Eli Lilly obesity pill miss boosts Novo Nordisk

General market commentary

Equity markets closed mixed on Thursday, as investors digested the latest wave of tariffs from the US administration and weighed corporate earnings results. The technology-heavy Nasdaq rose by 0.4%, buoyed by gains in major tech names like Apple, which surged after announcing a significant expansion of its US manufacturing footprint. In contrast, the Dow Jones Industrial Average fell 0.5%, and the S&P 500 slipped 0.1%, dragged lower by weakness in sectors such as health care. Bond yields were largely stable, with the 10-year Treasury yield edging up to 4.24%, as traders priced in an increasing likelihood of a rate cut from the Federal Reserve later this year amid signs of a cooling labour market. Unemployment claims rose more than expected, while job growth has been revised lower in recent months.

The implementation of sweeping new tariffs, particularly the 100% rates on semiconductor imports, has stirred uncertainty, although exemptions for firms investing in domestic production have eased some market fears. Average US tariff rates have climbed to 18.3%, fuelling concerns over inflationary pressures, yet the growing number of carve-outs suggests the most extreme outcomes may be avoided. Meanwhile, the second-quarter earnings season has proven more resilient than anticipated, with 82% of S&P 500 companies surpassing analyst estimates and earnings growth forecasts for the year now revised up to 10%. Strong results from technology and communications firms have offset weakness in sectors like energy and materials, helping to underpin overall market sentiment despite ongoing geopolitical and economic headwinds.

Latest market and economic update

Asian markets mostly declined on Friday as Trump’s tariffs took effect, weighing on regional economies. Hong Kong’s Hang Seng fell 0.6%, South Korea’s KOSPI dropped 0.3%, Australia’s ASX 200 slipped 0.1%, and Singapore’s Straits Times declined 0.4%, while China’s indexes remained flat. In contrast, Japan’s Nikkei surged 2.2%, boosted by tariff relief and strong earnings from SoftBank.

US equity futures rose overnight, with gains of 0.2% across the Dow, S&P 500, and Nasdaq 100, supported by strength in semiconductor equities after President Trump confirmed tariff exemptions for firms manufacturing in the U.S. Investors also monitored Federal Reserve developments, with Stephen Miran nominated to the Board and Christopher Waller reportedly favoured to succeed Jerome Powell.

European equities closed higher on Thursday, with the STOXX 50 up 1.4% and STOXX 600 rising 1.0%, driven by gains in travel, leisure, and pharma sectors. Novo Nordisk jumped 6.7%, Maersk rose 5.1%, and Allianz gained 4.1% on strong results. Deutsche Telekom and Rheinmetall lagged, falling 4.9% and over 6%, respectively, on weak earnings.

The US dollar index held steady above 98 on Friday but remained set for a 0.5% weekly decline, pressured by growing expectations of a September Fed rate cut and concerns over Trump’s new tariffs. The euro strengthened to around $1.1661, supported by soft US labour data and rising bets on looser monetary policy ahead.

Oil prices steadied in Asian trade but faced a sharp weekly loss amid concerns over tariff-driven demand cooling and a looming supply glut. Brent stood at $66.43 and WTI at $63.03. Rising OPEC+ output and US tariffs on India and China heightened supply-demand worries, while potential Russia-Ukraine talks added further uncertainty.

The Bank of England cut its benchmark interest rate by 25 basis points to 4%, its fifth reduction in 12 months, aiming to support a weakening jobs market amid economic slowdown. However, the outlook for further monetary easing remains uncertain as concerns grow over a potential sharper deterioration in the UK labour market.

Federal Reserve Governor Christopher Waller is a leading candidate to replace Jerome Powell as Fed Chair in May 2026, admired by Trump’s advisers for his forecasting-based policy approach. Despite dissenting on rates in July, markets expect a September cut. Other contenders include Kevin Warsh and Kevin Hassett, with Waller’s chances recently rising to 36%.

Equities on the move

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

SoftBank shares surged over 13% to a record high this morning, boosted by strong Q1 profits and its $30 billion AI investment in OpenAI. The firm reported a net profit of 421.8 billion yen, reversing last year’s loss, and improved its loan-to-value ratio. SoftBank was a key driver of Japan’s Topix reaching a historic high above 3,000 points.

Pinterest missed Q2 profit estimates, reporting 33 cents per share versus the expected 35 cents, despite 17% revenue growth to $998.2 million and strong Gen Z user growth. Shares fell 11% in after-hours trading. The company forecast Q3 revenue in line with estimates, while ad pricing dropped 25% due to rising international impressions.

Block reported higher Q2 income and raised its 2025 gross profit forecast to $10.17 billion, boosted by steady consumer spending. Cash App grew 16%, while the Square segment’s gross profit rose 11%. Bitcoin revenue fell. Adjusted net profit rose to $385 million. Shares gained 6% in extended trading despite earlier losses this year.

