Headwinds Ease: Wall Street Breaks Out to Records

For the week of Aug 07, global equities advanced as easing worries over AI spending, softer oil prices and receding fears of further Fed tightening let fundamentals reassert themselves. In the U.S., major benchmarks broke out of their summer range to fresh record highs, powered by strong big-tech earnings and a softer July jobs report that trimmed rate-hike bets. China's mainland indices advanced on renewed technology and semiconductor strength, while Hong Kong slipped as a new tax on offshore insurance income weighed on financials. Singapore's Straits Times Index edged to new highs, led by industrials and its banks. Singapore market closes on Monday Aug 9 for National Day holiday, wil resume trading on Tuesday.

(Refer to the major indices' weekly performance tables below.)

🇺🇸 United States

Market Overview

U.S. equities broke decisively higher, with the Nasdaq Composite (COMP) surging 5.19% for its best week since April, the S&P 500 (SPX) climbing 3.58% and the Dow Jones Industrial Average (DJI) adding 2.96%. All three closed at or near fresh record highs as favourable corporate earnings, renewed AI enthusiasm and hopes for a reopening of the Strait of Hormuz lifted sentiment. Falling oil prices and softer labour data drove Treasury yields lower, reinforcing the risk-on tone.

Index Weekly Performance

-  Dow Jones Industrial Average (DJI): +2.96%

-  S&P 500 (SPX): +3.58%

-  Nasdaq Composite (COMP): +5.19%

Key Highlights and Outlook

1️⃣ Indices Break Out to Fresh Record Highs

After three months rangebound, U.S. stocks broke to new highs as three headwinds — doubts over AI spending, energy-driven inflation risk and Fed-tightening fears — eased in unison. With those overhangs lifting, earnings and economic fundamentals reasserted themselves as the primary drivers of prices, per Edward Jones.

2️⃣ AI Earnings Renew Confidence in the Cycle

Large technology firms reported accelerating cloud growth, rising AI demand and expanding backlogs. Microsoft added roughly USD 450bn in market value after results — the largest single-day market-cap gain on record — while Meta slipped as investors questioned whether heavy capex would translate into returns. The AI story is maturing, not breaking, Edward Jones noted.

3️⃣ Earnings Strength Broadens Beyond Mega-Cap Tech

With over 85% of the S&P 500 reported, Q2 earnings growth is tracking near 48% — roughly 29% excluding investment-related gains at Alphabet and Amazon. Six of the remaining nine sectors delivered double-digit growth, pointing to a healthier, broader foundation for the advance, according to Edward Jones.

4️⃣ July Jobs Miss Recalibrates Fed Expectations

Employers shed 23,000 jobs in July versus expectations for an 80,000 gain, with prior months revised sharply lower and the unemployment rate easing to 4.1% on lower participation. Stocks rallied on the “bad-news-is-good-news” read: odds of a September rate hike fell to about 42% from roughly 55%.

5️⃣ Manufacturing Accelerates as Oil Retreats

The ISM Manufacturing PMI rose to 55.6, its highest since May 2022, as new orders and production strengthened and hiring turned positive. WTI crude retraced much of last month's spike on hopes of Strait of Hormuz de-escalation, easing energy-inflation concerns even as talks remained fluid.

6️⃣ Treasuries Rally, Yields Ease

Softer labour data and lower oil pushed Treasury yields down across maturities, with the 10-year note falling to roughly 4.64% from 4.74% a week earlier. Lower yields provided an additional tailwind for equities, particularly rate-sensitive growth names.

S&P 500 Sectors in Focus

Technology led the tape by a wide margin as the AI-driven rally reasserted itself, with Materials also outperforming on the improving industrial backdrop. Consumer Discretionary, Industrials and Communication Services likewise finished firmly higher. Energy was the clear laggard, dragged by the sharp retreat in oil prices, while Utilities and Real Estate also lagged as the week's risk-on rotation favoured cyclical and growth exposure.

(Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The major indices cleared the upper boundary of their multi-month trading range, with the Nasdaq within arm's reach to its all-time high of 27190 and the SPX and DJI both confirming new-high territory. Breadth improved as leadership rotated back toward growth. On the charts, SPX, the Nasdaq Composite and the DJI have all resolved their prior sideways consolidation to the upside, establishing higher trading bands as price discovery extends into fresh-high territory.

📊 Weekly charts: 

DJI weekly chart  

SPXweekly chart  

Nasdaq weekly chart

 

🇨🇳 China / Hong Kong

Market Overview

China's markets diverged sharply. The Shanghai Composite (SSE) rose 2.81% and the CSI 300 gained 2.32% as technology and semiconductor shares rallied, while the Hang Seng Index (HSI) fell 0.84% in local-currency terms, dragged by financials. News that mainland tax authorities would levy taxes on offshore insurance policies weighed on Hong Kong-listed insurers and banks.

(Refer to the major indices' weekly performance tables above.)

Index Weekly Performance

-  CSI 300: +2.32%

-  Shanghai Composite (SSE): +2.81%

-  Hang Seng Index (HSI): -0.84%

Key Highlights and Outlook

1️⃣ Mainland–Hong Kong Divergence Widens

Renewed strength in technology and semiconductor names lifted mainland benchmarks to solid weekly gains, even as the Hang Seng slipped. The split reflected diverging drivers: an AI- and tech-led bid onshore versus financials-led weakness in Hong Kong, per T. Rowe Price.

2️⃣ Offshore Insurance Tax Hits HK Financials

Tax authorities in Beijing and Hangzhou began applying a 20% levy on income from mainland residents' overseas insurance policies, including dividend and interest returns. The move — seen as part of tighter scrutiny of cross-border flows — sent Hong Kong-listed insurers and financials sharply lower, with heavyweight AIA among the biggest constituent decliners.

