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- Issue #24 - Markets Rally on Rate-Cut Signals | Nvidia Earnings in Focus
Issue #24 - Markets Rally on Rate-Cut Signals | Nvidia Earnings in Focus
Powell hints at possible rate cuts as global equities surge; tariffs squeeze Walmart; key inflation and AI-driven earnings ahead.
George Osei-Oppong junior
August 24, 2025
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What’s in this issue;
Markets surged after Jerome Powell’s Jackson Hole remarks reinforced rate-cut hopes, setting the stage for a potential September pivot. This issue breaks down Q2 earnings beats driving equity gains, sector rotations, and the latest on tariffs impacting Walmart margins.
We also cover European outperformance, crypto moves, and U.S.–U.K. inflation surprises that could shape central bank policy. Looking ahead, Nvidia’s earnings, Core PCE, and GDP revisions are on deck—key catalysts for the AI trade and macro narrative.
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Weekly Movement - Heatmaps
Corporate Earnings
Strong corporate earnings boosted sentiment, with roughly 80% of S&P 500 companies beating forecasts for Q2. Notable single-stock moves included Paramount Skydance (+31%), Intel (+23%), and UnitedHealth (+21%) topping weekly S&P winners. Small-cap stocks surged, supported especially after the CPI release.
Sector Performance
Healthcare (+4.6%) and Consumer Discretionary (+2.5%) led sector gains. Solar energy stocks jumped after new US Treasury guidance on clean energy incentives. Notable decliners included Applied Materials (-13%), Cisco (-8%), and EQT Corp (-4.4%), the latter on natural gas oversupply concerns.
Commodities & FX
Oil (-1.7%) and gold (-3.1%) declined, while the US dollar softened modestly. In crypto, Ethereum outpaced Bitcoin, rising 4% over the week.
Global Markets
European and Japanese equities outperformed, soft inflation data and expectations of central bank easing. The FTSE 100 rose 0.48% for the week.
Positive earnings, moderate US and global inflation, and easing geopolitical tensions drove equity gains, but a late-week PPI surprise and policy caution ahead of Jackson Hole tempered optimism.
What is Moving the Markets This Week
Tariffs causing headache
Walmart, the world’s largest retailer, announced during its quarterly earnings call that tariffs are increasingly impacting its imported merchandise, with costs rising each week and expected to continue throughout the third and fourth quarters of 2025.
CEO Doug McMillon stated that these cost increases, largely driven by tariffs deemed “too high,” will force Walmart to implement price hikes on consumers.
While the retailer saw lower markups than expected in the second quarter and price increases have so far been gradual, shoppers—especially those in middle and lower income households—have been adjusting by either skipping purchases or opting for more affordable alternatives.
Despite these challenges, Walmart reported robust performance, with comparable sales growth of 4.6%, a 1.5% increase in transactions, and a 3.1% rise in the average receipt compared to last year. CFO John David Rainey noted that gradual price changes and customer adaptability have helped maintain momentum.
Additionally, the company’s back-to-school shopping results point to a strong holiday season ahead, reflecting continued resilience among value-conscious consumers.
European Stocks Surge as Fed Signals Potential Rate Cuts; Polish Banks Hit by Tax Plans
European stocks rallied into the afternoon on Friday, with all major indices posting solid gains after dovish comments from Federal Reserve chair Jerome Powell at the Jackson Hole conference boosted risk appetite.
The Stoxx 600 finished up 0.4% at 561.30, just shy of its record close of 563.13 from early March, and has surged 5% in August.
Powell signaled potential rate cuts, noting that the inflationary effects of Donald Trump’s trade tariffs were less severe than anticipated and suggesting the Fed’s restrictive stance may soon be adjusted, especially as incoming data softens and unemployment remains low.
Chris Beauchamp, chief market analyst at IG, said Powell’s remarks increased the likelihood of a September rate cut and pleased markets, which are now optimistic about US economic prospects for the autumn.
Meanwhile, German GDP revisions showed a deeper second quarter contraction of 0.3%, driven by weak industrial production.
In individual moves, Polish banks tumbled over 7% after their government announced new taxes on banks and alcohol to fund defense and social benefits, while AkzoNobel surged after Cevian Capital disclosed a 3% stake, and Standard Chartered climbed in London following a supportive filing from the US Department of Justice in its long-running sanctions case.
London Shares Advance as Powell Hints at Possible US Rate Cuts and UK Consumer Confidence Improves
London equities closed higher on Friday, with investors parsing Federal Reserve chair Jerome Powell’s Jackson Hole speech for indications on US interest rate direction; the FTSE 100 edged up 0.13% to close at 9,321.40, while the FTSE 250 outperformed with a 1.19% rise to 22,077.23. Sterling strengthened 0.89% against the dollar but slipped 0.1% versus the euro.
Powell signalled a potential policy shift, suggesting interest rate cuts may be possible if economic conditions deteriorate, though recent inflation data tempered market expectations.
