The State of Markets: “Equity Market Breakouts ”
Equity markets around the world broke out to the upside this week. In Asia, both China’s Shanghai Comp and Japan’s TOPIX added to recent gains and made new multi-year highs. In certain other Asian indices the price action has become parabolic, i.e. somewhat vertical (see chart below). Various European indices also broke out to the upside (e.g. the Spanish IBEX, EZ banks, STOXX600, the FTSE100 etc.), along with several tech heavy US markets (most notably the NDX & SPX).
The key question, therefore, is how long will the upside momentum last? Have markets entered a multi-month ‘melt-up’ phase? Or, is this the a ‘blow-off top’ phase ahead of a sharp pullback? We address those questions in today’s Longview on Friday – see below for detail.
The key event next week is the Fed’s policy decision on Wednesday. While rates will almost certainly stay unchanged (97.4% probability according to CME FedWatch), the tone of Powell’s press conference will be watched closely. Other central banks are also making policy decisions next week, including the Bank of Canada (Wednesday) and the BoJ (Thursday).
It’s also a key week for US macro data releases, much of which has a strong labour market theme next week, with JOLTS job openings (Tuesday); Challenger job cuts & ADP (Wednesday); and nonfarm payrolls (Friday). Other key US data includes the flash GDP estimate for Q2 (Wednesday); personal income, spending & PCE inflation (Thursday), followed by ISM manufacturing (Friday). Elsewhere it’s ‘GDP & CPI week’ in Europe (with various Q2 flash GDP estimates on Tuesday and Wednesday, and inflation in the second half of the week). It’s a tech heavy week for US earnings, with Meta & Microsoft (Wednesday), followed by Apple & Amazon (Thursday). In Asia, Chinese manufacturing & service sector PMIs are also out (Thursday). Please see below for a full list of key macro data and events this coming week.
Key chart: South Korean Kospi vs. Vietnamese VN equity index
Upcoming important data/events this week:
|
Events: |
Fed Policy Decision (Wed, 7:00pm), followed by Powell press conference (7:30pm); BOJ policy decision (Thurs, time tentative); Bank of Canada Policy Decision (Wed, 2:45pm). |
|
Monday: |
N/A |
|
Tuesday: |
US JOLTS job openings (June, 3pm); US Conference Board consumer confidence (July, 3pm). |
|
Wednesday: |
GDP for France (6:30am), Italy (9am), Germany (9am), Eurozone (10am) & US (1:30) – all Q2 first estimates; US Challenger job cuts (July, 12:30pm); US ADP employment (July, 1:15pm). |
|
Thursday: |
Chinese manufacturing & service sector PMIs (July, 2:30am); US personal income & spending including headline & core PCE (June, 1:30pm). |
|
Friday: |
US nonfarm payrolls, hourly earnings & unemployment data (July, 1:30pm); US ISM manufacturing PMI (July, 3pm); EZ headline & core CPI (July first estimate, 10am). |
|
Key earnings: |
Essilorluxottica (Mon); Visa, P&G, UnitedHealth, Boeing, L'Oreal, AstraZeneca, Barclays (Tues); Microsoft, Meta Platforms, Hermes International, Airbus Group, HSBC (Wed); Apple, Amazon.com, Shell, Unilever, Samsung Electronics (Thurs); Nintendo (Fri). |
Key Research
Longview on Friday, 25th July 2025:
“Froth Is Building – Caveat Emptor”
Signs of froth continue to build in global financial markets (especially in the US).
As has been widely reported, this has been one of the fastest recoveries by the US stock market from a major drawdown. From the April 8th closing lows, it took 54 trading days to recover the 19% loss during the pullback (i.e. based on closing prices). By way of comparison, post the March 2020 COVID sell-off it took 107 trading days from the March 23rd lows to reclaim the highs (from Feb 2020*).
As that froth has emerged, our SELL-off indicator has continued to build to higher levels. As of yesterday’s close it had reached +36 (an unusually high level for this model). At +20, it warns of a high likelihood of a pullback (and signals that global markets are becoming overly exuberant).
