Weekly Market Review - 24 August 2026

Global equities came under pressure on the back of rising bond yields and renewed Middle East tensions. The UK market’s more defensive characteristics and increased Energy sector exposure led it to outperform peers.

US: Rising bond yields dents investor sentiment

US equities moved lower over the week as rising bond yields, renewed tensions in the Middle East and weakness in AI and semiconductor stocks weighed on sentiment. Concerns around government borrowing, corporate debt issuance and higher oil prices pushed long dated US bond yields higher, with the 30-year yield reaching its highest level since 2007. Markets have shifted from expecting rate cuts to pricing a higher for longer interest rate environment as inflation remains stickier than anticipated. Economic data remained resilient, with business activity accelerating in August and employment growth reaching its strongest level since January 2025. However, the housing market continued to struggle under the weight of elevated mortgage rates and affordability pressures. Overall, investors remain caught between strong economic fundamentals and concerns over inflation, valuations and higher interest rates.

Japan: Tech sell-off drives equities lower

Japanese equities fell sharply during the week as rising bond yields, higher oil prices and renewed geopolitical tensions triggered a broader risk off move. Technology and semiconductor companies were among the weakest performers, reflecting concerns around valuations and global growth. Japanese government bond yields reached their highest levels in around 30 years as investors increasingly anticipate further Bank of Japan policy tightening. Economic growth slowed in the second quarter, with weaker consumer spending and investment partly offset by strong export performance. Meanwhile, inflation accelerated for a second consecutive month, reinforcing expectations of further rate rises. The yen remained weak overall, although rising domestic interest rates continue to provide support for the currency over the longer term.

China: Faltering economic momentum weighs on sentiment

Chinese equity markets were mixed, with Hong Kong shares outperforming mainland markets amid concerns over slowing economic momentum. July data showed weaker industrial production, retail sales and fixed asset investment, highlighting ongoing challenges for domestic demand and growth. The property sector remained a significant drag, with real estate investment continuing to contract and house prices still edging lower. In response, policymakers announced further support measures, including easier access to Housing Provident Fund savings and relaxed home buying restrictions in Shanghai. Technology remained a key area of investor interest, with humanoid robotics company Unitree Robotics surging on its market debut and attracting exceptionally strong demand from retail investors.

Europe: Rising bond yields and inflation concerns outweigh improving business activity

European equities ended the week lower, as rising bond yields, inflation concerns and geopolitical uncertainty weighed on sentiment. Encouragingly, eurozone business activity improved in August, with the flash composite PMI rising to 52.1, supported by stronger new orders and a return to export growth. Germany's manufacturing sector continued to recover, with output reaching its highest level in over four years, although weakness in services persisted. Investor confidence in Germany strengthened, helped by resilient corporate earnings, infrastructure spending plans and stable exports. In France, manufacturing and broader business confidence improved, reaching their highest levels in several months. Despite the positive economic data, major European markets finished lower, with Germany, France and Italy all posting declines.

UK: Energy sector strength leads UK equities to outperform peers

The UK market outperformed its European peers, with the FTSE 100 gaining 0.62% over the week. Labour market data pointed to further signs of cooling, as payroll employment fell for a sixth consecutive month and unemployment remained elevated at 4.9%. Employers continue to show caution in hiring amid a softer economic backdrop. Meanwhile, inflation rose to 2.9% in July, largely reflecting higher household energy costs following Ofgem's increase to the energy price cap. The combination of rising inflation and a weakening jobs market presents a challenging backdrop for policymakers. Markets continue to assess whether inflationary pressures will delay any potential easing in monetary policy.

What’s Important Next: 24 August to 28 August 2026

Nvidia results put the AI investment thesis under the microscope

Nvidia reports its earnings on Wednesday.

Why it’s important

There has been a huge debate about AI. Is it a bubble? Is current capital expenditure sustainable? And who is capturing the real economic value: the hyperscalers investing billions in infrastructure, such as Microsoft and Google, or the “shovel providers” like Nvidia?

Nvidia has faced accusations of circular financing, with claims that it has extended credit to some suppliers and customers. Optimists point to the company’s extraordinary earnings trajectory and argue that this growth can continue for years to come. Anthropic, the maker of Claude AI, has also reported impressive revenue growth and

strong future demand.

Nvidia, like Anthropic, is widely regarded as one of the clear winners of the AI boom. As such, its earnings alone will not settle the broader debate over whether there is sufficient long-term demand, and ultimately earnings potential, across the wider sector. However, any hint of a slowdown would very much put the cat amongst the pigeons.

Jackson Hole takes centre stage

Central bankers and economists gather for the annual Jackson Hole Economic Policy Symposium.

Why it’s important

Jackson Hole has a history of being a place where key economic initiatives are

launched and policy statements are made. While this does not happen every

year or indeed most years, the potential is always there given the attendance of

the world’s leading policymakers.

Following Treasury Secretary Bessent’s remarks that the US could buy longer dated government bonds, implying concern over the recent rise in bond yields, attention will be firmly focused on Fed Chairman Warsh for any further comments or policy signals. Beyond bond market concerns there has also been recent US and Japanese intervention in the yen. Will central bankers provide any further commentary on this issue?

In short, there is plenty that could happen. Warsh’s keynote speech on Friday will receive laser -like attention from investors and policymakers alike.

This update reflects Omnis’ view at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.