Markets This Week: Payrolls, Inflation, Tesla & Nike – Key Events Investors Can't Ignore

Even with Brent crude oil prices back at levels last seen prior to the outbreak of hostilities in the Middle East, some equity markets are showing increasing signs of nervousness about valuations in certain sectors, specifically technology and AI.

This week we’ve seen sharp declines in Asia markets with the Nikkei 225 and Korean Kospi falling sharply from record highs, led by SK Hynix and Samsung both of which registered one day declines of more than 12% on concerns over frothy valuations.

These concerns prompted similar weakness in the Nasdaq with the semiconductor sector seeing some frantic selling, with Micron shares getting hit particularly hard ahead of their latest Q3 earnings report.

How the market reacts to these numbers is likely to be singularly important given that the move higher in the Micron share price has been the single biggest contributor to this year’s gains in the S&P500.

Investors appear to be becoming increasingly nervous about some of the valuations in this particular area of the market, with some of the early enthusiasm for SpaceX shares also starting to wane from the early peaks above $225, with the IPO price at $135 coming into view.

With concerns about events in the Middle East becoming less of a factor in investors’ minds, the focus appears to be returning to the everyday minutiae of the latest economic numbers, and more specifically about economic fundamentals.

Key Takeaways

• US Jobs Data Takes Center Stage
  The upcoming US non-farm payrolls report could reinforce expectations that the US economy remains resilient despite concerns about slowing growth.
• Inflation Remains a Major Concern
  Both the US ISM reports and EU inflation data will be closely watched for signs that price pressures remain stubbornly high.
• Federal Reserve Rate Hike Risks Are Back
  Strong labour market data and persistent inflation could increase speculation that the Fed may raise rates later this year.
• Technology Stocks Face Valuation Questions
  Recent sharp declines in semiconductor and AI-related stocks suggest investors are becoming more cautious about stretched valuations.
• Corporate Earnings Under the Spotlight
  Results from Nike and Tesla will provide important insight into consumer demand, EV competition, and broader market sentiment.
  
  

Amongst some of the more notable moves in the last few days has been a sharp rise in the value of the US dollar, a trend which started to accelerate in the days after the latest Fed meeting, and which has seen the greenback hit its highest level in over a year.

Some of this US dollar strength may well be down to shifting expectations on a possible rate hike before year end, after last week’s Fed rate meeting, some of the move may also be down to some hedging of risk against a possible correction in equity markets.

This shift towards the US dollar could gain extra traction as we head into Q3, if economic data out of the US continues to point to a resilient labour market, along with concerns about persistently elevated inflation risk.

With that in mind the upcoming June payrolls report, as well as the latest ISM reports, could elevate expectations about an upcoming Fed rate hike as early as the autumn, and the possible risks that might present to the current resilience in some of the frothier parts of the equity market.

US non-farm payrolls (Jun)

02/07 – the US labour market has confounded expectations in recent months after a weak end to 2025, as well as a slow start to the year. Perhaps we shouldn’t have been surprised given that recent ADP reports had been consistently steady since July last year. The erratic nature of the BLS survey was more than likely down to fluctuations in government hiring and public sector jobs due to strike action and government shutdown disruptions. Other clues have been in the weekly jobless claims numbers which have been steady in the low 200ks. Nonetheless it was still a surprise to see the May jobs report come in well ahead of forecasts at 172k, only modestly lower from the 179k in April and 214k in March. With vacancies also showing signs of bottoming out with a big jump in April to 8.18m, from 6.68m in March the US labour market appears to be showing a remarkable resilience, a trend that could well continue into the summer with the Football World Cup offering a potential hospitality boost. The only blot on the landscape has been the continued softness in the labour force participation rate which appears to be stuck close to a 5-year low at 61.8%. One explanation for this could be structural in that the US population is getting older, and as such the working age population is shrinking as more people retire, than enter the labour force. This trend appeared to accelerate in the aftermath of the Covid lockdowns given that we haven’t returned to pre-Covid levels of participation when we were at 63.3%. While this weak participation may not be a problem now, it’s likely to become a problem if we start heading back to the levels we saw post Covid when we were at 61.4%, and briefly sank to a low of 60.1% in April 2020.