UK consumer confidence improved, with GfK’s monthly index climbing two points to -17, aided by lower interest rates, benefiting retailers and travel businesses. On the corporate front, Standard Chartered surged 4.19% after a favourable US DoJ filing in a long-standing civil case, and Morgan Advanced Materials rose 3.62% following the sale of its Molten Metal Systems business.
Housebuilders Berkeley Group and Persimmon recovered earlier losses and miners reversed declines, with Anglo American, Antofagasta, and Glencore finishing higher.
Blackstone won the battle for Warehouse REIT as rival Tritax Big Box withdrew its bid, while Revolution Beauty saw its shares rise on fundraising news and a leadership change despite ongoing turnaround challenges.
WH Smith rebounded 11.09%, recovering some losses after Thursday’s profit downgrade due to a £30m North America accounting overstatement, with Deloitte set to conduct an independent review.
Wall Street Soars to Record Highs as Powell Signals Possible Fed Rate Cuts
US stocks surged on Friday, with the Dow Jones Industrial Average hitting a record high after Federal Reserve chair Jerome Powell signalled that an interest rate cut may come as soon as September, easing concerns over inflation and boosting investor confidence.
Speaking at the Jackson Hole conference, Powell said slowing job growth and softer economic data could justify a policy shift, prompting analysts at Berenberg to now forecast two 25-basis point cuts this autumn.
Markets welcomed the dovish tone, with the Dow jumping 1.9% to 45,631.74, while the S&P 500 and Nasdaq also rallied toward record levels. Sentiment was further lifted by Canada’s decision to remove tariffs on $21bn of US imports following talks with Donald Trump, though tariffs on steel, aluminum, and autos remain.
Tech and industrial stocks led the gains, with Nvidia, Apple, Amazon, Tesla, and Caterpillar all rising, while software firms Workday and Intuit dragged after issuing cautious outlooks.
Top Economic News This Week
Geopolitics
Markets tracked high-level talks including Trump’s extension of the US-China trade truce by 90 days and Ukraine peace negotiations in Washington. Hints of progress supported market sentiment, though investors remained cautious pending the outcomes.
Inflation Data & Fed Rate Cut Expectations
Investors reacted to mixed inflation signals. US Consumer Price Index (CPI) for July rose 2.7% year-on-year, slightly below expectations and fuelling hopes for a Federal Reserve rate cut in September. Conversely, the Producer Price Index (PPI) was hotter than expected late in the week, creating some caution and causing pullbacks in the S&P 500 and Nasdaq on Friday.
Track Inflation Across Europe & US
UK inflation rose unexpectedly to 3.8% in July, the highest since January 2024, fuelled by rising food prices, higher airfares, and transport costs.
The Office for National Statistics reported that food and non-alcoholic beverages were 4.9% higher than last year, marking the fourth consecutive increase. Services inflation, closely watched by the Bank of England (BoE), also jumped to 5%, exceeding the central bank’s forecast and adding to concerns about persistent price pressures.
The higher-than-expected reading has cast doubt on the likelihood of further interest rate cuts this year, just weeks after the BoE lowered its base rate to 4% in a narrow vote. Economists now believe a September rate cut is off the table, with markets pricing in only a 50% chance of another reduction later this year.
The figures are a political and economic challenge for both the government and the BoE, as inflation continues to run above the central bank’s 2% target while growth remains weak.Chancellor Rachel Reeves stressed that the government had stabilised public finances and moved far from the double-digit inflation of the past, but acknowledged more must be done to ease cost-of-living pressures.
Opposition parties criticised Labour’s economic management, while economists warned that food price inflation is being amplified by both global shocks and domestic pressures such as higher national insurance contributions and minimum wage costs being passed through by retailers.
With inflation expected to peak at 4% in September, the persistence of price pressures leaves policymakers with limited room to stimulate growth without risking renewed inflationary momentum.
UK food inflation reached 4.9% in July 2025, which means common grocery items have become noticeably more expensive for consumers. Key examples include coffee, fresh orange juice, meat (especially beef, lamb, and goat), and chocolate, all of which experienced some of the biggest price jumps.
For instance, beef prices rose by an average of 3.2%, with lean beef mince increasing by £0.82 per kilogram (9.15%) and sirloin and fillet steaks both rising by over £1.00 per kilogram. Coffee saw a 12.3% rise, and chocolate went up by 16.3%. Butter experienced a 20% increase, and fresh orange juice contributed to overall food inflation pressures.
To illustrate the effect with actual price changes:
A bottle of milk costing £1 in July 2024 would now cost £1.05, reflecting a 5% annual inflation in milk.
Lean beef mince, for example, rose from £8.96/kg to about £9.78/kg.
Sirloin steak increased by more than £1.00 per kg, and standard beef mince went up by 4.6% (+£0.28/kg).
Coffee, chocolate, butter, and lamb/goat were each up more than 10%, with butter alone 20% more expensive than a year earlier.
These real-world item increases show how households face higher grocery bills as a direct result of stubborn food inflation.
