Weekly Market Review — W/C 3rd August 2026: Risk-On, Selective, Equities and Copper in Focus

Rating: Risk-On | Bias: Selective · Quality Setups Only · Proceed with Caution

The Big Picture

The macro picture this week is mixed but the weight of evidence points to risk-on. The indicators that matter most are constructive, but there are enough amber signals in the background to warrant discipline over enthusiasm. The approach is straightforward: risk-on bias and quality technical setups only.

Macro Indicators — The Full Read

Credit spreads remain tight. The most reliable real-time read on risk appetite and it is not flashing any concern. Investors are comfortable taking on risk. Until this changes, the fundamental floor under risk assets holds.

VIX is in decline. Fear is not present in a meaningful way. Combined with tight credit, this is a consistent risk-on signal.

OFR Financial Stress Index at -1.92. A negative reading on the OFR FSI means below-average financial stress — the system is not under strain. At -1.92 the reading is comfortably in constructive territory.

USD depreciating against EM currencies. Capital is rotating toward higher-yielding, higher-beta opportunities rather than retreating into dollar safety. This is the behaviour of a risk-on market, not a defensive one.

M2 slowly grinding higher. Capital is entering the real economy at a modest pace. This is a mild tailwind for asset prices — not a stimulus surge, but not a headwind either.

Liquidity flat to falling modestly. This is the one note of caution worth watching carefully. Net liquidity is the primary fuel gauge for sustained risk asset rallies. At current levels it is not an immediate problem, but if liquidity continues to drift lower it could become a constraint on further upside — particularly if markets require fresh capital to sustain the bullish trend and asset purchases.

JPY — Intervention, Not Risk-Off

The Japanese yen has been purchased this week, but this is currency intervention by the Ministry of Finance rather than a genuine risk-off signal. Safe-haven demand driven by fear looks different — it comes with VIX spikes, credit spread widening, and broad EM selling. None of those are present. The JPY move is a policy action, not a market verdict. It does not change the regime read.

The Caveats — What to Watch Beneath the Surface

Bank lending is tightening slightly. It is still growing, which matters — a contraction in bank lending is a very different signal to a moderation in growth. But the direction of travel is worth monitoring. If tightening accelerates, it becomes a meaningful headwind.

Real retail sales are negative. Headline retail sales are up 3%, but CPI is running at 3.5%. In real terms the consumer is losing purchasing power at approximately -0.5% — spending is not keeping pace with inflation. If this persists, it will begin to impact consumer-reliant businesses and feed into earnings expectations for index-heavy consumer sectors. The DOW and FTSE carry more consumer and industrial weight than the Nasdaq — this distinction matters for how you position across indices.

Markets in Focus

Equities — FTSE 100, DAX, S&P 500, Nasdaq, DOW, Nikkei

European equities have been showing relative strength. The FTSE 100 and DAX remain the primary focus on that side. In the US, the Nasdaq and S&P 500 offer the clearest technical setups in a risk-on environment, though the real retail sales data introduces a specific headwind for consumer-heavy indices like the DOW. Nikkei remains on the watchlist — the JPY intervention introduces a ceiling risk on yen crosses that limits the pure risk-on carry expression in Japanese equities for now. No entries without confirmed technical setups across all of the above.

Copper

Copper is the single metals focus this week — the cleanest fundamental expression of the global growth signal within the metals complex. Tight credit, rising M2, and EM capital flows are all consistent with a constructive copper backdrop. Watching for a confirmed technical breakout before engaging.

What to Watch

Liquidity trajectory — flat to falling is manageable now. A continued drift lower becomes a structural headwind. The key question is whether M2 growth is sufficient to offset the net liquidity drag

Bank lending trend — still growing but tightening in direction. A further move toward contraction changes the credit picture materially

Real retail sales — if the -0.5% real figure persists, consumer-facing equity sectors come under earnings pressure. Watch DOW and FTSE consumer components specifically

VIX — currently supportive. A reversal back toward 20 and above would shift the regime read

Copper technical setup — watching for breakout confirmation with volume before entry

These are my views based on my own analysis at the time of writing. Nothing here is financial advice. Always do your own research and manage your risk.