Eli Lilly shares fell over 14% after its weight-loss pill orforglipron showed 12.4% weight loss in trials—less than Novo Nordisk’s rival treatments. Analysts had expected stronger results. A high dropout rate also raised concerns. The disappointment overshadowed strong Q2 earnings, with revenue up 38% and full-year guidance raised to $60–62 billion.

ConocoPhillips will sell its Anadarko Basin assets for $1.3 billion, accelerating its $5 billion asset-sale target to reduce debt after acquiring Marathon Oil. The deal boosted second-quarter production by 446,000 boepd. Despite lower crude prices, the company beat profit estimates, with CEO Ryan Lance optimistic about natural gas amid global LNG demand.

Rheinmetall reported Q2 sales and profit below expectations due to German defence contract delays and costs at a new site but confirmed its full-year outlook. The order backlog rose to €63.2 billion, with CEO Papperger optimistic about growth and acquisitions, aiming to expand capacity and alliances amid increased European defence spending.

Allianz reported a stronger-than-expected 13% rise in Q2 net profit to €2.84 billion, beating forecasts and supported by gains from its property and casualty segment and a €300 million UniCredit JV disposal. The insurer reaffirmed its full-year operating profit target of €15–17 billion, with CEO Oliver Baete calling H1 results “record-breaking.”

CRH reported Q2 adjusted EBITDA of $2.463 billion, beating estimates by 2.6%, aided by acquisitions despite a 2.2% organic revenue drop. Revenues hit $10.2 billion, in line with expectations. It raised its 2025 EBITDA guidance floor and reported EPS of $1.95, potentially qualifying for S&P 500 inclusion. Net debt rose to $13.4 billion.

Duolingo shares closed up 13.75% after initially surging 36%, following an increased annual forecast that boosted investor confidence. The company’s user growth and monetisation improved via AI features and social engagement. Adjusted EPS beat estimates, driven by lower AI costs and stronger ad performance, raising its market valuation by roughly $5 billion.

MP Materials reported a smaller-than-expected Q2 loss as rare earths production surged, boosting shares 8%. Output of key metals neodymium and praseodymium nearly doubled. The company secured a US government deal guaranteeing a $110/kg floor price and a $500 million supply agreement with Apple to fund mine expansion in Texas.

Instacart forecasted third-quarter gross transaction value between $9 billion and $9.15 billion, surpassing estimates, as it focused on matching in-store prices and expanding its platform with UberEats. Q2 GTV rose 11% to $9.08 billion, with total revenue at $914 million. Adjusted earnings of 41 cents per share beat expectations, boosting shares 9% in after-hours trade.

Peloton forecast 2026 revenue above estimates and announced a 6% global workforce cut to boost cost savings in its turnaround effort. The company posted a surprise Q4 profit, with operating expenses down 20%, and expects tariff-related costs to reduce 2026 free cash flow by $65 million, while planning price adjustments to offset costs.

US President Donald Trump demanded Intel CEO Lip-Bu Tan’s immediate resignation over his ties to Chinese firms, raising national security concerns. Tan, appointed in March, faces scrutiny amid Intel’s ongoing struggles and slowing factory projects. Despite challenges, Intel insists on commitment to US interests as its market value and manufacturing edge weaken.

Firefly Aerospace’s shares surged 55.6% on its debut on the Nasdaq, valuing the company at $9.84 billion after a successful lunar landing and strong military-space prospects. The Texas-based firm raised $868.3 million in its IPO, boosted by Pentagon contracts and partnerships with Northrop Grumman. Despite past struggles, Firefly is positioned for growth amid rising US space and defence demand.

JPMorgan praised Apple for delivering a “masterclass in managing uncertainty” after it raised U.S. investment plans to $600 billion. The expanded commitment, including a new manufacturing programme and supplier partnerships, reduces tariff risks. Apple will also hire 20,000 workers, focusing on AI and chip engineering, bolstering domestic supply chains amid global geopolitical tensions.

Several Wall Street analysts downgraded Fortinet after its earnings revealed the firewall refresh cycle is already 40-50% complete, dampening growth prospects. Morgan Stanley, KeyBanc, and Piper Sandler cited weaker subscription revenue and limited upgrade visibility, warning of a challenging outlook. Fortinet shares dropped 22%, trading near $75.30 on Thursday.

Morgan Stanley downgraded Caterpillar to Underweight, warning the shares are “priced for perfection” despite signs of weakening fundamentals. The firm sees eroding profitability, temporary demand boosts, and overoptimistic guidance, with 2025 earnings expected 4% below consensus. A bearish scenario could see the equity fall by up to 50%, despite recent strong rally and backlog growth.

Roth upgraded Lyft to Buy from Neutral, raising its price target to $19, citing improving business fundamentals despite slightly missed Q2 revenue. Lyft reported record rides and margins, positive free cash flow, and cost cuts. Growth prospects are boosted by the Freenow acquisition, though risks remain from Uber competition and autonomous driving progress.

Upcoming data and events

Today, traders will watch the Baker Hughes rig count and CFTC’s Commitments of Traders report for market insights, while earnings from Constellation Software, Under Armour, and Muenchener Rueckver offer key sector updates.

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