The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- Nvidia lines up $500bn of capital for AI infrastructure – Nvidia has announced plans with big Wall St banks and investors including Apollo, Blackrock, Blackstone, Brookfield, Goldman Sachs and KKR to lease semiconductors to tech groups with financing. It will likely go towards new data centres and factories to manufacture new chips.
- UK economy growth slows – the UK economy grew by 0.4% between April and June according to the Office for National Statistics (ONS). This is a slowdown from the 0.6% growth in the previous three months but sunny weather and the World Cup may have boosted the hospitality sector. The service economy also expanded by 0.5% driven by gains in computer programming and consultancy.
- US inflation eases – prices in the US rose 3.4% in the year to July, slightly down from 3.5% in June. Energy prices contributed to the slight drop, down 2.9% from July to June. But prices excluding food and energy rose by 0.2%. Inflation remains an important factor for the US Federal Reserve as it considers its next move on interest rates.
- Water companies given greenlight to increase bills – Millions of households will face increased water bills after Ofwat gave the go ahead to spend £3.4bn more than planned. This comes on top of a £104bn investment programme that is already expected to push bills up by 36% over the next decade.
- Indefinite blockade – US Defence secretary Pete Hegseth said on Thursday that the US had the resources to blockade Iran indefinitely, while Treasury Secretary Scott Bessent said that they planned to inflict more financial damage on Iran. An end to the oil crisis seems far away.
What this means for financial advisers and clients
AI Funding
Nvidia’s funding announcement comes at a time where AI spending has come under increasing scrutiny. By making it easier for customers to finance new AI infrastructure, the deal could expand the number of data centres using Nvidia technology, supporting demand for its chips and further growth. CEO Jensen Huang believes it’s creating a new asset class: compute, backed by chips.
But everything depends on continued demand. If demand for chips slows down the financiers could be on the hook. As with all AI spending, for the banks and Nvidia: will it pay off with more revenue growth?
UK economy slowdown
The growth figures this week show that while the UK hasn’t felt the full impact of the Iran war, it was buoyed by temporary factors like the World Cup.
Chancellor Healey has said the government’s aim is to make the country more resilient and drive growth in every postcode. We could see a challenge in his October Budget if there is a deceleration coming which everyone is awaiting with interest.
US rate hike still tabled?
The latest inflation data comes as the Federal Reserve (Fed) faces calls to raise interest rates to pull inflation back to its target of 2%.
As it stands these inflation figures mean that an increase in US interest rates could still come this year, but lowers the need for one as soon as September. Factors like the US-Iran war and food prices could still push up inflation going forward. The US interest rate affects more than just the US, it has impacts on global stock markets.
Chart of the week
Source: The European Correspondent, Toon Vos – Ikea Catalogues, 1960-2021, manual count
Why’s this worth sharing?
The above chart illustrates how what’s popular gradually changes over time. Things you find trendy today, may not be as cool in years to come. And the same is true of funds.
Fund managers have investment styles that can move in and out of favour. Value and growth are two familiar examples. While a fund manager’s style might not be in fashion right now, it may come back around.
Unlike a sofa, where there’s only so much that’ll fit in your living room, we can hold multiple funds with contrasting styles. They also don’t have to match. In fact, having different styles can help spread risk and give us more opportunities to benefit when the market moves in a different direction.
Take our Japanese equity holdings. Over the last year, Jupiter Japan Income is slightly behind its benchmark, while Morant Wright Nippon yield has significantly outperformed. Put the two together, and our asset class which combines these funds is ahead of the benchmark.
The same is true over five years. And that doesn’t mean both funds have outperformed throughout. There have been periods when Jupiter has led and Morant Wright has lagged, and vice versa. That’s the point. We don’t need to predict which style will be fashionable next. Holding different approaches means we can benefit from changing market conditions over time.
And this year there’s been no shortage of risks, from the US-Iran war to the AI booms and sell-offs. Despite that, performance is still up.
Sofa, so good.
I double checked IKEA’s website and grey is still popular, but they are bringing back some older throwback styles. I’m not an interior designer, but I’m hoping the patterns make a comeback.
The Markets
UK: UK equities faced a downward trend with the FTSE 100 dropping this week, driven by slumping metal prices that hit mining stocks alongside a softer outlook for growth.
US: The S&P 500 and Nasdaq both hit record highs. Softer inflation data and resilient corporate earnings boosted confidence that the Fed would hold interest rates in September.
Europe (ex UK): European equities suffered this week due to ongoing US-Iran tensions and mixed inflation data. There are expectations that the European Central Bank could raise interest rates again later this year.
Japan: Japanese equities had a strong week, driven by a global tech rally. The yen had a weekly loss due to speculation over further currency intervention and potential interest rate hikes.
Asia Pacific ex Japan: A strong week driven by the US inflation figures and a rebound in tech stocks later in the week. South Korea’s Kospi saw a massive single day surge due to a risk-on rally.
| Name | Weekly change | YTD change |
|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | -0.20% | -0.77% |
| IA Sterling Corporate Bond | -0.07% | 0.45% |
| IA Global High Yield Bond | -0.09% | 2.01% |
| FTSE All Share | -0.75% | 11.33% |
| FTSE USA | 0.47% | 13.93% |
| FTSE World Europe ex UK | -0.16% | 12.21% |
| FTSE Japan | 1.66% | 20.87% |
| FTSE Asia Pacific ex Japan | 2.09% | 21.44% |
| FTSE Emerging | 0.26% | 11.25% |
Source: FE. GBP returns as at close of business on Thursday 13th August 2026.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
