The local market hit its lowest level in a week, with lingering domestic inflation worries keeping investors cautious. Although inflation eased modestly in June, concerns remain elevated after the Reserve Bank left the cash rate unchanged at 4.35% earlier this week but signalled it could tighten further following three increases so far this year.

Sector performance was mixed: communications, consumer durables, retail, and transport stocks pressured the market, while industrial services and technology names provided some offsetting support. Commonwealth Bank fell more than 2%, bucking the trend of gains across the other three major banks. Among the heavier decliners, Insurance Australia Group slumped 5.5%, while Transurban dropped 2.7%, Telstra 2.6%, and Scentre 2.3%.

Over the first five months of 2026, net FDI inflows contracted by 33.4% year-on-year to USD 2.18 billion. Net investments in debt instruments dropped by 49.5% to USD 1.25 billion, while reinvested earnings fell by 9.7% to USD 383 million. These declines outweighed a 17.4% rise in equity capital investments, which reached USD 925 million. Equity capital placements came largely from Japan, the United States, and Singapore, and were channeled mainly into the manufacturing, financial and insurance, and real estate sectors.

The moderation in FDI suggests that foreign investors may be taking a more cautious stance toward the Philippine market compared with the previous month. While the report does not specify the sectoral breakdown or drivers behind the shift, the trend will be closely watched by policymakers and market participants for signs of whether this represents a temporary pause or the beginning of a more sustained cooling in foreign investment.

In Japan, producer prices rose 7.2% year-on-year in July, easing slightly from 7.3% in June and undershooting market expectations of 7.4%. Technology and artificial intelligence-related shares led the gains, with notable advances in Kioxia Holdings (up 6.2%), Taiyo Yuden (8.6%), Advantest (5.3%), Ibiden Co. (7.3%) and Murata Manufacturing (7.4%). Bank stocks also traded higher, including Mitsubishi UFJ Financial Group (up 1.6%) and Mizuho Financial Group (1.7%).

Additional support came from lower oil prices, as markets assessed the likelihood of an agreement to reopen the Strait of Hormuz—an outcome that could ease energy supply risks and dampen inflation pressures.

At the same time, the rapid build-out of AI infrastructure and data centers is emerging as a potential new driver of demand for platinum-group metals (PGMs). Valterra Platinum estimates that AI-related PGM demand currently stands at 200,000–400,000 ounces per year and could increase fivefold by 2030.

Even so, the platinum market is expected to remain in deficit amid constrained mine supply, particularly in South Africa. While higher prices may stimulate increased recycling, they are unlikely to fully offset the supply shortfall in the near term.

On the economic front, investors awaited Thursday’s producer price data, following Wednesday’s consumer price index report, which showed relatively stable core inflation and eased pressure on the Federal Reserve to raise interest rates. During Wednesday’s regular session, the S&P 500 and Nasdaq Composite gained 0.26% and 0.54%, respectively, while the Dow edged down 0.04%.

On a month-over-month basis, the latest reading shows that the pace of producer price growth has lost momentum compared with the previous period, when June’s 0.4% gain reflected a stronger uptick in input costs relative to May. The July figure represents a significant moderation in that trend, suggesting that upstream price pressures on Japanese businesses may be easing.

The comparison framework for the data is month-over-month: the “actual” July PPI result measures the change relative to June, while the “previous” June reading captured the change versus May. The deceleration from 0.4% to 0.1% in this sequence highlights a notable cooling in producer-level inflation as the summer progresses in 2026.

The figures are based on year-over-year comparisons, with the “actual” July reading measuring price changes against July of the previous year, while the “previous” June figure compares producer prices to June a year earlier. The slight deceleration suggests that upstream price pressures in Japan may be stabilizing, though producer inflation remains elevated on an annual basis.

The modest dip from 7.3% to 7.2% could be closely watched by policymakers and markets as an indicator of potential easing in input cost pressures, which can eventually filter through to consumer prices and corporate margins. However, with producer prices still growing at a strong pace year-over-year, the broader inflation picture remains sensitive to further shifts in global demand, currency movements, and commodity costs.

At the same time, the IEA’s monthly report signaled that the global oil market is heading for a supply shortfall of 1.8 million barrels per day this quarter as the conflict in the Middle East persists. Separately, EIA data showed that US crude inventories jumped by 17.4 million barrels last week, the largest weekly increase since early 2023.

While the balance remains firmly in negative territory—indicating that more surveyors continue to report falling rather than rising prices—the three‑percentage‑point shift marks a slight easing in downward pressure. The move from -33% to -30% points to a marginally less pessimistic view among property professionals, but does not yet signal a clear turnaround in overall market conditions.

The July reading will be closely watched by investors and policymakers as they assess whether this modest uptick represents the start of a broader trend or merely a temporary pause in house price declines across the UK.

The benchmark index rebounded from its lowest close since August 3, hit the previous day, with advances led by real estate, financials, materials, and energy stocks. Investors nevertheless remained cautious, closely watching developments in the Middle East amid uncertainty over the reopening of the Strait of Hormuz. Sentiment was also restrained ahead of the release later today of the RBNZ’s Q3 business inflation expectations, following a slight acceleration in Q2.

Early gainers included Port of Tauranga (up 1.5%), Ebos Group (0.6%), South Port NZ (0.5%), Meridian Energy (0.5%), Freightways Group (0.4%), Infratil (0.4%), Chorus (0.4%), Mainfreight (0.3%), and Contact Energy (0.3%).

