Global growth reaches five-month high as price pressures ease

Global economic activity accelerated in July as output and new orders strengthened, employment returned to growth, and inflationary pressures eased, according to the latest J.P.Morgan Global Composite PMI.

The Composite Output Index rose to 52.6 from 52.0 in June, reaching a five-month high and its strongest level since February. A reading above 50 signals expansion. Manufacturing output remained slightly ahead of services, at 52.7 and 52.5 respectively, although factory growth slowed for a second month while services recorded their strongest expansion since February.

Growth was broad-based across sectors and countries. Output increased in all six industry categories covered by the survey, with investment goods recording the fastest expansion and consumer services the weakest. Business services accelerated, while consumer services returned to growth.

Economic activity rose in 10 of the 13 countries for which July data were available. France, Russia, and Brazil were the only economies to contract, while growth strengthened in the US and Australia and returned in the euro area and the UK.

Incoming new business increased for the thirty-third consecutive month, reaching its strongest level since February. Manufacturers reported slower expansion in new orders, while services gained momentum and outpaced manufacturing.

International trade remained a weak point. New export business fell for a fifth straight month. Export orders stabilised among manufacturers but declined again across services, leaving internationally exposed companies with a weaker demand signal than the headline expansion suggests.

Forward-looking indicators also improved. Business confidence about activity over the next 12 months rose for a second consecutive month to a five-month high, helping support the first increase in global employment since April.

Hiring increased in the US, China and Japan, while employment stabilised in the euro area after six months of cuts. A rise in backlogs of work also pointed to stronger labour demand.

Business price pressures continued to moderate from recent peaks. Input costs increased at their slowest pace in five months, and selling-price inflation fell to a four-month low, bringing both measures closer to levels recorded before the outbreak of war in the Middle East. Price increases nevertheless remained considerably stronger in developed economies than in emerging markets.

Alex Gallin, global economist at J.P.Morgan, said the July reading had narrowed most of the gap with its pre-conflict average and continued to indicate above-trend growth.

“Employment further unwound its recent weakness and returned to expansionary territory,” he said.

Firmer demand and slower increases in business costs and selling prices give companies a somewhat stronger starting point for the third quarter, although official inflation trends remain uneven across major economies. That could support firmer revenue assumptions and take some pressure off cost forecasts, while renewed hiring may add to payroll and working capital needs.

Export weakness remains the clearest counterweight. Companies with cross-border sales may find the global headline less representative of their own order books, while the gap between developed and emerging-market inflation could complicate pricing, sourcing and currency assumptions across regions.

July’s survey, therefore, points to a broader recovery, but one still carrying enough variation to keep corporate forecasts under pressure.

 

Inflation risks return as bond markets test central banks

Inflation risks are re-emerging across major developed markets as higher energy prices, resilient activity and shifting rate expectations complicate the outlook for central banks, according to Northern Trust Asset Management (NTAM).

In its latest Liquidity Link Monthly, NTAM said the euro area faces the clearest renewed pressure. July headline HICP rose to 2.9%, core inflation edged up to 2.5%, and energy inflation accelerated to 10% year on year. Second-quarter GDP expanded 0.4%, while the composite PMI improved to 51.9.

Stronger inflation alongside firmer activity pushed Bund yields higher and left money markets close to pricing a full 25-basis-point ECB increase by year-end. The central bank kept its deposit rate at 2.25% in July, but subsequent communication from policymakers remained hawkish.

Daniel Farrell, head of international fixed income at NTAM, said “the primary focus remains the extent to which higher energy prices feed through into broader inflation” and whether central banks see evidence of persistent second-round effects.

The UK offered a different inflation signal. June CPI slowed to 2.6% year on year, its lowest reading in 15 months, while wage growth fell below 3%. The Bank of England held the Bank Rate at 3.75% for a fifth consecutive meeting, although a 6-3 vote showed three policymakers favoured a 25 basis-point increase.

