On Monday, August 4, global equity markets recorded moderate gains in what was otherwise a quiet trading session, marked by limited macroeconomic data and corporate news. Major Western indices partially recovered losses from the previous three sessions—particularly those from Friday—supported by strength in the banking sector.
In the United Kingdom, several banks rallied after avoiding the most adverse outcomes from the Supreme Court ruling on vehicle financing. Notably, Lloyds (+7.87%), Barclays (+1.49%), and Santander (+3.96%) saw meaningful gains. Positive investor reaction to a small batch of corporate earnings also contributed to the uptick in sentiment. As a result, key European indices posted solid advances: FTSE MIB (+1.89%), IBEX 35 (+1.84%), EuroStoxx 50 (+1.49%), DAX (+1.42%), CAC 40 (+1.14%), and FTSE 100 (+0.66%).
Conversely, the Swiss SMI index declined, under pressure from the announcement that U.S. President Donald Trump intends to impose a 39% tariff on Swiss imports. The move, which drove the SMI to a three-month low, poses significant risks to employment and trade. In response, Swiss authorities signaled willingness to engage in negotiations aimed at securing a bilateral trade agreement. Luxury sector firms, including Swatch Group (-2.28%) and Richemont (-1.27%), were among the hardest hit.
U.S. markets also rebounded, with all major indices closing higher in what appears to be a technical correction following Friday’s sharp declines. The Dow Jones gained 1.34%, the S&P 500 rose 1.47%, and the Nasdaq Composite advanced 1.95%. The recent downturn was triggered by a weaker-than-expected non-farm payrolls report, which cast doubt on the resilience of the U.S. economy. While Monday’s performance was encouraging, market participants may remain cautious in the near term amid the seasonal slowdown typical of August.
Technical Analysis
Today, investors will turn their attention to the final July readings of the Services Purchasing Managers’ Index (PMI) for the Eurozone, including Germany, France, Italy, and Spain, as well as the United Kingdom. In the afternoon, corresponding data will be released in the United States, including both the S&P Global Services PMI and the ISM Services Index. The market anticipates modest expansion in the Eurozone and more robust growth in the U.S. Given the services sector’s significant weight in Western economies, these indicators are considered more influential than their manufacturing counterparts.
Additional macroeconomic releases include industrial production data for June from Spain and France, and the Eurozone’s June Producer Price Index (PPI). In the U.S., attention will focus on the June trade balance.
The corporate earnings season continues, with key results expected from Continental AG, Deutsche Post, Diageo, and BP in Europe, as well as Caterpillar, Pfizer, and Marathon Petroleum in the U.S. Of particular interest will be commentary from company executives on the potential impact of U.S. trade policy, especially in light of Trump’s recently announced tariffs. These developments are expected to remain in focus ahead of potential trade agreement announcements by August 7, and the looming August 12 deadline for further tariffs on China.
Looking ahead, European markets are expected to open slightly higher, albeit without strong directional conviction. Investors will likely remain cautious ahead of key economic data and earnings reports. Sentiment may also be influenced by global macro factors: Asian equity markets closed higher earlier today, buoyed by stronger-than-expected PMI figures from China and Japan; the U.S. dollar continues to recover; oil prices are declining following OPEC+ plans to raise output in September; gold and copper prices remain stable; and Bitcoin has retreated after a brief rally.
