Inflationary pressure is increasing in New Zealand. The People’s Bank of China kept interest rates unchanged

At the end of Friday, the Dow Jones Index (US30) fell by 0.32% (-0.01% for the week). The S&P 500 (US500) Index fell by 0.01% (+0.67% for the week). The Nasdaq (US100) Technology Index closed down 0.07% (+1.25% for the week). The US stocks closed nearly flat on Friday as investors weighed President Trump’s demand for higher tariffs against the European Union amid strong economic data and corporate earnings. According to reports, Trump is demanding minimum tariffs of 15–20% in any deal with the EU, which is working to conclude an agreement by August 1. On the corporate front, Netflix shares fell by 5.1% despite exceeding revenue and profit estimates, while Charles Schwab shares rose 3% thanks to strong results.

The University of Michigan Consumer Sentiment Index in the US rose to 61.8 in July 2025, its highest level in five months. Meanwhile, inflation expectations for the year ahead fell for the second month in a row to 4.4% from 5% in June. Long-term inflation expectations fell for the third consecutive month, dropping to 3.6% from 4%. Both inflation indicators are the lowest since February, indicating that consumers believe inflation will continue to decline further.

European stock markets were mostly down on Friday. The German DAX (DE40) fell by 0.33% (+1.05% for the week), the French CAC 40 (FR40) closed up 0.01% (+0.63% for the week), the Spanish IBEX35 (ES35) fell by 0.04% (+0.67% for the week), and the British FTSE 100 (UK100) closed up 0.22% (+0.57% for the week). European stocks closed in the red on Friday as investors monitored corporate events and signs of progress in trade negotiations between the US and the European Union. Technology companies continued their volatile movement as tariffs and broader economic uncertainty continued to cloud their outlook, with ASML shares falling 2.6%. Heavyweight luxury brands and automakers also closed in the red: Hermes, LVMH, Mercedes-Benz, and Stellantis lost between 1% and 3%.

WTI oil price reached $67.3 per barrel on Friday, posting a weekly decline of 1%, as mixed economic data from the US offset concerns about new EU sanctions on Russian energy exports. Weak US housing data points to a decline in housing investment, but improved consumer sentiment and lower inflation have raised hopes for future rate cuts and increased demand for energy. Meanwhile, the EU approved an 18th package of sanctions targeting the Russian oil industry, including a new floating price cap and a ban on petroleum products made from Russian oil.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 1.02%, China’s FTSE China A50 (CHA50) fell by 0.12%, Hong Kong’s Hang Seng (HK50) jumped by 3.01%, and Australia’s ASX 200 (AU200) showed a positive result of 2.06%.

The offshore yuan exchange rate remained virtually unchanged on Monday at around 7.17 per dollar as markets digested the latest decision by the People’s Bank of China. As expected, the Central Bank kept its benchmark lending rates at historic lows during its July rate-setting meeting. The 1-year prime rate, which is a key benchmark for most corporate and household loans, was kept at 3%, while the 5-year LPR, which determines mortgage rates, remained at 3.5%. This comes amid continuing signs of weak consumer sentiment and uneven economic growth.

The New Zealand dollar fell to $0.594 on Monday, reversing the previous session’s gains and ending up near a four-week low as investors reacted to softer-than-expected inflation data. In the second quarter, the Consumer Price Index rose by 0.5%, below the expectations of 0.6% compared to 0.9% in the first quarter. On an annualized basis, inflation rose to 2.7% from 2.5%, but fell short of the expectations of 2.8%. Although inflation is approaching the upper end of the RBNZ’s target range of 1–3%, weak underlying pressures and a significant economic downturn have kept expectations of a rate cut in August intact.