ISM Manufacturing (Jun)

01/07 – having seen the Federal Reserve drop the easing bias in its most recent statement of the economy, and the labour market looking in pretty fine fettle if recent jobs data is any guide, attention has shifted back towards the prices part of the Fed's mandate. With new Fed chairman Kevin Warsh keen to adopt an attitude of communicating less with the market, the potential for markets to draw their own conclusions about Fed intentions when it comes to rate policy has never been greater. This is why these economic activity reports on the economy are likely to become of much greater importance in the coming months. Recent surveys have shown that price pressures in both the manufacturing as well as the services have been rising in recent months. In the manufacturing sector alone, prices paid have gone from 59 in January, to as high as 84.6, in April, and why we saw a slight easing in May to 82.1, they still remain at levels last seen 4 years ago.      

EU Flash CPI (May)

01/07 – when the ECB hiked rates by 25bps at its last meeting there was an expectation that it might be what we would describe as a “dovish” hike in that they would signal a pause as they looked to implement a modest “insurance” hike. Rather than do this the ECB decided to adopt the approach that we could expect to see another hike in July. Its latest economic outlook pointed to an expectation that inflation could remain higher for longer, rising to 3% by the end of this year before returning to 2% in 2028, which in turn could act as a drag on the wider economy in the coming months. The bank mapped out 4 different scenarios with the most adverse putting crude oil up at $165 a barrel in Q3, which could push headline inflation up to 4% this year, and 5.3% next year.

It is clear that the ECB is once again leaning towards the idea that second and third round effects are more likely than not, and want to get ahead of the curve. Unfortunately for them history hasn’t been kind to them in the past on this, and there is a risk they are making the same mistake again, especially since a week after they hiked oil prices fell to 3-month lows and are still falling. That said, the latest April CPI numbers did see a move to 3.2%, up from 3%, while core prices also jumped sharply to 3.2% from 3%. Nonetheless with GDP growth non-existent across the bloc would it have hurt to wait a little longer. If this week’s flash CPI numbers point to a modest slowdown, from the current 3.2%, we could well be seeing a repeat of previous ECB mistakes, of raising rates into an economic slowdown.   

UK Manufacturing and Services PMIs (Jun)

01/07 – 03/07 – the recent flash PMI numbers continued to point to increasing price pressures on the private sector of the UK economy, with new business volumes sliding at the fastest rate in 14 months. Input prices continued their relentless rise, largely due to higher IT equipment costs, along with higher transport and commodity prices. That said we have continued to see a moderation in inflationary pressures from the 41-month high seen in April. The services sector was the main drag as economic activity slowed to 48.7, from 49.3 in May. The manufacturing sector was able to retain its recent resilience slipping back from 53.9 to 53.1, as once again many clients continued to replenish their stock piles ahead of anticipated price increases. Despite this uplift there are some signs that this effect is slowing with new order growth at its lowest level in 6 months, while backlogs of work were also slowing. As with the services sector input cost inflation, while easing is expected to remain elevated, with higher employee costs also a factor. As we look towards the final PMI numbers there isn’t expected to be much difference to the flash numbers, with the main headwinds remaining heightened inflation, ongoing geopolitical uncertainty and squeezed consumer spending.

