FISG Daily Market Wrap 14th August

Today’s Topic: “Stocks Extend Gains as AI Trade Returns and Softer US Inflation Supports Fed Pause” — by Amir Amidian, Director of the InterStellar Group Research Center.

Global markets remained firmly in risk-on mode on Friday, with equities heading for a third consecutive weekly gain as investors returned to the artificial-intelligence trade and softer US inflation data reinforced expectations that the Federal Reserve will keep interest rates unchanged.MSCI’s Asia Pacific Index rose 0.2%, keeping the MSCI All Country World Index on track for its longest winning streak since April. The global gauge and S&P 500 both closed at record highs on Thursday, supported by a renewed recovery in semiconductor stocks. European equity futures also pointed higher after regional markets reached records earlier in the week.South Korea remained one of the strongest performers. The Kospi climbed almost 1.8%, taking its weekly advance to around 10% and ending a seven-week losing streak. AI-related chipmakers Samsung Electronics and SK Hynix both gained more than 15% over the week, highlighting the renewed strength in the semiconductor sector.Bond markets also maintained their recent gains after two consecutive days of softer-than-expected US inflation readings. Shorter-dated Treasuries continued to outperform, while the two-year Treasury yield held around 4.15% ahead of US retail sales data.Fed policymaker Austan Goolsbee said the US economy remains stable, adding that recent inflation readings have improved slightly. He noted that some of the earlier inflation pressures came from tariffs and oil and were initially expected to be one-time increases. Goolsbee said the latest improvement was encouraging and expressed hope that the trend toward 2% inflation continues.In China, the 10-year government bond yield fell to its lowest level since July 2025 after the central bank injected liquidity through overnight reverse repos, marking its first such mid-month operation. The move reinforced expectations that policymakers remain focused on supporting liquidity and economic activity.In foreign exchange, the yen remained close to the 160-per-dollar level despite reports that Prime Minister Sanae Takaichi’s government supports an interest-rate increase. The currency traded around 159.40 per dollar, keeping intervention and monetary-policy expectations firmly in focus.In Europe, UK political developments also drew attention as Nigel Farage regained a parliamentary seat by winning the Clacton by-election. Meanwhile, Latvia ended an air-threat alert after allied fighter jets reportedly downed a drone in Latvian airspace, adding another geopolitical development to an already closely watched European security environment.FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.

Market Focus

The dominant theme remains the combination of cooling inflation, resilient growth and renewed enthusiasm for AI stocks. With inflation showing signs of improvement while the US economy remains relatively stable, markets are increasingly comfortable with a Federal Reserve that can remain patient on rates.The key question now is whether this combination can persist. US retail sales, upcoming economic data and further Fed commentary will be important in determining whether the current risk-on momentum can extend into next week.