EU Midday Digest - 05 Aug 2026

The Nasdaq 100 added US$ 3.5tn of market capitalisation in four days while Europe closed flat.

Overnight & European Session

The technology bid did the work overnight: the Nasdaq 100 rose 3.32% to 29,733 and the S&P 500 1.79% to 7,737, with the Nikkei 225 up 3.66% at 66,300, while the Euro Stoxx sat out the move entirely at 6,484 (-0.05%). Bloomberg attributes the run to strong technology earnings, noting the Nasdaq 100 has added US$ 3.5tn of market capitalisation in four days, and reports the rally paused as investors weighed oil prices and fresh threats against Middle East shipping. Rates moved against the equity move at the long end — the 10-year down 1.26 to 4.63% and the 30-year down 0.78 to 5.19% — while the 2-year rose 0.81 to 3.73%, a flattening that says the front end is pricing policy and the long end is pricing something else. The dollar was soft (DXY 100, EUR/USD 1.1542 +0.30%, GBP/USD 1.3465 +0.28%, USD/JPY 157.75) and hard assets ran with equities, Brent up 1.90% to 80.87 and gold up 2.93% to US$ 4,215. The VIX eased 0.91% to 16.35% and crypto was inert, Bitcoin at US$ 64,088 and Ether at US$ 1,871.37.

Key Themes Today

• Technology: The AI trade is now large enough that its internal dispersion matters more than its direction. Bloomberg reports the Nasdaq 100 gained US$ 3.5tn in market value over four sessions on technology earnings, yet CNBC reports AMD fell 8% pre-market despite beating expectations, having rallied 132% year-to-date. A stock that beats and falls is a positioning signal, not an earnings signal, and it is the clearest evidence available that the bar has moved above the print. CNBC separately reports SpaceX pulling its US$ 1tn annual revenue target forward to 2030 from 2031, and a 10% drop in SpaceX-related equities on anxiety over the surge in AI-driven capital spending. The theme to trade is not AI versus no-AI, it is which balance sheets are funding the capex and which are receiving it. Attribution: Bloomberg - Markets and CNBC - Markets.
• Labour: Two labour markets on the same continent are decelerating in the same direction, and neither is breaking. The BLS JOLTS release of 4 August 2026 shows job openings at 7.4 million, hires at 5.3 million and total separations at 5.4 million, all described as little changed. Statistics Canada reports payroll employment up just 24,100 in May 2026 (+0.1% month-on-month) after +59,000 (+0.3%) in April, with the year-on-year gain at 112,500 (+0.6%). Deceleration without deterioration is precisely the configuration that keeps a central bank on hold and keeps the front end range-bound, which is what the 2-year at 3.73% is expressing. Attribution: BLS - JOLTS and Statistics Canada - Labour.
• New Zealand: The clearest policy signal of the session is antipodean, and it is a real-wage squeeze rather than a slowdown. InvestingLive reports New Zealand unemployment rose to 5.6%, the highest since 2015, with under-utilisation jumping to 13.8% from 12.9% and annual wage growth muted at 2.0% against a 4.1% inflation rate for the June quarter. Markets now price roughly a 90% chance of a move to 2.75% on 2 September. Wages running two points below inflation is a demand problem the central bank cannot fix with a cut, which is why the size of the move matters less than the guidance attached to it. Attribution: InvestingLive - Central Banks.
• Credit: Corporate borrowing has reached a record while the compensation for lending has compressed, and the two facts are usually reported apart. Speaking through the BIS, John C. Williams notes corporate debt issuance surged to a record US$ 1.9tn in Q2 2026 with average credit spreads narrowed to 78bps, alongside the S&P 500 up 4% year-to-date and corporate cash-flow volatility down 12% year-on-year. Philip N. Jefferson, in the same series, cites a 0.6 percentage point shock to core PCE inflation following the abrupt energy price spike in June 2026 and a 0.3 percentage point rise in the unemployment rate. Record supply into the tightest spreads is the standard precondition for a credit repricing; the June inflation shock is a candidate trigger rather than a forecast. Attribution: BIS - Central Bank Speeches.
• Funding: Treasury supply at the front end is arriving in size and in a compressed window. TreasuryDirect shows US$ 110bn at four weeks, US$ 95bn at six weeks and US$ 72bn at 17 weeks announced between 30 July and 4 August — US$ 277bn over a ten-day window — plus a US$ 52bn 52-week offering, with auctions on 4, 5 and 6 August and all bills maturing between early September and 8 December 2026. That concentration is the mechanical reason the 2-year has risen while the 10-year has fallen. For cash managers it is an opportunity; for anyone reading the curve as a growth signal, it is noise that needs stripping out first. Attribution: TreasuryDirect.

What to Watch

The earnings cluster on 5 August is the intraday catalyst: Nasdaq lists LLY with consensus EPS around US$ 2.45, DIS around US$ 1.12, UBER around US$ 0.31 and SHOP around US$ 0.45, with AMD's Q2 filing carrying a consensus of roughly US$ 1.02 and revenue guidance of US$ 6.5bn. Given AMD's 8% fall on a beat, the read-across to watch is whether a second beat is also sold — that would confirm the positioning problem rather than an earnings one. On rates, the 10-year at 4.63% is the level: a further fall while the 2-year rises would extend the flattening that the bill supply above is largely creating. Prediction markets are unusually one-sided, with Polymarket putting the next Fed move at a hike with 58% probability and a 50bp-plus cut after the October meeting at 1%. In Europe, CNBC reports the Rhine and Danube at historically low levels as drought turns waterways into bottlenecks, with manufacturing inflation worries described as exceeding those recorded during the pandemic — a supply-side risk with no consensus level identified. The open question is whether a market that has just added US$ 3.5tn in four days can absorb a second sold beat without the index noticing.