Markets reduced expectations for near-term UK tightening after the decision, with pricing falling from around 47-50 basis points beforehand to roughly 32. Gilts nevertheless remained sensitive to global yields, fiscal uncertainty and future issuance.

US data also offered some short-term relief. June CPI fell 0.4% month on month, core CPI was unchanged, and PCE inflation declined to 3.7% from 4.1%. The Federal Reserve held its target range at 3.50% to 3.75%, while a 9-3 vote exposed a more hawkish internal debate.

Growth and labour signals remained mixed. Payrolls increased by 57,000, second-quarter GDP slowed to a 1.5% annualised pace, and the 30-year Treasury yield reached about 5.23% as investors reassessed inflation, Fed credibility and long-term funding needs.

NTAM remains sceptical that another US rate increase is the most likely outcome. Farrell said: “While market pricing continues to reflect some probability of further rate increases, we view such an outcome as less likely and maintain a neutral duration stance given that Treasury yields remain broadly consistent with fair value.”

Diverging inflation trends matter for corporate liquidity and funding decisions. Euro area inflation is strengthening, while UK and US data have softened, leaving rate paths less synchronised and potentially widening differences in cash returns, debt costs and hedging assumptions.

Farrell said NTAM’s portfolio strategy continues to emphasise “liquidity, issuer quality and disciplined risk management” as markets await whether energy shocks spread to broader markets.

 

Japanese equities face yen risk as foreign positioning builds

Japanese equities could remain vulnerable to a sharp correction if the yen strengthens abruptly, despite Goldman Sachs Research raising its 12-month target for the TOPIX index.

The bank now expects TOPIX to reach 4,500 over the next year, up from its previous forecast of 4,400 and compared with an index level of 3,960 on 3 August. Japanese stocks have been trading near record highs, supported by fundamentals that Goldman believes could drive further gains.

Those prospects are being weighed against memories of summer 2024, when TOPIX fell 24% from peak to trough. The correction followed a sudden rise in the yen, with the dollar losing 11% against it. Exporters and financial stocks were among the hardest hit as investors reassessed risk positions.

Bruce Kirk, chief Japan equity strategist at Goldman Sachs Research, said the currency backdrop is less threatening today. “The macro backdrop looks less yen-supportive now versus 2024,” he wrote, suggesting a repeat of that abrupt move is less likely.

Equity positioning, however, may leave the market more exposed if another shock arrives. “But the equities positioning looks more vulnerable to a major correction versus two years ago,” Kirk said.

Foreign participation is one reason for that caution. Overseas investors sold Japanese equities after the 2024 decline but have been net buyers since April 2025. Their positioning in Japan’s equity market is now around 20% higher than before the correction two years ago.

Recent coordinated US-Japan efforts to support the yen have already unsettled Japanese shares, highlighting how quickly currency moves can feed through into equity valuations. A stronger yen can reduce the translated value of overseas earnings for exporters and alter expectations around margins and financial conditions.

Goldman also points to the possibility of a different trigger this time. An unexpected shock that undermines confidence in the economic viability of artificial intelligence could prompt investors to reduce risk across global markets, including Japan.

Even with those vulnerabilities, Kirk sees medium- and long-term opportunities in Japanese equities. Goldman’s higher TOPIX target suggests its central view remains constructive, but the combination of elevated foreign positioning and sensitivity to the yen leaves the market more exposed to abrupt changes in sentiment.

 

UK equity fund outflows surge as policy uncertainty grows

UK equity fund outflows surged to £1.61bn in July, their highest level since the run-up to last year’s autumn Budget, as policy uncertainty weighed on investor confidence, according to Calastone.

The latest Fund Flow Index showed July was the fifth-worst month for equity funds in the network’s 11-year history. The 12-month run rate of outflows reached a record £13.9bn, extending a trend Calastone said began in June 2025 as tax concerns intensified.

UK-focused equity funds bore the brunt, with investors withdrawing £948m during the month. Since June 2020, when sustained selling began, the sector has lost £52.6bn and recorded net inflows in only four individual months.

