Weekly Market Review - 17-08-2026

Aug 17
5 min read

Markets delivered a mixed week, with technology shares edging higher while UK and US blue-chip stocks lost ground. Investors balanced softer US inflation against renewed oil-price pressure, extreme weather risks and increasingly difficult choices for central banks. This week’s review also examines Lloyds’ £100 billion sustainable finance target and the geopolitical tensions reshaping global alliances.

Market Recap.

Equity markets delivered a mixed performance this week, with UK and US blue-chip stocks declining while broader US equities and technology shares moved modestly higher.

UK equities weakened, with the FTSE 100 ETF falling 0.74%, reflecting a more cautious tone across large-cap companies.

In the United States, the Dow Jones Industrial Average ETF also moved lower, declining 0.71%. However, the broader S&P 500 ETF edged up 0.15%.

Technology stocks delivered the strongest performance, with the Nasdaq 100 ETF rising 0.87%, highlighting continued investor support for growth-oriented companies despite weakness elsewhere.

News.

Extreme weather is becoming an immediate economic concern for the UK. Heat and drought are reducing some fruit, vegetable and grain supplies, increasing costs for food manufacturers and raising the risk of shortages and higher retail prices. The Food and Drink Federation reports manufacturers' input costs have risen 39% since January 2020. However, most food price inflation since 2020 has been driven by post-pandemic supply chain disruption, higher energy and fertiliser costs, labour shortages and commodity market shocks following Russia's invasion of Ukraine. With around 40% of UK food imported, weather-related disruptions can increasingly amplify these existing pressures.

The severity of extreme weather was underlined on Friday, when a government alert warning of a “very high risk of wildfires nationally” sounded on millions of phones after temperatures reached 38.1°C and fires destroyed 19 homes in Stourbridge.

Inflation.

US inflation eased slightly to 3.40% in July, although it remained well above the Federal Reserve’s 2.00% target. Core inflation, which excludes food and energy, edged up to 2.50%, while food and key services, including housing, transport and medical care—were around 3.00% more expensive than a year earlier.

Energy prices offered some relief, with petrol falling nearly 3.00% during the month. However, prices at the pump remained roughly 15% higher than a year ago. The figures may ease immediate pressure on the Federal Reserve to raise interest rates, particularly after the US economy lost 23,000 jobs in July. Nevertheless, persistently elevated prices and falling real wages leave policymakers balancing inflation control against signs of a weakening labour market.

Central Banks.

The European Central Bank faces growing questions over whether further interest-rate increases would do more harm than good. Having raised borrowing costs in June, the ECB must now decide whether to tighten policy again while much of the eurozone economy remains weak following repeated energy shocks.

Financial markets expect the ECB to raise its deposit rate by 0.25 percentage points to 2.50% in September, with another increase possible next year. However, some economists believe it acted prematurely in June. Higher oil prices are already restricting economic activity, meaning another rate rise could deepen the slowdown without addressing the supply disruption responsible for much of the price pressure.

Commodities.

Commodity markets remained volatile as stalled negotiations over the Strait of Hormuz renewed concerns about disruption to Middle Eastern oil supplies. The threat of a prolonged US naval blockade of Iran pushed prices higher, although rising US inventories and weaker demand forecasts limited the advance. US WTI crude ended the week up 5.40% at $82.40 per barrel, while Brent gained 5.95% to $88.52.

Precious metals also moved higher, although gains were more modest than the previous week. Weaker US retail sales and reduced expectations of a September interest-rate increase supported demand for gold and silver. Gold rose 0.91% to $4,380.40 per ounce, while silver gained 2.62% to $64.99.

ESG.

Lloyds Banking Group has set a new target to facilitate more than £100 billion in sustainable and transition finance between 2027 and 2030 as part of its Accelerate 2030 strategy.

The commitment builds on £70.9 billion of sustainable financing delivered between 2022 and 2025, including £21.9 billion during 2025 alone. Lloyds is also expanding its approach beyond traditionally green projects to include credible transition activities, such as helping carbon-intensive industries invest in cleaner technologies, strengthen resilience and reduce emissions. The move reflects a wider shift among banks towards financing the transition of existing industries rather than concentrating solely on already-green businesses.

Geopolitics.

The geopolitical spotlight continues to flip-flop between the US–Iran confrontation and Russia’s war in Ukraine, reflecting how both conflicts are reshaping alliances well beyond their immediate regions.

This week, President Trump said the US would “substantially reduce” joint military exercises with South Korea, partly citing Seoul’s refusal to support US action against Iran. The planned 11-day exercises were expected to involve around 18,000 South Korean soldiers, while approximately 28,500 US personnel are stationed in the country. The decision also comes as North Korea expands its missile programme and deploys troops to support Russia, raising concerns that weaker US–South Korean coordination could reduce regional deterrence.

Week Ahead.

United States

Federal Reserve policy and housing data will be the main focus in the United States this week. July housing starts and building permits are released on Tuesday 18th, alongside industrial production figures, providing an update on construction activity and the wider economy.

Minutes from the Federal Reserve’s July meeting follow on Wednesday 19th. Markets will examine the discussion behind the decision to hold interest rates and the unusually divided vote. Initial Jobless Claims and the Philadelphia Fed Manufacturing Index are released on Thursday 20th, before preliminary August PMI figures conclude the week on Friday 21st.

United Kingdom Inflation will be the main domestic focus this week. July CPI and producer price data are released on Wednesday 19th, with markets watching whether higher energy and food costs have pushed inflation further above the Bank of England’s target.

Friday 21st brings July Retail Sales and Public Sector Finances, alongside preliminary August PMI data. The releases will provide a broader picture of household spending, government borrowing and business activity, while helping shape expectations for the Bank of England’s September interest-rate decision.

Eurozone

Inflation and business activity will be the main focus across the Eurozone. Final July inflation figures are released on Wednesday 19th, confirming whether the earlier estimate of 2.9% annual inflation remains unchanged.

Preliminary manufacturing and services PMI figures follow on Friday 21st, alongside the European Commission’s latest Consumer Confidence Indicator. Markets will assess whether the region’s recent improvement in business activity has continued and whether economic conditions are strong enough to support another European Central Bank interest-rate increase.

It is important to note that the geopolitical situation remains highly fluid, and developments are changing rapidly. As such, the outlook may shift quickly as new information emerges.