Apple rises after $100 US investment commitment

General market commentary

Equity markets advanced on Wednesday, with the Nasdaq Composite hitting a record high, driven by strong corporate earnings and gains in major technology shares. The S&P 500 rose 0.7% and the Dow Jones Industrial Average edged up 0.2%, supported by strength in consumer discretionary and staples shares. Apple was a key contributor, climbing 5.1% following reports of a new $100 billion investment pledge in the US, bringing its total planned domestic investment to $600 billion over the next four years. Arista Networks surged nearly 18% after issuing an upbeat revenue forecast, while Walt Disney and McDonald's both beat earnings expectations, reinforcing signs of consumer resilience despite a cooling labour market. On the downside, Super Micro Computer and Snap fell sharply after disappointing results, with Snap citing higher expenses and slowing advertising revenue.

In the bond market, yields rose following a soft $42 billion auction of 10-year Treasury notes, which drew lower than average demand. The 10-year yield increased to 4.23%, while the two-year rate ticked up to 3.72%. Despite the move, yields remain below their July peaks as weaker economic data and last week’s jobs report have fuelled expectations of several rate cuts by the Federal Reserve through 2025, exceeding the Fed’s current guidance. In other markets, Asia mostly finished higher, supported by India’s central bank keeping its policy rate steady at 5.5%, while European shares were little changed as eurozone retail sales rose 3.1% year over year, beating forecasts. The US dollar declined against major currencies, and oil prices continued to slide, with WTI crude falling to its lowest level since early June amid speculation over potential adjustments to sanctions on Russian exports.

Latest market and economic update

Asian equity markets were mixed on Thursday, with gains in Japan, South Korea, and Singapore offset by declines in China and Hong Kong. China’s exports rose 7.2% in July, beating forecasts, while imports climbed 4.1%, narrowing the trade surplus. Markets reacted cautiously amid lingering trade tensions and ahead of central bank decisions in China and Australia.

U.S. stock futures rose modestly overnight, with S&P 500 and Nasdaq 100 futures up 0.2%, while Dow futures remained steady. Apple shares surged after pledging an additional $100 billion in U.S. manufacturing. Meanwhile, tariffs on semiconductors and Indian imports stirred caution. In after-hours trading, Airbnb fell 6% on a weaker growth forecast.

European shares ended mostly higher on Wednesday, with the Eurozone's STOXX 50 up 0.2%, while the broader STOXX 600 dipped 0.1% due to weakness in pharmaceuticals. Drugmakers slumped after Trump threatened 250% tariffs on the sector, with Bayer and Novo Nordisk falling sharply. Gains in financials and Airbus helped limit broader market losses.

The US dollar index steadied below 98.5 on Thursday after a sharp fall, as traders weighed rising Fed rate cut expectations and potential leadership changes. Softer jobs data fuelled bets on a September cut. EUR/USD held firm at 1.1662, supported by dollar weakness and renewed trade tensions following Trump’s fresh tariff announcements on semiconductors and India.

Oil prices rose in Asian trade this morning, rebounding from two-month lows as traders priced in tighter supply risks from new US tariffs on Indian oil imports. Brent climbed 0.9% to $67.48, and WTI to $63.98. Gains were tempered by ongoing concerns over rising OPEC+ output and weakening global demand, despite a surprise US inventory draw.

President Trump plans to meet Russian President Putin next week, followed by a trilateral meeting with Ukrainian President Zelensky, aiming to end the three-year Russia-Ukraine war. The talks, revealed during a call with European leaders, would exclude European representatives. European leaders appeared to accept Trump’s approach to the peace efforts.

Federal Reserve Bank of Minneapolis President Neel Kashkari said the U.S. labour market is cooling and the economy slowing, suggesting two interest rate cuts this year are “reasonable.” He hinted at near-term rate adjustments, expressed uncertainty about tariffs’ impact on prices, and affirmed trust in official labour data despite political questions.

Equities on the move

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

President Trump announced a 100% tariff on chips made outside the US, exempting firms expanding domestic production, including TSMC, Samsung, and SK Hynix. Apple pledged an additional $100 billion investment in US manufacturing. Shares of Apple, TSMC, Micron, and GlobalFoundries surged as markets welcomed growth opportunities and eased tariff concerns.

Sony Corp reported a 36% rise in first-quarter operating profit to 340 billion yen, beating estimates, driven by strong performance in its gaming and image sensor units. Net profit rose 23% to 259 billion yen, while sales edged up 2%. The firm slightly raised its 2025 earnings outlook, citing reduced concerns over trade tariff impacts.

