Global stocks ease back as investors parse PCE; euro softens, bullion still set for an August win

A month-long, tech-fueled climb in world equities hit a speed bump on Friday, with indexes slipping during the New York morning as traders absorbed a U.S. inflation update that neither derailed nor supercharged the rate-cut story. The PCE report met the market where it lives right now: good enough to keep a September cut on the table, not decisive enough to silence worries about the last stretch of disinflation. That ambiguity was all it took for investors—fresh off record prints in several benchmarks—to trim risk and wait for more proof.
Earlier in the day, Europe set a cautious backdrop. Continental shares lost ground into the close, pressured by a slump in U.K. lenders after a think tank argued for taxing interest paid on bank reserves at the central bank. The idea landed at an awkward time for the sector, which has benefited from higher rates but remains exposed to regulatory and political scrutiny. Add anxiety around French politics and it was a session that rewarded de-risking over dip-buying—an instinct that followed the tape into the U.S. morning.
In foreign exchange, the dollar found its footing after a month of retreat, reflecting the notion that the Fed can begin easing without racing. That left the euro and the pound a touch softer, though still well within recent ranges. In commodities, gold held onto a month-to-date gain—helped by a weaker dollar over August and by still-subdued real yields—even as spot prices cooled alongside equities. Crude prices eased as well, a nod to lingering questions about the growth outlook now that the easy disinflation wins are behind the Fed.
The bigger message was about posture rather than panic. With valuations stretched and positioning full in the winners of 2025, investors are demanding cleaner signals before extending risk: softer services inflation, calmer labor prints, and clarity on how trade frictions will filter into prices. The PCE tables didn’t contradict that wish list—but they didn’t check every box either. As a result, the market’s playbook into month-end favored quality over momentum, defensives over high-beta, and patience over bravado.
From here, the burden of proof shifts to the next data points and to central bank rhetoric. If the numbers corroborate a soft-landing glide path, the August rally can catch a second wind. If they don’t, the day’s modest drift may mark the beginning of a broader pause. Either way, Friday’s move was a reminder that at this altitude, even “as expected” can be a reason to step back and reassess rather than to chase.