% to a record close of 660.25. Germany’s DAX gained 2.69%, France’s CAC 40 rose 2.41% and Italy’s FTSE MIB added 2.96%. Eurozone services activity returned to growth for the first time in months, and selling-price pressures moderated.

In Asia, Japan’s Nikkei 225 rose 1.93% as investors assessed recent coordinated intervention to support the yen and speculated about the timing of the Bank of Japan’s next rate rise. Chinese markets diverged: mainland indices rose on technology strength while Hong Kong slipped. Chinese exports grew 23.9% year on year in July, driven largely by demand for AI-related electronics.

 

What happened over the weekend?

The most significant development was in the Middle East. Houthi forces claimed a drone strike on Saudi Aramco’s refinery at Jizan on Sunday. Saudi authorities confirmed a fire at the facility and said it had been extinguished with no injuries; the refinery had already been offline following an earlier attack in late July. Separately, Houthi attacks in Yemen were reported to have killed seven people.

Alongside that, Iran publicly denied that it was holding direct talks with the US about reopening the Strait of Hormuz, and set out conditions that would need to be met first. That directly undercut the optimism that had driven oil prices down earlier in the week. Brent crude has climbed back above $84 a barrel, having risen for three consecutive sessions.

For markets, this creates a familiar tension. Last week’s rally rested partly on the idea that energy costs — and therefore inflation — were coming back under control. If Hormuz stays effectively closed and Saudi export infrastructure remains a target, that assumption becomes harder to sustain.

 

The key themes driving markets this week

1. Inflation is back at the centre of the story

Wednesday’s US consumer price index reading is the week’s main event. Headline inflation eased to 3.5% in the year to June from 4.2% in May, but that reading largely predates the escalation in the Middle East and the associated rise in energy prices.

July’s figures will therefore be the first fuller test of how much the energy shock has passed through to the broader price basket. Producer prices follow on Thursday, and are often read as an early signal of where consumer inflation is heading.

2. Interest rate expectations have shifted — in an unusual direction

For much of the past two years, the debate has been about when rates would come down. This summer it has been about whether they might need to go up again. The Federal Reserve held rates steady in July, and Chair Warsh struck a cautious tone.

Friday’s weak payrolls report changed the arithmetic, cutting the implied odds of a September rate rise to roughly 42%. A soft inflation print this week would push those odds lower still; a hot one would revive them quickly. In the UK, the Bank of England faces a similar balance between above-target inflation and a fragile labour market.

3. Energy supply remains the wildcard

Oil has been the single biggest swing factor for markets this year. Brent fell more than 8% last week on hopes of a Hormuz deal, then recovered a good part of that move as those hopes faded.

Because energy feeds directly into inflation, and inflation feeds into interest rate expectations, oil headlines are effectively driving bond yields and equity valuations at the moment. Investors should expect continued day-to-day volatility while the situation remains unresolved.

 

Coming up this week

Monday: A quiet start, with no major economic releases scheduled. Attention stays on Middle East headlines and the oil price, with results from a handful of smaller US companies including AST SpaceMobile.

Tuesday: The Reserve Bank of Australia announces its interest rate decision, and the NFIB small business optimism index is published in the US. Corporate results include Super Micro Computer, CoreWeave, On Holding and Cava Group.

Wednesday: The main event: US July consumer price inflation, released at 1.30pm UK time. Germany also publishes final July inflation figures, and Coherent and Cerebras Systems report results.

Thursday: The UK’s first estimate of second-quarter GDP is out at 7am UK time, following growth of 0.6% in the first quarter. US producer price inflation follows in the afternoon, alongside results from Applied Materials and Birkenstock.

Friday: US July retail sales at 1.30pm UK time give a read on consumer spending, followed by the preliminary University of Michigan consumer sentiment survey. Investors will assess whether the week’s data supports the recent rally.

 

Why it matters for investors

Weeks like the last one are a useful reminder of how quickly the mood can change. A jobs report that looked disappointing on the surface triggered one of the strongest weekly gains of the year, because of what it implied about interest rates. Predicting those reactions consistently is extremely difficult, even for professionals.

That is one of the arguments for staying invested through the noise rather than trying to time entries and exits. Investors who stepped away from markets during July’s technology sell-off would have missed last week’s rebound.

Diversification also does quiet work in this kind of environment. Over the past week, US technology shares, European equities, Japanese shares and gold all rose, while oil fell heavily — different holdings responding differently to the same set of events. Spreading investments across regions, sectors and asset types is what smooths the ride when any single one of them lurches.

Above all, the horizon that matters for most people is measured in years, not weeks. Inflation reports, oil headlines and central bank meetings all feel urgent at the time, but their significance tends to fade in the context of a long-term investment plan that is regularly contributed to and left to compound.

 

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