Global equity funds saw £574m of outflows and emerging market funds £224m, while sector-focused, Asian, Chinese and Japanese strategies also lost capital. European equity funds were flat, while North American funds were the only major equity category to attract money, taking in £227m.

Selling was concentrated in active strategies. Actively managed equity funds suffered £3.04bn of outflows, their third-worst month on record, while passive funds attracted £1.43bn, broadly in line with their long-run average.

Pressure also spread beyond equities. Multi-asset funds recorded £463m of outflows, their first negative month since October 2022, while sell orders reached a record £6.58bn. Fixed income inflows slowed to £179m from more than £1bn in June, and property funds continued to shed capital.

Edward Glyn, head of global markets at Calastone, said policy uncertainty was becoming as important as the tax measures themselves. “The evidence increasingly suggests that policy unpredictability is unnerving investors almost as much as the tax measures themselves,” he said.

Calastone linked the acceleration to uncertainty over the new government’s fiscal direction, including speculation about capital gains tax, pensions, and broader wealth taxation. Glyn said strong equity market performance may also have made it easier for some investors to realise gains.

“The arrival of a new Prime Minister and Chancellor has reset expectations, but it has not yet provided investors with clarity about the future tax environment,” he said.

The figures point to a marked shift in fund behaviour, with policy risk competing with market performance as a driver of allocation decisions. Continued withdrawals from UK equities, alongside heavy selling of active funds, suggest investors are becoming more selective about where they keep capital exposed.

Calastone’s index is based on millions of buy and sell orders from UK-based investors, with more than 85% of UK fund flows by value passing across its network.

 

Islamic finance links capital across emerging trade corridors - report

Standard Chartered says Islamic finance is taking on a broader role in linking capital, trade and digital infrastructure across emerging markets as global commerce becomes more fragmented.

Its report, The Islamic Finance Connector Era, estimates the industry now holds about US$6 trillion in assets across nearly 100 jurisdictions. Islamic finance is increasingly connecting liquidity-rich markets in the Gulf with economies across ASEAN, South Asia, Africa and other emerging regions seeking long-term investment.

Despite that scale, capital deployment remains uneven. Only 6% of global sukuk capital currently reaches South Asia and Africa, even as both regions face substantial infrastructure and development funding needs.

Standard Chartered identifies GCC-centred, China-centred and Middle East-Türkiye trade corridors as areas where Islamic finance could play a larger role in financing trade, working capital, treasury, payments and settlement.

Khurram Hilal, chief executive officer of group Islamic banking at Standard Chartered, said: “Islamic finance is becoming a critical enabler of cross-border connectivity.”

Private credit is another area of focus. The report says Shariah-compliant structures could support investment in infrastructure, receivables, trade-linked assets and mid-market businesses, broadening the channels through which capital is deployed beyond public sukuk markets. That could widen funding options for companies operating along these corridors.

Digital infrastructure is also becoming more important. Tokenisation and digital assets could improve efficiency and expand access to cross-market investment, though the report says progress will depend on legal certainty, interoperability, custody arrangements, and governance.

Legal certainty and interoperability will be particularly important as financial institutions try to connect new trade corridors without adding operational or settlement risk. Greater standardisation of financing structures and stronger cross-border infrastructure could help institutions move Shariah-compliant liquidity between markets more efficiently.

Hilal said better links between available liquidity and cross-border investment opportunities would be central to the sector’s future growth.

Standard Chartered argues that the sector’s next phase will depend increasingly on its ability to mobilise capital across regions. Trade finance, private credit, and digital market infrastructure are therefore likely to become increasingly important alongside traditional banking and sukuk issuance as institutions seek ways to channel liquidity into growing markets.

 

EU banks’ climate risk exposure remains broadly stable

Climate-related exposures across EU and EEA banks remained broadly unchanged in the second half of 2025, while the quality of underlying ESG data continued to improve, according to the European Banking Authority.