3️⃣ Macro Data Mixed as Trade Frictions Resurface

The RatingDog manufacturing PMI eased to 50.9 and services to 50.4, their softest in months, echoing the official survey's slip into contraction. Yet exports rose 23.9% YoY on resilient AI-electronics demand, even as fresh U.S.–China curbs — new import bans, blacklistings and Beijing's retaliatory controls — clouded the trade outlook.

4️⃣ Policy Support and Southbound Flows

Maybank KE's Dim Sum Weekly flagged the July Politburo's tilt toward targeted support and its “Six Networks” push to strengthen AI, data-centre and digital infrastructure, while Hong Kong signalled an upgrade to its 2026 growth forecast after 1H GDP rose 5.1% YoY. Southbound investors were net buyers of Alibaba, Tencent and Xiaomi, and net sellers of Meituan and China Construction Bank.

5️⃣ Maybank KE House Views

Maybank KE maintains BUY on China Telecom (728 HK, TP HKD 6.00) on next-gen infrastructure and a ~6.4% FY26e yield; Hong Kong Land (HKL SP, TP USD 9.30) on capital recycling and an office-leasing recovery; XPeng (9868 HK, TP HKD 80.00) on overseas expansion and AI optionality; and Yum China (9987 HK, TP HKD 479.00) on store growth and efficiency gains.

Technical Snapshot

The Hang Seng slipped back below recent resistance to around 25,668, underperforming firmer mainland benchmarks as financials led the pullback. Despite the weekly loss, the index held marginally positive year-to-date, keeping its broader base intact. Near-term direction likely hinges on stabilisation in financials and follow-through from the mainland's tech-led bid.

(Refer to the Hang Seng Index constituents' weekly performance table below.)

📊 Weekly charts: 

SSE weekly chart

HSI weekly chart

 

🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) rose 1.24% to 5,698.43, edging to fresh highs and extending a market-leading year-to-date gain of 22.65%. Gains were led by industrials and the local banks, offsetting broad weakness across property trusts and REITs.

Index Weekly Performance

-  Straits Times Index (STI): +1.24%

Key Highlights and Outlook

1️⃣ STI Extends Record-Setting Run

The benchmark notched another fresh high, cementing its standing as one of the region's strongest performers this year. The advance was concentrated at the top of the table even as the tape narrowed lower down, with roughly half the constituents ending the week in the red.

2️⃣ Industrials and Shipyards Lead

Venture Corp topped the index, followed closely by Yangzijiang Shipbuilding, with ST Engineering and SATS also among the leaders. Strength in manufacturing, shipbuilding and defence-linked names underpinned the index's push to new highs.

3️⃣ REITs and Property Trusts Under Pressure

The Mapletree trusts, Frasers vehicles and CapitaLand Ascendas REIT were among the week's heaviest fallers, while Keppel DC REIT and several developers also softened. Rate-sensitive S-REITs lagged the broader tape even as Treasury yields eased late in the week.

4️⃣ Index Heavyweights Mixed

Singtel, the Jardine counters (JMH) and DFI Retail weighed on the index, ranking among the steepest decliners. Their weakness partly offset leadership from the banks and industrials, keeping the STI's weekly advance measured despite the fresh high.

5️⃣ Financials Anchor a Heavy Results Week

Singapore's three lenders reported 2Q/1H FY26 — DBS on 6 Aug, OCBC and UOB on 7 Aug. DBS posted a record quarter (net profit ~S$3.08bn, +9% YoY) on surging wealth fees, prompting Maybank KE to raise its target to S$85.86 (BUY); the stock rose 3.12%. OCBC (+4.02%) beat with profit up 22% YoY, though led by non-interest income, while UOB (-0.23%) lagged on elevated NPAs and a trimmed fee-income outlook. SGX capped the week with strong FY results and higher capital returns (Maybank KE BUY, TP S$28.33).

Technical Snapshot

The STI extended its uptrend to a fresh high at 5,698.43, keeping its year-to-date leadership intact. Momentum stayed constructive at the index level even as breadth thinned, with gains concentrated in banks and industrials against a soft REIT complex. The trend remains higher while the index holds its rising near-term support.

(Refer to the STI constituents' weekly performance table below.)

📊 Weekly charts: 

STI weekly chart

 

📅 Week Ahead (10–14 August 2026)

In the U.S., the July CPI report on Wednesday, 12 Aug is the marquee release, carrying added weight after soft jobs data left markets pricing roughly a 42% chance of a September rate hike. Producer prices and retail sales follow later in the week, alongside the tail end of Q2 earnings season.

In China and Hong Kong, July inflation (CPI and PPI) and new-yuan-loan and aggregate-financing data are due, offering a fresh read on demand after softer PMIs. Investors will also watch for follow-through on U.S.–China trade frictions and continued Hong Kong corporate earnings.

Singapore starts the week shortened by the National Day holiday on Monday, 10 Aug (Japan is also closed on 11 Aug), before results season broadens from the banks to mid-caps and REITs. With the big three lenders now reported, sell-side positioning is split: UOB Kay Hian's Alpha Picks favours staying with the banks, while DBS and Phillip flag a rotation toward laggard tech such as UMS and AEM.

🗓️ Overarching Watchpoint

The single biggest binary risk is Wednesday's U.S. July CPI. A hotter-than-expected print would revive fears of further Fed tightening and could quickly unwind the AI-led breakout, whereas a benign reading would reinforce the “bad-news-is-good-news” dynamic and validate fresh record highs.

Source: Some content and data are excerpted from publicly available market reports.