Week ending 28th August 2026.

As shown in the accompanying table, it was a mixed week for global financial markets, with investors focused on the latest U.S. inflation data, developments in the Middle East, and a closely watched set of results from tech giant Nvidia.

The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index, was released mid-week. Inflation rose broadly in line with expectations, although consumer spending slowed. The annual rate of PCE inflation increased to 3.7%, while core PCE, which excludes the more volatile food and energy components, rose 3.3% year-on-year.

While the readings were relatively muted, inflation remains well above the Federal Reserve’s 2% target. At the same time, the economy remains resilient, consumer spending continues to hold up, and the labour market is showing signs of softening, creating a difficult balancing act for policymakers. With no Federal Open Market Committee meeting scheduled in August, attention has already turned to the 15-16 September meeting and any further clues on the timing and pace of future interest rate adjustments.

Against this backdrop, investors closely followed the Jackson Hole Economic Symposium in Wyoming, where Fed Chair Kevin Warsh delivered a much-anticipated speech on Friday. While the speech struck a hawkish tone and reinforced the Fed’s commitment to returning inflation to target, investors largely viewed the message as supportive. Warsh stated that policymakers “must be confident that underlying inflation is moving towards their objective with sufficient speed, otherwise there is work to do”, underlining the Fed’s focus on price stability.

Warsh stated that current financial conditions are difficult to describe as restrictive, leaving the Fed room to tighten policy further if inflation does not decline. He also noted that he was “impressed” by the economy’s overall performance, which appears to have strengthened recently.

Markets interpreted the remarks as keeping the door open to further rate hikes, if necessary, while also taking reassurance from the Fed’s strong commitment to returning inflation to its 2% target.

One of the biggest corporate events of the week was Nvidia’s second-quarter results, released after the U.S. market close on Wednesday. Nvidia is the global leader in AI computing and sits at the centre of the artificial intelligence investment theme, making its results an important barometer for the strength and sustainability of AI-related investment.

The results once again demonstrated the extraordinary pace of growth in the business and helped re-enforce faith in the AI investment theme. Second-quarter revenue reached $96.2bn, up 106% year-on-year, while data-centre revenue increased 117% to $89bn. Nvidia also raised its third-quarter revenue guidance to $108bn. Stocks briefly fell in after-hours trading after the report before reversing course as investors focused on the longer-term outlook. Nvidia’s executives said the company expects revenue to grow by approximately 70% in fiscal 2028, despite supply constraints. CEO Jensen Huang characterised AI as having reached an “inflection point,” stating that the infrastructure buildout is moving ahead at “full steam”. His comments reinforced the company’s view that demand for AI infrastructure remains exceptionally robust.

As the Iran conflict approached its six-month mark, Brent crude moved lower over the week. While the U.S. signalled further sanctions on countries trading with Iran under its “economic D-Day” initiative, markets were largely unmoved. Iran and Oman agreed a temporary shipping route through the Strait of Hormuz, although the Strait remains effectively closed under the U.S. blockade. Developments in the region therefore remain an important source of uncertainty for energy prices and inflation.

Looking ahead, it is a holiday-shortened week in the UK, with markets closed on Monday for the August Bank Holiday. Investors will focus on eurozone inflation and unemployment data, alongside U.S. manufacturing and trade figures. However, the key event will be Friday’s U.S. labour market report, with payrolls, unemployment and wage growth likely to shape expectations for future Federal Reserve interest rate decisions.