Across the EU and EEA, 62% of banks’ exposures were to sectors that contribute heavily to climate change between June and December 2025, broadly unchanged over the period. Overall transition risk also remained stable, with the most exposed countries and institutions largely unchanged.

Mortgage portfolios showed modest progress on data quality. The share of highly energy-efficient mortgage exposures, defined as properties using no more than 100 kWh per square metre, increased slightly. At the same time, the proportion of mortgages without energy performance information and the share relying on estimated energy performance scores both edged lower.

Physical climate risk exposures were also broadly unchanged across most jurisdictions, although differences between countries remain substantial. Average exposure shares ranged from below 10% in some markets to more than 55% in others.

EBA said the variations reflect differences in geography, economic structure and sector mix, as well as differences in how physical climate risk is classified and assessed.

Stable headline exposures do not remove the need for closer monitoring. Better data on mortgage energy efficiency should give banks and regulators a firmer basis for judging where risks are concentrated, while wide national differences in physical risk exposure suggest portfolio vulnerability can vary sharply across the region.

Improving data quality also matters for banks assessing borrowers, collateral and sector concentrations. More complete energy performance information should reduce reliance on estimates and strengthen comparisons across mortgage books.

Based on banks’ ESG disclosures, the dashboard tracks both transition and physical climate risks across the EU and EEA banking sector. Latest results point to little change in overall exposure during the period, alongside a gradual improvement in the information available to assess those risks.

 

Wells Fargo plans tokenised deposits for corporate payments

Wells Fargo is preparing to introduce tokenised deposits for corporate and commercial clients, beginning with a limited US dollar-to-sterling use case this autumn.

According to the bank, eligible clients will be able to move and settle funds around the clock through a blockchain-based representation of commercial bank deposits. A broader rollout is planned through 2027, covering more clients, countries and currencies.

Payments will be integrated into Wells Fargo’s existing services and routed through tokenised deposits where the bank judges they can improve timing or flexibility. Planned capabilities include 24/7 transfers between accounts, subsidiaries and counterparties, alongside programmable payments that can be released when predefined conditions are met.

Wells Fargo said the deposits will retain the regulatory protections and deposit insurance eligibility of its existing deposit products. Its system is being built on proprietary blockchain infrastructure, with future support planned for custodial wallets and connectivity between different blockchain networks.

The initial deployment will focus on US dollar-to-sterling transactions for selected corporate and commercial clients. Expansion during 2027 is intended to bring the service to all eligible clients and add further currencies.

Growing interest among large banks in tokenised deposits reflects demand to extend payment and settlement activity beyond conventional cut-off times. Faster movement between subsidiaries and counterparties could be useful where funding needs arise outside the traditional banking day or across time zones.

Corporate treasury teams will still need to assess how tokenised transactions fit with reconciliation, liquidity management and payment controls. Adoption will also depend on currency coverage, counterparty participation and how easily the transactions can be incorporated into existing treasury and accounting workflows without adding new reconciliation or governance burdens.

 

BlackRock tokenises European MMF shares

BlackRock has launched tokenised share classes for selected European money market funds, giving eligible investors blockchain-based access to existing cash management strategies. It is BlackRock’s first tokenised fund offering in Europe.

Available across euro, sterling and US dollar funds, the share classes cover public debt constant net asset value and low volatility net asset value money market funds. Each digital token represents an underlying share in a BlackRock Institutional Cash Series fund.

Kinexys by J.P. Morgan provides the tokenisation infrastructure, with tokens minted on the Ethereum network. Official ownership records will continue to be maintained through the funds’ existing transfer agent infrastructure, linking on-chain activity with the traditional shareholder register.

Approved investors will be able to transfer holdings between digital wallets around the clock using smart contracts. BlackRock said the structure could support corporate liquidity management, digital collateral, distribution and participation in tokenised financial markets, while retaining the investment characteristics of the existing funds.

