Monday Afternoon Coffee - Markets Update - 25 Aug 2025 - Market Sentiment Shifts as Investors Eye Nvidia Earnings and Inflation Data

The Trade Academy Team
Aug 25
4 min read

Markets Update: Wall Street retreated on Monday as last Friday's Powell-driven rally faded, with investors turning their attention to upcoming earnings from AI bellwether Nvidia and key inflation data.

Global Markets Roundup: 25 August 2025

**Major Index Performance:**

- **S&P 500**: Declined 0.43% to 6,439.32 points, with nine of eleven sectors posting declines.

- **Nasdaq Composite**: Fell 0.22% to 21,449.29 points, outperforming broader markets due to technology strength.

- **Dow Jones Industrial Average**: Dropped 0.77% to 45,282.47 points after reaching record highs on Friday.

The pullback came despite Nvidia edging higher ahead of Wednesday's highly anticipated earnings report, as staples and healthcare sectors led the decline. Market participants are pricing in an ~84% probability of a September Federal Reserve rate cut following Powell's Jackson Hole dovish pivot.

## European Markets

European indices opened lower on Monday in a bout of profit-taking after the Powell-driven rally, with the UK markets closed for a bank holiday.

**Key European Index Performance:**

- **STOXX 600**: Declined 0.4% near record highs

- **DAX (Germany)**: Fell 0.4% to around 24,278 points

- **CAC 40 (France)**: Dropped 1.6% to approximately 7,822 points

Despite the retreat, Germany showed economic resilience with the Ifo Business Climate Index rising to 89.0 in August from 88.6 in July, reaching the highest level in over a year. Companies' expectations for the coming months improved to 91.6 from 90.7, though current situation assessments declined slightly.

**Eurozone Economic Momentum**: The flash Composite PMI surged to 51.1 in August from 50.9 in July, marking the fastest expansion in 15 months and beating expectations of 50.7. This was supported by manufacturing returning to expansion territory at 50.5 (vs 49.8 prior) for the first time in over three years, while services remained solid at 50.7.

## Asian Markets

Asian markets displayed strength earlier in the session, led by China's continued bull run.

**China Markets Performance:**

- **Shanghai Composite**: Surged to hit a new decade high, continuing its remarkable rally

- **CSI 300**: Advanced significantly, reaching levels not seen since July 2022

## Foreign Exchange Markets

The dollar index rebounded after last week's slide, recovering to approximately 98.3 as traders repriced after Powell's Jackson Hole hints and higher US yields.

**Major Currency Pairs:**

- **EUR/USD**: Eased to ~1.163, down 0.7% on the day

- **GBP/USD**: Trading around 1.35

- **USD/JPY**: Rose 0.6% to near 147.7

US 10-year Treasury yields ticked higher to around 4.27%, contributing to dollar strength.

## Commodities and Energy Markets

**Energy Complex:**

- **Brent Crude**: Rose 1.6% to $68.80/barrel

- **WTI Crude**: Gained 1.8% to $64.80/barrel

- **US Natural Gas**: Hovering near $2.70/MMBtu amid fading summer demand

Oil prices advanced approximately 2% as traders weighed additional US sanctions on Russian oil and Ukrainian strikes on Russian energy infrastructure. Ukraine has intensified drone attacks on Russian oil refineries and export terminals, disrupting at least 17% of Russia's refining capacity or approximately 1.1 million barrels per day.

**Precious Metals:**

- **Gold**: Held near $3,373/oz (flat), stalled on the firmer dollar despite remaining near two-week highs.

## Economic Developments

**United States:**

New home sales fell in July as high borrowing costs continue to bite the housing market. Sales decreased 0.6% to 652,000 units (annualized), with inventory remaining elevated at 499,000 units representing 9.2 months of supply. The median sales price dropped to $403,800, down 0.8% from June.

**Eurozone:**

The economic outlook brightened significantly with the flash PMI showing the fastest expansion in 15 months at 51.1, driven by manufacturing's return to growth and continued services expansion. New orders increased for the first time in 14 months, signaling underlying demand recovery.

## Geopolitical Developments

**Ukraine-Russia Conflict:**

Ukraine intensified drone strikes on Russian refineries and terminals, targeting critical energy infrastructure to disrupt Moscow's war economy. Recent strikes hit facilities in Leningrad region (gas terminal) and Samara region (oil refinery), with the Syzran refinery accounting for 3.08% of Russia's total oil refining volume.

**Middle East Tensions:**

Israel struck Nasser Hospital in Gaza on Monday, killing at least 20 people including five journalists who worked for Reuters, Associated Press, Al Jazeera and other outlets. The attack involved a "double-tap" strike, with a second missile hitting as rescue personnel arrived. This incident has drawn global condemnation and raised broader regional risk sentiment concerns.

## Key Market Catalysts Ahead

**Wednesday, August 27**: Nvidia earnings represent the week's most significant market catalyst, with analysts expecting revenue of $46 billion (up 53% year-over-year) driven by Blackwell GPU demand. The AI chipmaker's results will serve as a bellwether for the broader technology sector and AI infrastructure spending.

**Friday, August 29**: US PCE inflation data - the Federal Reserve's preferred inflation measure - will provide crucial insights into the central bank's September rate cut decision path.

## Market Outlook

The trading environment remains characterized by mixed sentiment as investors balance Fed dovishness, geopolitical tensions, and upcoming earnings catalysts. While Powell's Jackson Hole speech has solidified expectations for September rate cuts, market participants are cautious ahead of key data releases and Nvidia's earnings, which could significantly influence technology sector momentum and broader market direction.

The combination of improving European economic indicators, ongoing China market strength, energy market volatility from geopolitical tensions, and heightened Middle East risks creates a complex backdrop for global markets as the week progresses.

Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team