Airbnb forecast slower growth for the rest of the year, citing tough comparisons from strong bookings in Asia and Latin America last year. Shares fell almost 6% after hours. Despite recovery in US travel and beating revenue estimates with $3.10 billion in Q2, the company expects moderated night bookings and announced a $6 billion share buyback.

Lyft missed revenue estimates with $1.59 billion in Q2, growing slower than Uber’s ride-hailing unit. Shares fell 4.2% after hours despite beating earnings expectations. The company expanded into Europe via FreeNow acquisition and partnered with Baidu for robotaxis. It forecast stronger Q3 gross bookings of $4.65-$4.80 billion, highlighting growth potential.

DoorDash forecast third-quarter gross merchandise value between $24.2 billion and $24.7 billion, surpassing Wall Street estimates. Q2 results beat expectations with $3.28 billion revenue and 65 cents EPS. Strong demand for food, groceries, and expanded offerings drove growth. Shares rose 8.5% after hours, with the Deliveroo acquisition expected to close in Q4.

Uber announced a $20 billion share buyback and strong third-quarter bookings, driven by rapid growth in its Uber One loyalty program with over 36 million members. Results were supported by rising commuter demand, effective promotions, and robust delivery and mobility segments. Uber plans to expand robotaxi services to cut costs and boost profits despite regulatory hurdles.

Duolingo raised its 2025 revenue forecast to $1.01–$1.02 billion, beating Q2 estimates with $252.3 million revenue. AI-enhanced subscription tiers and lower-than-expected AI costs boosted margins. The app expanded AI-powered features and courses rapidly. Q3 revenue is forecast between $257 million and $261 million, with adjusted core profit expected at $288.1–$295.5 million.

Walt Disney beat earnings expectations and raised its annual profit forecast, driven by strong growth in streaming and parks. It plans to bundle Disney+, Hulu, and ESPN with new NFL and WWE deals to boost streaming revenue. However, declines in traditional TV hurt operating income, causing a 2.7% drop in shares despite upbeat results.

Shopify forecast strong quarterly revenue, reporting 31% second-quarter growth and no slowdown in U.S. consumer demand despite tariff pressures. Its diverse merchant base remains resilient, with many raising prices. The company expects mid- to high-twenties percentage revenue growth next quarter, aided by AI-powered tools supporting retailers’ operations and sales.

McDonald’s Q2 global comparable sales rose 3.8%, beating estimates, driven by affordable meal deals and promotions targeting budget-conscious diners. U.S. sales grew 2.5%, with strong international demand in Japan, the UK, Canada, and France. Shares rose 3.0%, while adjusted net income of $3.19 per share surpassed expectations.

Siemens Energy expects to hit the top of its 2025 growth forecast, supported by strong U.S. demand and reduced tariff impact. Despite tariffs cutting profits by €100 million so far, new contracts ease cost pressures. Orders rose 66% to €16.6 billion in Q3, with the wind turbine division targeting break-even by 2026 amid ongoing cost cuts.

Investor concerns over Bayer’s earnings, boosted by Bundesliga player transfer fees rather than core healthcare and agriculture, caused shares to drop nearly 5%. The firm also revealed reliance on established drug Xarelto and added €6.3 billion in Roundup litigation provisions. Bayer has cut 12,000 jobs amid restructuring but postponed breaking up the group.

Wells Fargo reaffirmed its Overweight rating on AMD, viewing recent share weakness as a buying opportunity. Despite a 13% drop in Q2 data centre GPU revenue due to China restrictions, strong server CPU growth and a 69% rise in client computing revenue boosted confidence. AMD’s Q3 guidance predicts 28% revenue growth.

Citizens downgraded Snap shares to Market Perform after weak Q2 earnings, citing sluggish ad revenue growth and falling user engagement. North America’s daily active users declined for the second quarter, with Snap losing market share to Meta and TikTok. Concerns include volatile ad execution, AI underinvestment, leadership changes, and ongoing competitive pressure.

UBS downgraded International Airlines Group to “sell,” citing peak earnings, weakening transatlantic demand, UK economic challenges, and loyalty program changes. Despite strong H1 results, UBS forecasts lower 2026 EBIT and limited share price upside. Potential shareholder returns via buybacks could offer upside, but risks around earnings momentum and market conditions persist.

Upcoming data and events

Market attention will today be on the Initial Jobless Claims report and earnings from major firms such as Square, Gilead Sciences, and Monster Beverage, offering key insights into market direction and sector performance.

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