Cautious Market Sentiment Ahead of Nonfarm Payroll Report

Market Overview

As the August 1 tariff deadline approaches—alongside inflation pressures and the release of the key nonfarm payrolls report—risk aversion in the market has risen sharply. U.S. equities surged intraday but later pulled back, with all three major indices closing lower. The S&P 500 and Nasdaq both dropped more than 1% from session highs. Technology stocks showed mixed performance: Microsofts market capitalization broke above $4 trillion and Meta shares rallied sharply, but the Philadelphia Semiconductor Index tumbled 3.1%, marking its largest single-day drop in nearly four months. Amazon also fell sharply following its earnings release. Capital flows remain clear: the U.S. Dollar Index extended its winning streak to six sessions, gaining 3.5% in July, while gold spiked nearly 1.2% intraday before paring gains.

Hot Topics Preview

• Fed‘s Preferred Inflation Gauge Surprises to the Upside

• The U.S. economy is sending mixed signals, making the Federal Reserve’s policy outlook increasingly complex. On one hand, the latest data shows the June Personal Consumption Expenditures (PCE) Price Index rose 2.6% year-over-year, exceeding market expectations and signaling persistent inflation pressures. On the other hand, consumer spending and income growth are showing signs of fatigue, hinting at a slowdown in economic momentum. The coexistence of above-target inflation and sluggish growth has deepened policy divisions within the Fed. Against this backdrop, all market attention has shifted to Friday‘s employment report, with investors seeking clearer guidance on the Fed’s future policy path.

• Trump Signs Order Updating Trade Tariff List

• U.S. President Donald Trump has signed an executive order announcing updated tariff rates on goods from multiple countries, set to take effect within seven days. The tariffs include a 10% duty on the United Kingdom, 15% on certain goods from Japan, South Korea, and the European Union, and 20% on products from Bangladesh, Vietnam, and Sri Lanka. South Africa faces a 30% tariff, Switzerland 39%, and the highest rate of 40% applies to Laos and Myanmar.

Key Events to Watch (GMT+8)

• 20:30 – U.S. July Nonfarm Payrolls (thousand, seasonally adjusted), U.S. July Unemployment Rate

• 21:45 – U.S. July S&P Global Manufacturing PMI Final

• 22:00 – U.S. July ISM Manufacturing PMI, University of Michigan Consumer Sentiment Final (July), and University of Michigan 1-Year Inflation Expectations Final (July)