EU Close Digest - 13 Aug 2026

S&P 500 closed at 7,785, its highest since early July, as Euro Stoxx rose to 6,549.

US Session Open & European Close

The U.S. market opened higher, with the S&P 500 up 0.47% and the Nasdaq 100 gaining 1.13% to 30,077, driven by strength in technology and consumer‑discretionary stocks. Breadth was solid, as more than half of the S&P 500 constituents posted gains, reflecting optimism after the July Producer‑Price‑Index (PPI) showed flat overall growth – a signal that input‑cost inflation may be easing (BLS). In Europe, the Euro Stoxx 600 edged up 0.23% to 6,549, while the euro held near 1.1538 against the dollar, consistent with the ECB’s cash‑usage data that showed cash still commanding 73% of retail transactions (ECB). The modest rise in European equities mirrored the U.S. rally, but the sector mix differed: European industrials and banks led the gains, whereas U.S. gains were more tech‑centric, underscoring the divergent impact of the PPI versus the ECB’s cash‑dominance narrative. Overall, the session confirmed a broad‑based risk‑on tone, with both sides of the Atlantic buoyed by signs of easing inflation pressures and stable payment‑instrument demand.

Analyst Consensus

• Inflation & Rate Outlook: The flat July PPI – overall final‑demand index unchanged year‑to‑date and services up only 0.2% month‑over‑month while goods fell 0.7% – suggests that producer‑level price pressures are cooling (BLS). Bloomberg’s “Traders Pare Bets on Fed Rate Hike” notes that lower oil prices have removed the market’s expectation of a further Fed hike this year, and InvestingLive’s Fed‑Hammack commentary flags a need for “some restraint” but acknowledges the easing data (InvestingLive). The combined view is that the Fed is likely to hold rates steady at its September meeting, reducing near‑term upside for short‑duration Treasury yields.
• Sector Rotation: Both the BLS analysis and Nasdaq earnings commentary highlight a split‑trend between services (still modestly inflationary) and goods (showing deflation). This underpins a rotation toward technology hardware, automotive, and other capital‑intensive sectors that benefit from lower commodity costs, while service‑heavy stocks such as hotels and airlines remain under pressure (BLS; Nasdaq). The consensus therefore favors “hard‑goods” equities over “soft‑services” names in the coming weeks.
• Credit, FX & Commodity Linkages: The ECB’s cash‑usage report (73% cash share) and the BIS’s global‑liquidity data (cross‑border credit up 11% YoY) indicate ample euro‑funded credit, supporting euro‑zone banks’ cash‑service margins (+0.12 ppt YoY) and keeping euro‑denominated sovereign yields modest (ECB). Meanwhile, the Turkish central bank’s decision to keep its policy rate at 15% amid 58.2% YoY inflation (TCMB) reinforces a high‑yield environment for Turkish bonds, while the U.S. dollar’s slight dip in the DXY (‑0.11%) reflects reduced Fed‑rate expectations. Together, these dynamics suggest a modest carry trade from the euro to higher‑yielding emerging‑market currencies, with credit spreads remaining compressed in Europe but widened in Turkey.
• Contrarian Call: Destatis’ data on German child‑welfare cases (79,800 in 2025, a 10% YoY rise) points to a growing fiscal burden that could pressure German sovereign yields despite the euro’s current stability (Destatis). This view runs counter to the broader euro‑zone optimism derived from abundant liquidity and stable cash usage. If fiscal pressures translate into higher German bond yields, the euro could face downward pressure, creating a divergence between core and peripheral euro‑zone assets.

Tomorrow's Setup

Asian markets are expected to open lower after a mixed U.S. session, with the yen near 159.35 per dollar and the euro at 1.1538, reflecting the tentative dollar stance ahead of the U.S. CPI release (no consensus level identified). In the U.S., the key macro event is the August CPI report, for which Bloomberg’s consensus projects a 0.4% month‑over‑month decline in the PPI and a core CPI around 2.8% annualized (Bloomberg). The data will be a litmus test for the Fed’s September policy decision; a stronger‑than‑expected CPI could revive expectations of a 25 bp hike, while a softer reading would cement the hold narrative. On the earnings front, Target (TGT), Costco (COST) and Dollar General (DG) are slated to report, offering sector‑specific catalysts. The market’s primary question heading into tomorrow is whether the inflation data will force the Fed to abandon its current “hold” stance and resume tightening.