Kara Kennedy, global head of market development at Kinexys by J.P. Morgan, said: “Tokenisation has moved from concept to execution. By tokenising share classes of existing money market funds, we bring new on-chain functionality to trusted products, made possible through blockchain rails.”

Around-the-clock transferability could broaden how money market fund holdings are used alongside digital payment and collateral infrastructure. A tokenised share could potentially move between approved investors without waiting for conventional transfer windows, while the underlying fund remains within its established regulatory and operational framework.

Corporate adoption will depend on wallet governance, accounting treatment, custody arrangements and integration with existing treasury systems. Liquidity teams will also need to determine how on-chain transfers interact with subscriptions, redemptions and cash settlement before tokenised holdings can become part of day-to-day liquidity management.

 

Serrala and IFS link finance automation to ERP

Serrala has partnered with enterprise software provider IFS to add accounts receivable and accounts payable automation to the IFS Cloud ecosystem. IFS customers will be able to automate invoice processing, approvals, payments, cash application, collections and related workflows without replacing their existing ERP environment.

Finance teams using the combined offering will be able to draw on IFS Cloud data across receivables and payables, with Serrala supplying automation and analytics around payment processing, liabilities, cash flow and collections performance.

Serrala’s finance platform will also use IFS data to provide predictive insights, benchmarking and real-time recommendations across AR and AP. The companies are positioning the partnership around reducing manual work and improving visibility across finance operations.

ERP implementations can still leave gaps between core accounting systems and the day-to-day processes used to collect cash, approve invoices and release payments. Extending those workflows through integrated automation could help reduce hand-offs between systems and give finance teams a clearer view of working capital.

Cash application and collections are particularly important where delayed matching or follow-up can obscure the true position of incoming funds. On the payables side, tighter links between invoice approval and payment execution can improve visibility over upcoming liabilities and reduce manual intervention.

The partnership will initially support IFS customers across sectors, including manufacturing, energy and utilities, field service management, engineering and construction and distribution. Wider value will depend on implementation quality, data consistency and how easily finance teams can incorporate the additional workflows into existing controls.

 

Visa and Corpay expand European fleet payments partnership

Visa and Corpay have expanded their European partnership to bring Visa’s fleet payment capabilities onto Corpay’s fleet card processing platform. Under the agreement, Corpay will make Visa Fleet 2.0 available across its European network, enabling fleet operators and mobility providers to access open-loop payment functionality through existing Corpay services.

Corpay serves more than 800,000 business customers globally and provides payment tools covering fuel, electric vehicle charging, parking, tolls, maintenance and other vehicle-related costs. Integrating Visa’s infrastructure is intended to widen the payment options available to those customers and support expansion into additional European markets.

Fleet payments are becoming more complex as businesses manage a broader mix of vehicle types, charging models and mobility services. For companies running both combustion and electric vehicles, a common payments layer could reduce reliance on separate fuel, charging and mobility arrangements.

Greater integration between card processing, spend controls, and transaction data could help finance teams track costs more consistently across fleets operating in several countries.

Open-loop acceptance may also give operators greater flexibility in where payments can be made, while centralised transaction data can support reconciliation, policy enforcement, and analysis of vehicle-related spend.

Visa and Corpay said the partnership builds on their existing relationship and will support further development of fleet and mobility services across Europe.

Adoption will depend on merchant coverage, data quality and how effectively companies can connect fleet transactions with expense, procurement and accounting systems. Cross-border operators will also need consistent controls across currencies, tax regimes and local payment environments as the platform expands.

 

Mastercard and AFS link corporate cards with payments

Mastercard and Arab Financial Services are introducing corporate credit and prepaid cards in the UAE and Egypt, linking card issuing, spend controls and payment acceptance through the AFS Pro app. Initial rollout will begin in the UAE before expanding to Egypt. Businesses will be able to issue and manage corporate cards, set spending limits, monitor transactions in real time, and handle expense management from a single platform.

