Market wrap
Week:
S&P500: -2.5% FTSE100: -0.1% Gold: +2.9%
ytd:
S&P500: +6.3% FTSE100: +9.9% Gold: +30.8%
The S&P 500 fell sharply this week, shedding over 2% as traders contended with mixed megacap earnings, rising geopolitical tensions, and growing macroeconomic uncertainty. After notching a fresh record close on Monday, the benchmark index tumbled by Friday, marking its worst week since April and snapping a rare streak of calm where it went 25 straight sessions without a 1% daily move.
So what went wrong this week?
The early part of the week saw cautious optimism, with markets grinding higher on hopes of an extended trade truce with China and Europe. But that tone soured quickly. Fed Chair Powell's midweek warning about inflation risks tied to tariffs doused rate-cut hopes. Even a strong showing from Microsoft and Meta couldn't stem the selling. By Friday, a triple whammy of Amazon’s weak guidance, Trump’s announcement of fresh tariffs from August 7, and softer than expected US jobs data tipped markets firmly into risk-off mode.
Why it might not get better soon
August has a well-earned reputation for choppy, low liquidity trading, and the seasonal pattern is playing out once again. Historically, it's among the weakest months for the S&P 500, and with geopolitical tensions rising and earnings season nearing its tail end, the path ahead looks tricky.
The UK continues to outperform
One notable theme continues to play out and that is UK outperformance vs the US. Whilst the S&P 500 was down 2.5% last week, the FTSE 100 was broadly flat, extending the YTD outperformance to just under 4%. Much lower valuations and sector weightings support the UK tilted towards energy and financials, in contrast to the US market’s heavy reliance on richly valued tech names.