Key North American macro data & events:
|
Events: |
Fed Policy Decision (Wed, 7:00pm), followed by Powell press conference (7:30pm); Bank of Canada Policy Decision (Wed, 2:45pm). |
|
Monday: |
US Dallas Fed manufacturing sector activity (July, 3:30m). |
|
Tuesday: |
US trade balance (June, 1:30pm); US FHFA house price index (May, 2pm); US JOLTS job openings (June, 3pm); US Conference Board consumer confidence (July, 3pm); US Dallas Fed service sector activity (July, 3:30pm). |
|
Wednesday: |
US Challenger job cuts (July, 12:30pm); US ADP employment (July, 1:15pm); US GDP (Q2 first estimate, 1:30pm); pending home sales (June, 3pm). |
|
Thursday: |
US weekly jobless claims (1:30pm); US personal income & spending including headline & core PCE (June, 1:30pm); Canadian GDP (May, 12:30pm); US Chicago PMI (July, 2:45pm). |
|
Friday: |
US nonfarm payrolls, hourly earnings & unemployment data (July, 1:30pm); Canadian S&P Global manufacturing sector PMI (July, 2:30pm); US S&P manufacturing sector PMIs (July final estimate, 2:45pm); US ISM manufacturing PMI (July, 3pm); US construction spending (June, 3pm); US Michigan Sentiment (July final estimate, 3pm). |
|
Key earnings: |
Welltower, Waste Management, Cadence Design (Mon); Visa, P&G, UnitedHealth, Merck&Co, Booking, Boeing, Starbucks, American Tower, Royal Caribbean Cruises, Mondelez, United Parcel Service, Ecolab, Republic Services, PayPal, Johnson Controls, Carrier Global, Norfolk Southern (Tues); Microsoft, Meta Platforms, Qualcomm, Arm, Lam Research, Altria, Trane Technologies, Agnico Eagle Mines, Equinix, Illinois Tool Works, American Electric Power, Allstate, Public Storage, Ford Motor (Wed); Apple, Amazon.com, Mastercard, AbbVie, S&P Global, Stryker, Comcast, KKR & Co, MicroStrategy, MercadoLibre, KLA Corp, Southern, ICE, Bristol-Myers Squibb, Cigna, Arthur J Gallagher, CVS Health Corp, Howmet, Motorola, TC Energy, Air Products, Quanta Services, Monster Beverage (Thurs); Exxon Mobil, Chevron, Linde PLC, Colgate-Palmolive, Regeneron Pharma, Dominion Energy, WW Grainger (Fri). |
Fig B: US real GDP (Q-o-Q %, annualised rates)
Key European macro data & events
|
Events: |
N/A |
|
Monday: |
N/A |
|
Tuesday: |
Spanish GDP (Q2 first estimate, 8am); Spanish retail sales (June, 8am); ECB 1 & 3 year CPI expectations (June, 9am); French total jobseekers (Q2, 11am). |
|
Wednesday: |
GDP for France (6:30am), Italy (9am), Germany (9am) & Eurozone (10am) – all Q2 first estimates; German retail sales (June, 7am); Spanish CPI (July first estimate, 8am); ECB Wage Tracker (Wed, 9:00am); Eurozone consumer confidence (July final estimate, 10am); Italian industrial sales (May, 10am). |
|
Thursday: |
German import price index (June, 7am); French headline CPI (July first estimate, 7:45am); French PPI (June, 7:45am); German unemployment (July, 8:55am); Italian unemployment rate (June, 9am); Italian headline CPI (July first estimate, 10am); Eurozone unemployment rate (June, 10am); Italian PPI (June, 11am); German headline CPI (July first estimate, 1pm). |
|
Friday: |
HCOB manufacturing sector PMIs for Spain (8:15am), Italy (8:45am), France (8:50am), Germany (8:55am) & Eurozone (9am) – all July final estimates apart from Spain & Italy; Italian retail sales (June, 9am); EZ headline & core CPI (July first estimate, 10am). |
|
Key earnings: |
Essilorluxottica (Mon); L'Oreal, Air Liquide (Tues); Hermes International, Airbus Group, Santander, Intesa Sanpaolo, Vinci, Caixabank (Wed); DSV, Shell, Schneider Electric, Unilever, Safran, Sanofi, Enel, Ferrari NV, BBVA, ING Groep, Saint Gobain, Universal Music NV, Credit Agricole (Thurs); AXA (Fri).