Most financial stocks traded lower: Itaú retreated 1.5%, and B3 lost 0.3% after reporting a 15.5% year-on-year increase in expenses. Banco do Brasil, however, gained 0.8% ahead of its earnings release scheduled for after the market close.

Among commodity-linked names, Vale slipped 1.6% in tandem with falling iron ore prices, while CSN advanced 0.9% before publishing its results. Petrobras declined 0.5% as international oil prices turned lower.

In the healthcare and utilities space, Rede D’Or fell 2%, and Sabesp edged up 0.5%, with both companies set to release their quarterly figures after the close.

On the macro front, JPMorgan on Tuesday downgraded Brazilian equities to “neutral” within its Latin America allocation, citing weaker economic growth, deteriorating credit conditions, the prospect of higher-for-longer interest rates, and rising volatility ahead of the presidential election. The bank also cut its year-end target for the Ibovespa.

In Canada, the Bank of Canada is widely expected to leave its policy rate unchanged at its September meeting.

Financials outperformed, with major banks trading higher: Royal Bank of Canada gained 1.5% and Toronto-Dominion Bank advanced 1.7%. Most miners also moved up alongside firmer gold prices, as Agnico Eagle climbed 1.8% and Barrick Gold added 3%. In contrast, Franco‑Nevada slipped 1.6% after missing earnings expectations.

In the technology space, Celestica jumped 9.2%, benefiting from a rally in US chipmakers. Constellation Software dropped 4.5% after revenue slightly undershot forecasts despite an earnings-per-share beat, while Shopify declined 1.2%, mirroring weakness in US hyperscalers.

On the macro front, the latest inflation data showed core inflation remaining relatively stable, reducing pressure on the FOMC to resume rate hikes. However, uncertainty over the restoration of energy supplies from the Middle East kept inflation risks in focus. Large-cap tech “hyperscalers” gave back early gains, with Microsoft closing down 2.3%, Meta off 3.4%, and Amazon losing 1.8%.

Total government outlays rose to $766 billion from $630 billion in July 2025, driven primarily by Medicare expenditures of $174 billion. Social Security payments amounted to $141 billion, while net interest costs reached $104 billion and national defense spending totaled $91 billion.

On the revenue side, government receipts slipped to $334 billion from $338 billion a year earlier. Individual income taxes contributed $173 billion, and social insurance and retirement receipts came to $139 billion.

The sharp month-on-month widening in the budget gap underscores mounting fiscal pressures, as government expenditures continue to outpace revenues. While detailed drivers behind the July spike are not provided in the latest release, the scale of the deterioration highlights the growing challenge for policymakers in managing federal finances over the remainder of the fiscal year.

With July’s figure more than tripling June’s shortfall, markets and analysts are likely to focus on upcoming budget reports and policy statements for signals on how U.S. fiscal dynamics may evolve in the months ahead.

The reduction from $2.814 billion to $0.652 billion suggests a weaker pace of foreign currency entering Brazil’s economy compared with the prior period. While the data alone do not explain the drivers behind the shift, the sharp decline will be closely watched by market participants monitoring capital flows, currency dynamics and broader confidence in Brazilian assets.

Analysts and investors are likely to assess whether this slowdown in FX inflows reflects short-term volatility or signals a more persistent change in external financing conditions for Brazil, with potential implications for the real, local interest rates and portfolio positioning in Brazilian markets.

This uptick in the 10-year yield may indicate that investors are demanding slightly higher compensation to hold longer-dated U.S. debt, potentially reflecting shifting expectations around interest rates, inflation, or economic growth. As the 10-year note is a widely watched proxy for long-term borrowing costs, the higher auction yield could influence everything from mortgage rates to corporate financing conditions in the United States.

Market participants will be watching upcoming data releases and policy signals closely to determine whether this rise marks the start of a more sustained upward move in yields or a temporary adjustment in response to near-term economic uncertainty.

Sector performance was mixed: software, consumer cyclicals, telecoms, utilities, and automakers faced selling pressure, while industrial and technology shares advanced. E.ON declined nearly 3% after reporting only modest earnings growth for the first half, with the CEO cautioning about potential threats to Germany’s energy infrastructure. Brenntag slipped 2.2% after JPMorgan reiterated its Sell rating despite a solid second-quarter performance and an improved full-year earnings outlook.

On the upside, Rheinmetall topped the blue-chip index with a 2.3% gain, followed by Siemens Energy, which rose 1.9%, and Infineon Technologies, up 1.1%. TKMS was a standout, surging 8.5% on the back of strong results and an upgraded full-year revenue forecast.

Core inflation edged up to 5.2% from 5.0%, while goods inflation accelerated to 5.3% from 4.3%, largely driven by faster food price growth (4.4% vs 3.4%). In contrast, services inflation slowed to 7.8% from 10.6%, mainly due to a sharp easing in price growth for utilities (1.7% vs 15.1%) and housing (10.1% vs 12.1%).

On a monthly basis, consumer prices increased by 0.5% in July, down from a 0.9% rise in June.

US inflation data broadly matched expectations, tempering fears of an imminent Federal Reserve rate hike and offering some support to sentiment amid ongoing geopolitical tensions. Brent crude was volatile on Wednesday but remained at elevated levels following recent gains, with prices underpinned by uncertainty over the prospects for an agreement to reopen the Strait of Hormuz.