Markets in wait and see mode

General market commentary

Equity markets closed mixed on Monday as investors looked ahead to a busy week of retail earnings and awaited Federal Reserve Chair Jerome Powell’s upcoming speech at Jackson Hole. Industrials and consumer discretionary equities led gains, while real estate and communication services lagged. The Dow Jones Industrial Average slipped 0.1% to 44,911.8, with the S&P 500 and Nasdaq Composite finishing flat. Bond yields edged higher, with the 10-year US Treasury rising to 4.34%, though still below its July peak near 4.50%. Oil prices firmed, supported by geopolitical concerns over India’s purchases of Russian crude, while the US dollar strengthened against major currencies. Elsewhere, Japan’s Nikkei reached record highs, and European equities advanced as Western leaders met with Ukraine’s President Zelenskyy and US President Trump to discuss the ongoing war.

Earnings season remains supportive for markets, with over 90% of S&P 500 companies having reported results, and the majority beating expectations, helping lift forecasts for second-quarter earnings growth to more than 10%. Major retailers including Home Depot, Lowe’s, Target and Walmart are due to report this week, offering a further gauge of consumer demand. On the macroeconomic front, PMI data due Thursday is expected to show continued resilience in services and a modest recovery in manufacturing. Attention will turn to Powell’s Friday remarks for clarity on the Fed’s policy outlook, with markets currently pricing in a strong likelihood of a September rate cut amid signs of labour market cooling and easing inflation pressures.

Latest market and economic update

Asian equities traded in a flat-to-lower range on Tuesday, easing from recent record highs as investors turned cautious ahead of the Federal Reserve’s Jackson Hole Symposium and ongoing Russia-Ukraine peace efforts. Chinese and Indian equities stalled after Monday’s rally, Japan’s Nikkei steadied near records, while Australia and South Korea retreated on profit-taking.

US equity futures were little changed overnight as investors awaited key retail earnings from Home Depot, Target, and Walmart. Focus also remains on Federal Reserve Chair Jerome Powell’s upcoming Jackson Hole speech and the latest Fed meeting minutes. Meanwhile, geopolitical tensions involving Trump, Zelenskiy, and Putin continue to weigh on market sentiment.

European equities finished mixed on Monday, with the STOXX 50 slipping 0.3% to 5,431 and the STOXX 600 holding flat at 554 as investors stayed cautious ahead of key geopolitical and policy events. Banks weighed, with BNP Paribas and Nordea down over 1.5%, while Vestas jumped 15% and Novo Nordisk gained 6% on corporate news.

The US dollar strengthened this morning, climbing above 98.2 on the dollar index amid investor focus on a Trump-led summit addressing the Ukraine conflict. The euro pared losses, with EUR/USD trading near 1.1658, as the dollar gained its strongest foothold against the euro and yen. Market attention now shifts to Fed Chair Powell’s Jackson Hole speech for interest rate guidance.

Oil prices dipped in Asian trading as investors awaited developments from US-Ukraine talks and a potential meeting between Zelenskiy and Putin. Brent and WTI futures fell 0.5%, following gains on Monday amid supply concerns. Trump is arranging the Ukraine-Russia meeting, while markets remain cautious about a ceasefire and looming US tariffs on Indian Russian oil imports.

President Trump is arranging a meeting between Putin and Zelensky to discuss ending the conflict, with possible trilateral talks. While promising US security guarantees to Ukraine, details remain vague. Despite advancing Russian forces, a peace deal seems distant as Trump backs a comprehensive settlement over a ceasefire, amid threats of more sanctions.

S&P Global affirmed the US’s AA+ long-term and A-1+ short-term credit ratings with a stable outlook, citing robust tariff revenues offsetting fiscal pressures. Despite a rising deficit, the economy remains resilient. Risks include political challenges and Federal Reserve independence, but improved policymaking and growth could raise the rating in future years.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

SoftBank is investing $2 billion in Intel, becoming one of its top shareholders with nearly a 2% stake. The funding offers a boost to Intel’s turnaround amid AI chip competition. The investment is unrelated to President Trump, with SoftBank not seeking board seats or chip-buying commitments. Intel’s shares rose sharply following the announcement.

