4 August 2025 (recap week of 28 July to 1 August 2025)
Headlines & introduction
Markets entered August on shaky footing after a volatile week marked by mixed earnings, aggressive tariff moves from President Trump, and a disappointing U.S. jobs report. A flurry of tech results (Amazon, Meta, Microsoft, Apple) collided with escalating trade tensions and renewed rate-cut hopes. Investors reeled from a surprise miss in payrolls growth, driving a surge in bond prices and volatility. Meanwhile, cryptocurrencies softened and commodities were whipsawed by policy headlines and macro data.
Risk-off sentiment returned, reversing July’s optimism.
Equities
US stocks began the week near all-time highs but closed Friday sharply lower. The S&P 500 -1.6% on Aug 1, Nasdaq -2.2%, and Dow -1.2%, as Amazon dropped -8.3% and Apple fell -2.9%, despite strong Meta (+11.5%) and Microsoft (+8%) earnings earlier in the week. Trump’s sweeping new tariffs and a soft payrolls print drove risk aversion.
European indices also sank Friday: STOXX 50 -2.7%, DAX -2.7%, and CAC 40 -2.9%, hurt by poor results from Ferrari (-11.7%) and AB InBev (-11.6%).
UK’s FTSE 100 -0.7% on Friday but held near record highs, up 4.2% for July, lifted earlier by Rolls-Royce and Shell.
Tech earnings clashed with macro risk, triggering a sharp equity pullback.
Volatility
Volatility surged midweek and spiked into Friday’s close. The VIX hit 20.38 on Aug 1, rising +21.9%, with short-term metrics like VIX1D +18.9% and VIX9D +28.9% showing stress. Despite that, VIX futures only at 19.6 suggest some market relief ahead.
SPX options implied a ±58-point move for Aug 2, reflecting heightened caution but not panic.
Volatility jumped on weak payrolls and earnings volatility, but longer-term fear remains contained.
Digital assets
Crypto prices followed risk markets lower, but institutional flows persisted. Bitcoin held above $114,000, while Ethereum rebounded +1.0% to $3,532. Still, IBIT -3.2% and ETHA -6.7% fell on outflows. Altcoins like XRP and Solana saw minor gains. Crypto equities slumped: COIN -16.7%, RIOT -8.1%.
Traders are watching Wednesday’s US CPI print for the next big macro driver.
ETF flows support long-term sentiment, but macro shocks are weighing on prices.
Fixed income
Bond markets rallied sharply after Friday’s weak jobs report. The 2-year UST yield fell intraday from 3.96% to 3.66%, while the 10-year dropped to 4.20%, marking the steepest rally since May. Fed cut odds for September jumped above 85%.
High yield spreads widened to 301 bps, the highest in over a month.
Treasuries surged on payroll disappointment, fueling rate cut bets.
Commodities
Copper futures plunged over 23% as Trump exempted refined copper from tariffs. Gold bounced from a sub-$3,300 dip to retest the $3,450 ceiling, while silver fell below key supports.
Oil was volatile: Brent dipped below $72 after the OPEC+ hike, while grain prices sank on strong harvest prospects.
Tariff exemptions and recession fears jolted metals; gold regained safe-haven interest.
Currencies
The US dollar dropped sharply on Friday, especially vs JPY and EUR. USDJPY fell from 150.90 to 147.30 on plunging yields.
The EURUSD rallied from 1.14 to 1.1588 after Trump fired the BLS head, citing data manipulation.
The JPY was the strongest G10 currency, boosted by falling US rates and BoJ inaction.
Sharp FX reversals followed rate cut repricing and political uncertainty.
Key takeaways
Equities: Tech outperformance couldn’t offset macro shocks; US and EU stocks slumped.
Volatility: VIX surged to 20.38; SPX implied move ±58pts shows elevated short-term risk.
Digital assets: BTC and ETH stable; ETF flows supportive despite crypto equity selloff.
Fixed income: Yields collapsed on weak jobs data; 2Y dropped 30bps intraday.
Commodities: Copper’s crash and OPEC+ moves drove sharp reversals.
Currencies: USD fell on Fed cut bets; JPY and EUR rebounded strongly.
Looking ahead (week of 4 to 8 August 2025)
Earnings: Palantir (Mon), AMD (Tue), McDonald’s, Disney, Uber (Wed), Eli Lilly, Siemens (Thu).
Macro data: US trade deficit (Tue), productivity & consumer credit (Thu), services PMI (Tue).
Fed speakers: Daly (Wed), Bostic (Thu), Musalem (Fri) may shed light on rate path.
Watch: US-China truce expiry deadline looms Aug 12; CPI due Wednesday could move markets.
A heavy earnings calendar meets pivotal macro data and Fed speak in a fragile market.
Conclusion
Markets ended the week on a defensive note, rattled by a disappointing U.S. payrolls report, aggressive new tariffs, and lingering uncertainty around global trade and interest rates. While strong tech earnings initially lifted sentiment, these gains quickly evaporated under macro pressure. Volatility spiked, bond yields plunged, and the dollar reversed course—all reflecting a sharp shift in investor expectations. With the odds of a September Fed rate cut now above 80%, the coming week’s economic data and central bank speeches will be pivotal in shaping the path ahead.
The mood has turned cautious—rate cuts are back in focus, but so is recession risk.