A typical monthly shop in the UK has become noticeably more expensive compared to last year due to food inflation. In July 2025, Lidl was the cheapest supermarket, with a shopping basket of 76 regular groceries costing £128.40, up from around £120 the previous year.
At Asda, the same basket now costs £139.53, also showing an increase from last year’s prices. For a bigger shop of 192 products, Asda charged £474.12, up from about £460 last year, while Tesco with a Clubcard now charges £481.59 for this larger basket.
Weekly food trackers indicate that the Food Foundation’s “Basic Basket” for a typical adult woman now costs £52.13 per week, up around 27% since 2022. The average household grocery bill per person is now about £136 each month, a rise of more than 4% compared to the previous year, according to the latest Office for National Statistics data.
The cumulative effect of these increases means a household’s total monthly grocery spend is up by roughly £5-10 for a typical shop, with individual staple items—such as milk, bread, meat, coffee, and fresh produce—all contributing to the higher bill.
Things I’m Paying Attention To
I’m mainly paying attention to inflation and interest rates, mainly in the US, on the interest rate side, as once rates drop, money becomes cheap, and I know markets will thrive and go on a serious bull run. I feel like that’s what Trump wants, hence why he mentioned that it will be the greatest bull run, I presume.
Looking Forward: What We Anticipate Next Week
Weekly Market Outlook
What to Watch
All eyes are on Nvidia’s earnings Wednesday evening, a key litmus test for the AI trade that has been powering markets this year. Alongside that, the Fed’s preferred inflation gauge (Core PCE on Friday) and a potential big GDP revision Thursday could make this a pivotal week for both tech and macro.
Editorial Summary
As we close out August, investors face a mix of critical U.S. economic data and major corporate earnings. Central banks are back in focus with the RBA minutes and a weak Canada GDP print potentially shifting policy outlooks.
The week’s outcome could help set September’s market tone, balancing the AI-driven tech rally against the Fed’s higher-for-longer stance.
Key Events Next Week
Tuesday
RBA Meeting Minutes
Why it matters: May hint at future policy shifts, moving the Australian dollar.
US Durable Goods Orders
Forecast: -2.5% (Previous -9.3%)
Why it matters: A smaller drop could calm fears of collapsing business spending.
Thursday
US GDP Growth Rate QoQ – 2nd Estimate
Forecast: 3% (Previous -0.5%)
Why it matters: An upward revision would reinforce the Fed’s “higher for longer” narrative.
Friday
US Core PCE Price Index (MoM)
Forecast: 0.3% (Previous 2.2%)
Why it matters: The Fed’s preferred inflation gauge—soft numbers strengthen pause expectations.
US Personal Spending (MoM)
Forecast: 0.3% (Previous 0.3%)
Why it matters: Flat spending signals more cautious consumers, cooling demand.
Canada GDP (YoY, Q2)
Forecast: 0.2% (Previous 2.2%)
Why it matters: A sharp slowdown points to waning growth and potential Bank of Canada rate cuts.
Corporate Earnings to Watch
Spotlight: Nvidia (Wednesday after close) – the biggest catalyst for tech and overall market sentiment this week.
Also reporting:
Alibaba
PDD
CrowdStrike
Dell
Marvell
Snowflake
MongoDB
ICYMI
US President Donald Trump has begun his second term with a strong "pro-growth" and protectionist America-first agenda including trade tariffs. This shift impacts global geopolitics and supply chains, with new trade deals emerging such as a significant EU-South American bloc agreement. Geopolitical resilience is a hot topic for global business and leadership.
Generative AI regulation is evolving rapidly. The G7 nations have finalised 11 guiding principles for AI governance, known as the G7 Hiroshima Process. The EU is close to agreeing on a new AI Act. Meanwhile, US and China maintain differing approaches. A Chinese startup, DeepSeek, has made waves using advanced AI models with less reliance on Nvidia chips, disrupting expectations.
In the UK, a High Court ruling has led to the removal of asylum seekers from a hotel in Epping, Essex, impacting government migrant policy and possibly leading to closures of many such accommodation sites nationwide.
Internationally, there is continuing conflict and shifting diplomacy, with renewed attention on Ukraine security. Trump has set conditions rejecting US ground troops but is open to using air power for Ukraine security guarantees. Russian attacks on Ukraine persist amid international diplomatic efforts. Meanwhile, Trump’s diplomacy with Putin remains a contentious and evolving issue.
Natural disasters continue to affect regions: flash floods in India and Pakistan have killed over 280 people, and European seas are breaking temperature records, raising environmental concerns.
On a lighter cultural note, internet culture discussions include reflections on rare monocultural moments in 2024, such as the wide-ranging reaction to Kate Middleton’s cancer treatment announcement and the conspiracy theories that ensued, illustrating how major events shape internet engagement patterns.
These cover a broad set of significant current affairs and cultural moments relevant as of August 2025. Let me know if you'd like more details on any specific topic.
Sources
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