Palo Alto Networks forecast fiscal 2026 revenue and profit above estimates, driven by rising demand for AI-powered cybersecurity. Shares rose 5% in extended trading. New products and the planned $25 billion CyberArk acquisition bolster offerings. Founder Nir Zuk retired; Lee Klarich named CTO. The company anticipates strong revenue and earnings growth in the year ahead.

BHP’s annual profit fell to $10.16 billion, its lowest in five years, due to weak Chinese demand and lower iron ore prices. The miner raised its debt target and flagged reduced capital spending but declared a higher-than-expected dividend. It plans cautious acquisitions in copper and potash, while growth and exploration spending will slow after 2030.

Novo Nordisk will offer Ozempic for $499 per month to uninsured U.S. type 2 diabetes patients via its own pharmacy, GoodRx and telehealth partners. Shares rose 5.3%, while GoodRx surged 34.2%. The move mirrors Novo’s Wegovy pricing and follows FDA approval of Wegovy for MASH. Rival Eli Lilly sells Zepbound online for similar pricing.

U.S. solar shares climbed after the Trump administration issued subsidy rules that proved less restrictive than feared. The Treasury narrowed criteria for projects to qualify for 30% tax credits but kept the four-year window. The MAC Global Solar Energy index rose 4%, with Sunrun up 9% and First Solar gaining 8.6%.

Bayer shares rose over 3% after it agreed in principle to settle PCB cases involving more than 200 plaintiffs at Sky Valley Education Centre. Analysts said the deal is covered by a €530m provision and marks progress in containing liabilities, though pending appeals and other cases leave some residual litigation risk.

Country Garden said it secured agreement with a core bank creditor group holding 49% of its offshore debt, advancing its $14.1bn restructuring. The defaulted developer aims to cut offshore debt by 78%, with 77% of bondholders backing the plan, surpassing the 75% threshold. Finalisation is targeted by end-2025, despite an ongoing liquidation petition.

Palantir shares fell more than 2% after Citron Research warned the shares remains expensive, even at $40, citing a high price-to-revenue multiple compared with OpenAI. Concerns include CEO Alex Karp’s $2bn in insider sales and competitive pressures from Microsoft and Databricks. OpenAI CEO Sam Altman’s comments on an AI bubble also weighed on sentiment.

Truist raised Microsoft’s price target to $675, citing strong cloud and AI momentum. Analysts lifted 2026–27 revenue, profit, and cash flow forecasts, expecting low-teens growth over time. Microsoft benefits from Azure migration, AI workloads, and synergies across its portfolio, including Copilot and Fabric. The premium valuation reflects its key role in the AI landscape.

Deutsche Bank downgraded Commerzbank shares to “hold” from “buy,” citing a valuation premium after the shares tripled over the past year. Target price was raised to €35. Despite strong fundamentals, profitability gains, and expected benefits from Germany’s fiscal stimulus, Commerzbank trades at a 20–42% P/E premium versus peers, with buybacks supporting demand.

KeyBanc upgraded Duolingo to overweight with a $460 target, citing stronger engagement from its new “Energy” feature, upcoming product launches and viral marketing plans. The broker lifted 2026–27 forecasts by up to 7%, expecting AI to boost monetisation. Duolingo shares have lagged, but KeyBanc sees scope for renewed growth and margin improvement.

UBS upgraded CVS Health to Buy with a $79 target, citing stronger results from cost controls and healthcare benefits improvements. Earnings are forecast to grow 14% annually through 2028, aided by Medicare Advantage and group insurance fixes. Shares trade below historical averages, though risks include Medicare Star ratings and U.S. drug pricing regulation.

Jefferies downgraded On Holding to “underperform,” citing peak sales growth in 2025, slowing U.S. expansion, and a limited product range. Sales and EBITDA are projected 5–10% below consensus. Nike, with stronger running shoe demand and successful Vomero Plus sales, is outperforming. Jefferies maintained a “buy” on Nike, targeting $115 for fiscal 2027.

Moffett Nathanson initiated Live Nation with a Buy rating and $195 target, forecasting 15–20% annual earnings growth through 2027, driven by rising global live music demand and strong industry trends. Shares remain supported by consistent growth, though U.S. antitrust litigation over Ticketmaster poses a notable risk.

Upcoming data and events

Today’s US economic focus is on housing starts and building permits, with Home Depot’s earnings watched closely for retail cues.

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