AFS Pro also includes payment acceptance tools, allowing merchants to take contactless payments via smartphone with SoftPOS and accept remote transactions via Pay-by-Link. Real-time point-of-sale data and reporting tools are intended to give companies a clearer view of incoming payments and sales activity.

Combining outgoing and incoming payment flows in a single application could reduce fragmentation across payables, receivables, and expense processes. Finance teams may also gain a more consolidated view of transaction activity, helping with reconciliation, cash visibility and control over spending.

Financial institutions will be able to deploy the combined offering to business customers without building separate issuing and acquiring capabilities internally. Mastercard and AFS said the platform is designed to minimise integration work and shorten deployment timelines.

Regional adoption will depend on how well the service connects with companies’ accounting, ERP and treasury systems, as well as the depth of local payment acceptance and card controls. Businesses operating across both markets may benefit where central oversight can be maintained despite differing regulatory and operational environments.

Bringing card issuing and payment acceptance into a single environment could give businesses a more complete view of money moving in and out, particularly when expense data and merchant receipts have traditionally sat in separate systems. The real test will be whether that visibility translates into faster reconciliation and more reliable cash positions across the UAE and Egypt.

 

Omnia and Monavate link digital settlement to institutional liquidity

Omnia Exchange has partnered with payments platform Monavate to connect institutional liquidity and execution across digital assets, stablecoins and fiat currencies through a single API. Powered by LMAX Group, Omnia provides the market infrastructure behind the arrangement, while Monavate will use it to support payment and settlement operations for businesses operating internationally.

Access through a single connectivity layer is intended to reduce the need for payment providers to manage separate execution, liquidity, and settlement arrangements across different asset types. Monavate can draw on institutional liquidity while keeping those processes separate from its customer-facing services.

Corporate relevance sits mainly in the infrastructure rather than a new treasury product. As stablecoins and other digital assets become more widely used in payment flows, businesses will increasingly depend on providers that can convert, execute and settle across multiple forms of value without adding operational complexity.

Cross-border payments are a potential use case, particularly when transactions involve fiat currencies and digital assets. Reliable execution and liquidity access could also affect settlement timing and pricing, although the companies provided no data on transaction speeds, costs or current corporate adoption.

Monavate was recently acquired by Exodus Movement. Its agreement with Omnia reflects broader efforts by payment platforms to connect digital asset settlement with existing financial infrastructure.

Practical value for corporate finance will depend on whether those backend changes translate into faster settlement, better pricing, or simpler reconciliation, without introducing new governance, counterparty, or integration burdens.

 

Nuvei and BlackLine embed payments into invoice-to-cash

Nuvei and BlackLine have partnered to embed payment acceptance directly into BlackLine’s invoice-to-cash platform, linking invoicing, collection, and reconciliation into a single workflow. Already live with enterprise customers, the integration allows payers to settle invoices as soon as they receive them, with incoming funds automatically matched against open receivables.

Customers can pay by card, bank transfer, or local payment methods via the invoice, while finance teams can monitor payment status and cash position in real time. Nuvei’s infrastructure supports collections in 150 currencies across more than 190 markets.

Automatic matching is intended to reduce manual keying and shorten the gap between payment receipt and reconciliation. Payers also get a single place to view, query, and settle invoices, keeping payment and invoice data connected throughout the process.

Disconnected payment workflows can delay collections and leave finance teams with a less accurate view of cash. Bringing acceptance into the same platform used for receivables and collections could improve visibility over incoming funds and reduce the operational work needed to close invoices. That could also improve the timing of cash reporting and collections follow-up.

Working capital benefits will depend on how quickly customers pay and how reliably transactions are matched, but closer integration between billing, payment and reconciliation could give finance teams a more timely view of liquidity.

Nuvei said the partnership forms part of a broader push to embed payment capabilities into finance platforms. Among BlackLine customers, the immediate change is a tighter link between the invoice, the payment event and the accounting record.