Financial Markets Daily Report27 July 2026
Markets ended Friday with a cautious tone as lower energy prices supported sovereign bond yields amid resilient macroeconomic data. Yields declined on both sides of the Atlantic, more markedly in the euro area, with peripheral spreads tightening, as Brent crude retreated from $100/barrel.
Interest rate expectations remained firm: markets priced roughly a 35% probability of a Fed hike at this week's meeting following stronger-than-expected July PMI data and still-resilient labour market indicators. ECB's Zigman warned renewed tensions in the Middle East would take time to feed into the data, reinforcing expectations of a September hike.
European equities mostly advanced, while in the US Alphabet's capex-heavy earnings report continued to pressure AI-linked technology stocks, leading the Nasdaq lower. The S&P 500 ended broadly unchanged as gains in defensive sectors offset weakness in technology. In FX markets, the euro traded largely flat against its main peers.