Nike Q4 26

30/06 – when Nike reported in Q3 the shares continued their theme of recent weakness sliding sharply falling below their 2025 lows in the process and are now back at levels last seen over a decade ago. Quite simply the numbers “Just Didn't Do It” - as revenues came in at $11.3bn, unchanged from a year ago, and well below that of Q2. While they were still better than expected given, expectations were for a single digit decline in revenue, investors clearly weren’t impressed. It was a tale of 2 divisions with wholesale revenue rising 5% to $6.5bn, while DTC revenue fell 4% to $4.5bn, while profits fell 35% to $520m, of 35c a share. The business in China remains a drag on the wider business seeing a 7% decline to $1.62bn, the 7th successive quarterly decline. Gross margins were also lower, slumping to 40.2%, mainly due to tariffs. On the outlook Nike took another leg lower after management said they expected Q4 revenue to be between 2% and 4% lower on the previous year, which was completely at odds to expectations of 2% growth. The company cited concerns over the Greater China business which is expected to see a 20% drop in revenues. Gross margins are also expected to fall by 25 to 75bps, with tariffs continuing to act as a drag.

Constellation Brands Q1 27

30/06 - even though Berkshire Hathaway has reduced its stake in the Corona and Modelo beer owner they still have a small 0.4% stake in the business. It’s been a tough few years for beer and spirits makers in the last few years as consumer habits change and costs get bigger, a jump in aluminium prices along with tariffs being two of many challenges. In its last set of numbers, the shares initially saw a brief pop higher before continuing their downward slide toward their lowest levels since December last year. With more and more people drinking less when it comes to the consumption of alcohol, this has prompted brewers, as well as other drinks companies to shift strategy towards a low and no alcohol approach to tempt people back inside the tent. In Q4 revenues slipped to $1.92bn, mainly due to weakness in wines and spirits sales. The beer segment on the other hand saw sales increase. For 2027 the expectation was for beer revenue growth between -1% and +1%, however this could well turn out to be a low-ball estimate with the Football World Cup taking place in both the US, Canada and Mexico, with the tournament overlapping Q1 and Q2.

 

Tesla Q2 26 vehicle deliveries

 

02/07– the performance of Tesla shares over the past 3-months has been largely sidelined by Musk’s other big project SpaceX, which got off the IPO launchpad back in June, as investors scrambled to get on board the SpaceX Starship, paying an eye watering price to do so. All the while the performance of his other business appears to be operating below the radar, with little sign that shareholders in Tesla are shifting their allegiance to SpaceX. And why should they, since it’s highly likely that SpaceX will more than likely absorb Tesla into its own orbit. After all, why overpay for SpaceX when you can just wait until Musk comes along and gives you SpaceX shares for your Tesla ones.  When Tesla reported its delivery numbers in Q1 the bulk of its sales were Model3/Y vehicles to the tune of 394,611 out of a total of 408,386. It’s unlikely that the challenges Tesla faces will diminish with the increasing competition from the likes of BYD and Xiaomi, however its unlikely many Tesla shareholders will care in the short term. What’s more puzzling is why investors haven’t cottoned on to the idea that owning Tesla shares is a much cheaper way of investing in Musk, than SpaceX at the moment given that SpaceX shares appear to have hit a near term top

Summary

Markets are entering a critical week as investors shift their attention from geopolitical risks back to economic fundamentals. The spotlight will be on US non-farm payrolls, ISM manufacturing data, and Eurozone inflation figures, all of which could shape expectations for future central bank policy. At the same time, earnings and delivery updates from Nike and Tesla will offer valuable insights into consumer spending trends and the competitive landscape in key industries. With inflation concerns lingering and technology valuations under scrutiny, this week's data could set the tone for markets heading into the third quarter.

FAQs

Q1: Why is the US non-farm payrolls report important?
It provides a snapshot of the health of the US labour market and often influences Federal Reserve policy decisions.

Q2: What are the ISM reports?
The ISM Manufacturing and Services reports measure business activity and inflation pressures across the US economy.

Q3: Why is EU Flash CPI significant?
It offers an early indication of inflation trends across the Eurozone and can influence ECB interest rate decisions.

Q4: What challenges is Nike currently facing?
Nike is dealing with weaker consumer demand, declining profits, tariff pressures, and ongoing weakness in China sales.

Q5: Why are Tesla deliveries being closely monitored?
Vehicle deliveries provide a key measure of Tesla's growth and competitiveness amid increasing pressure from rivals such as BYD and Xiaomi.

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