Stagflation Fears Weigh on Global Markets as Japan's Economy Shows Resilience

Global stock markets were mixed on Monday as investors digested a weaker-than-expected report on the US economy. The Japanese government reported that its economy grew slightly faster than forecast in the April-June quarter, expanding at a 1.1% annual pace. In quarterly terms, the economy grew 0.3% in the second quarter of the year.

The S&P 500 fell 0.2% on Friday following a report that showed shoppers spent less at US retailers last month. This data could help the Federal Reserve keep interest rates low, which is positive for investors. However, it also suggests growth may be slowing at a time when inflation is still high.

The Fed has no good tool to fix both a stagnating economy and high inflation at the same time, making stagflation a worst-case scenario. This week will bring financial updates from some of the nation's biggest retailers, including Home Depot, Target, Lowe's, and Walmart. These results will provide investors with a more detailed picture of how businesses and consumers are handling stubbornly high inflation.