|
Fig C: EZ headline & core CPI, shown with EZ recession bands
Key UK macro data & events
|
Events: |
N/A |
|
Monday: |
CBI distributive trade survey (July, 11am). |
|
Tuesday: |
BRC shop price index (July, 12:01am); Net consumer credit, mortgage approvals & M4 money supply (June, 9:30am). |
|
Wednesday: |
N/A |
|
Thursday: |
Lloyds business barometer (July, 12:01am). |
|
Friday: |
Nationwide house prices (July, 7am); S&P manufacturing sector PMI (July final estimate, 9:30am). |
|
Key earnings: |
AstraZeneca, Barclays (Tues); HSBC, Rio Tinto PLC, BAE Systems, GSK PLC (Wed); British American Tobacco, Rolls-Royce Holdings, London Stock Exchange (Thurs). |
Fig D: UK consumer credit growth ex. Student loans (bn GBP)
Key Asia-Pacific macro data & events
|
Events: |
RBA's Hauser-Fireside Chat (Thurs, 0:20am); BOJ Governor Ueda Press Conference at BOJ (Thurs, 7:30am); BOJ policy decision including GDP & CPI Q3 forecasts (Thurs, time tentative). |
|
Monday: |
N/A |
|
Tuesday: |
N/A |
|
Wednesday: |
Australian CPI (June, 2:30am). |
|
Thursday: |
Japanese retail sales (June, 12:50am); Japanese industrial production (June first estimate, 12:50am); Chinese manufacturing & service sector PMIs (July, 2:30am); Australian private sector credit (June, 2:30am); Australian retail sales (June, 2:30am); Japanese housing starts (June, 6am); Japanese ESRI consumer confidence (July, 6am). |
|
Friday: |
Australian S&P manufacturing PMI (July final estimate, 12am); Japanese jobless rate (June, 12:30am); Japanese Jibun Bank manufacturing sector PMI (July final estimate, 1:30am); Australian PPI (Q2, 2:30am). |
|
Key earnings: |
Keyence, Advantest Corp, Larsen & Toubro (Tues); Garanti Bank (Wed); Samsung Electronics, Hitachi, Sumitomo Mitsui Financial, Tokyo Electron, Mizuho Financial, Japan Tobacco, Bharti Airtel, Sun Pharma (Thurs); Nintendo, Itochu Corp, KDDI Corp, Mitsui, SBI, ITC (Fri). |
Fig E: Chinese manufacturing & service sector PMIs (NBS)
This week:
Longview on Friday, 25th July 2025:
“Froth Is Building – Caveat Emptor”
Monthly Global Asset Allocation No. 68, 24th July 2025:
“Bonds: Fade the Fiscal Freakout A.k.a. Stay OW Treasuries in Strategic Portfolio”
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 25th July 2025:
Daily Dose of Macro & Markets 24th July 2025:
Daily Dose of Macro & Markets 23rd July 2025:
“OIL: From Geopolitics to Supply Glut’”
Daily Dose of Macro & Markets 22nd July 2025:
“China’s Monetary Momentum Builds – Markets Sniff a Sugar Rush”
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 21st July 2025:
“BUILDing signs of Complacency/Bullish Positioning”
Last week:
Longview on Friday, 18th July 2025:
“Where to Allocate -> US & EZ Small/Mid-Caps vs. Large Caps; PLUS UK Labour Market –> How Bad Is It?”
Global Macro Report, 15th July 2025:
Daily Dose of Macro & Markets:
Daily Dose of Macro & Markets 18th July 2025:
“Britain – Is There Any Hope?”
Daily Dose of Macro & Markets 17th July 2025:
Daily Dose of Macro & Markets 16th July 2025:
“US Inflation: ‘Something for Everyone’”
Daily Dose of Macro & Markets 15th July 2025:
Weekly Risk Appetite Gauge:
'Weekly Risk Appetite Gauge', 14th July 2025:
“Consolidating? Or Rolling Over?”