Nick Spencer-Skeen, Senior Executive Officer, Lunaro Markets Limited
Friday Closing Prices
- S&P 500 7,490 (+0.70%)
- Nasdaq 25,374 (+1.00%)
- Gold $4,045 (-1.42%)
- Brent Crude Oil $89.86 (+3.11%)
Markets endured a historically volatile week, as investors had to deal with risk events on several fronts. This included hawkish central bank meetings, major tech earnings, and renewed geopolitical risks, all of which competed for attention.
The Federal Reserve left rates unchanged, but three officials voted for a hike, exposing a significant policy split. Chair Kevin Warsh offered no forward guidance, telling investors to focus on incoming data rather than Fed communication. As a result, the Treasury yield curve steepened, with the 2-year yield remaining flat while the 30-year yield moved higher. This reflected growing uncertainty among traders about the Fed’s policy path.
In the first few trading sessions of the week, stocks experienced a sharp sell-off across AI and semiconductor stocks. Disappointing results from SK Hynix triggered a broader Asian technology sell-off, sending South Korea’s Kospi down 10.84% on Tuesday alone. The Nasdaq 100 briefly entered correction territory after heavy losses across several major chipmakers.
Sentiment reversed following strong earnings from Microsoft and Amazon. Microsoft surged after Azure growth exceeded expectations, while Amazon rallied on an upbeat outlook for AI investment. Together, the two companies helped the S&P 500 finish the week up 1.1% reversing much of the earlier technology-led weakness. A summary of the major tech earnings and the immediate stock reactions can be seen in our Chart of the Week.
Elsewhere, continued tensions between the US and Iran kept oil prices elevated, with little sign of an imminent easing in geopolitical risks.
Yen Crosses Face Critical Week
Market reports strongly suggest Japanese authorities, with US participation, entered the currency markets on Thursday to intervene again on USD/JPY. After trading above 163 earlier in the day, the pair fell over four big figures in a knee-jerk move, and continued to move lower to close the week at 157.46. Thursday’s 2.4% move coincided with the highest spot-yen turnover on EBS in a decade and record CME futures volumes. Bank of Japan data suggest Tokyo may have sold as much as $58.97 billion, while a photographed Treasury note indicated possible US yen purchases of $5–10 billion. Japan and the US are expected to describe this as their first joint intervention since 2011.
For the week ahead, the pressure might not be over. A currency intervention period can last up to three consecutive business days, meaning further action could be taken on Monday.
Beyond this, the question for the coming days is whether traders test the authorities’ resolve. The last round of intervention in late April proved short-lived, with USD/JPY rebounding within weeks. If we see another recovery in USD/JPY towards 160–162, it could highlight a further lack of success for the Japanese authorities.
Whatever happens in the short term, taking a step back is important. Sustained long-term Yen strength still requires narrower yield differentials, softer US data or firmer expectations of a September hike from the Bank of Japan. Until then, Yen crosses may remain volatile rather than trend cleanly lower.
SpaceX Faces Its First Public-Market Test
After completing the largest public offering in history back in June, SpaceX reports second-quarter results after Tuesday’s close. This will be its first update as a listed company and an important test of whether Starlink’s cash generation can support the group’s capital-intensive ambitions.
Consensus expects revenue of roughly $6.9 billion, with the Connectivity division carrying profitability. Analysts forecast a 35.9% operating margin for the segment, while Space and AI remain loss-making.
Beyond the financials, one of the big questions is the quality of Starlink growth. SpaceX entered the quarter with 10.3 million subscribers across 164 markets, but the average revenue per user has fallen 22.9% year-on-year as international expansion and lower-priced plans diluted the mix. Investors will therefore focus on customer additions and whether network efficiencies can preserve margins despite lower pricing.
Attention will also fall on spending. Analysts expect annual capex rising towards $48.7 billion in 2026 as SpaceX funds everything from satellites to AI infrastructure. Given the sensitivity of tech earnings last week to higher capex spend, the stock could be volatile if investors believe the size of capex spend isn’t going to be monetised fast enough.
Jobs Data Meets a Hawkish Fed
To close out the week, Friday’s US employment report will provide the first major test of the Fed’s hawkish July hold. The market expects nonfarm payrolls (NFPs) to rise by 85,000 in July, following June’s modest 57,000 increase, while the unemployment rate is forecast to hold at 4.2%.
Some focus on Friday will go beyond the headline numbers. In last month’s report, the labour force contracted by 720,000, pushing participation down to 61.5%. This was the lowest since March 2021, so it’s logical to assume participation will be closely watched.
Recent signals remain mixed on the state of the labour market. Initial jobless claims rose to 197,000 in the latest week, but remain historically low, suggesting employers are slowing hiring without moving towards broad layoffs.
In terms of a market reaction, a firm payrolls number along with a rebound in participation would validate the three Fed officials who voted to hike in July. This could act to push Treasury yields and the US dollar higher. A weak report would reduce these near-term tightening expectations, but may not produce a clean risk rally if investors interpret it as evidence that growth is deteriorating while inflation remains elevated.
