Equities and dollar extend gains on strong data and earni

General market commentary

Equity markets closed higher on Thursday, with the S&P 500 and Nasdaq reaching fresh record highs, continuing a streak of strong performance in recent weeks. Gains were led by financial and technology shares, while health care and real estate lagged behind. Investor sentiment was buoyed by a sharp rebound in U.S. retail sales for June, suggesting renewed economic momentum. Jobless claims edged lower, reinforcing the view that the labour market remains resilient, though gradually cooling. Bond yields rose slightly, with the 10-year U.S. Treasury yield at 4.46 percent, below its recent May peak. In other markets, Asian and European equities posted gains, with eurozone inflation holding steady at the European Central Bank’s 2 percent target. The U.S. dollar advanced against major currencies, and oil prices climbed amid heightened geopolitical tensions following Israeli strikes on Syria.

Investor concerns linger beneath the surface, however, as some professionals warn of stretched consumer balance sheets and rising indebtedness, particularly through alternative credit options like ‘buy now, pay later’ platforms. Despite this, several companies delivered strong results. PepsiCo shares surged 7.5 percent on upbeat forecasts driven by demand for energy drinks and healthier beverages, while United Airlines rose over 3 percent amid signs of stronger travel demand. TSMC, a key supplier of AI chips, gained nearly 3.5 percent after posting record quarterly profits. After the market closed, Netflix reported earnings ahead of expectations, helped by the final season of "Squid Game", though its shares dipped slightly in after-hours trading amid volatility.

Latest market and economic update

Asian markets equities mostly advanced this morning, tracking Wall Street’s overnight gains, with Australia’s ASX 200 hitting a record high. Chinese and Hong Kong markets rose modestly, while Singapore also edged higher. Japan lagged as sticky inflation raised rate hike fears. Chip shares traded mixed despite TSMC’s strong results, amid caution over U.S. trade tariffs.

US equity futures edged higher overnight, extending Wall Street’s record run after strong retail sales and tech earnings. S&P 500 and Nasdaq 100 futures rose 0.1%, while Dow futures gained 0.2%. Netflix dipped 2% in after-hours despite strong Q2 results and raised guidance, as markets expected a more robust 2025 outlook.

European equities rallied on Thursday, reversing recent losses as investors digested corporate earnings and trade outlooks. The Eurozone’s STOXX 50 rose 1.6%, while the STOXX 600 added 1%. Schneider Electric and ASML led gains, with ABB surging nearly 10% on record orders. However, Nordea and Novartis fell on weaker profits and mixed investor reaction.

The US dollar edged lower to 98.4 on Friday but remained on course for a second straight weekly gain, supported by strong retail sales and falling jobless claims. Despite mixed Fed signals on future rate cuts, economic resilience lent support. The dollar held firm against the euro, which traded at 1.1628, reflecting underlying dollar strength.

Oil prices held steady in Asian trade on Friday after gains driven by drone attacks on Iraqi oil fields. Supply concerns persisted despite a deal to resume Kurdish exports. U.S. inventory data showing a larger-than-expected draw supported prices, alongside signs of tight market conditions. However, oil remained on track for modest weekly losses amid easing Russia sanctions fears.

Equities on the move

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

Netflix beat Q2 earnings forecasts, lifted its 2025 revenue guidance slightly, and credited strong performance to hits like Squid Game season three. However, shares fell 1.8% in after-hours trade as investors had expected more ambitious guidance. Analysts noted concerns over conservative forecasts and reliance on price hikes, despite strong content and growing ad-supported offerings.

United Airlines sees strong bookings and rising pricing power, with CEO Scott Kirby optimistic that their revised 2025 profit forecast of $9-$11 per share may be conservative. Improved demand, aided by geopolitical stability and tariff clarity, plus industry efforts to cut unprofitable flights, are boosting airfares and premium cabin revenue, driving growth.

PepsiCo reported better-than-expected Q2 results, driven by steady demand for snacks and sodas in the US and Europe. The company plans to rebrand Lay’s and Tostitos with no artificial colours and adjust its supply chain amid tariff impacts. Shares rose 6%, with full-year earnings decline forecast cut to 1.5%.

Swiss engineering firm ABB reported record quarterly orders, driven by a 37% surge in the US and strong demand for AI-related data centre products. Core operating income rose 9% to $1.71 billion, beating forecasts. Despite trade uncertainties affecting robotics, ABB’s data centre business grew 10-20%, supported by global tech and energy investments.

Publicis raised its full-year organic growth forecast to nearly 5% after reporting 5.9% Q2 growth and €1.24 billion adjusted EBIT in H1. The firm gained $5.2 billion in new business, with strong regional growth. CEO Sadoun noted steady client spending but cautioned H2 may see reduced budgets and softer Sapient sales.

Union Pacific is reportedly exploring a potential takeover of Norfolk Southern, a deal that could create a $200 billion rail giant. Norfolk shares rose 4.5% in after-hours trading. Talks are still early and face major regulatory hurdles, including approval from the Surface Transportation Board and potential opposition from unions concerned about job losses and service disruptions.

Uber will invest $300 million in Lucid to deploy over 20,000 autonomous Lucid Gravity SUVs starting in 2026, aiming to launch robotaxi services in a major U.S. city. The deal includes self-driving tech from Nuro and marks Uber’s renewed push into robotaxis amid growing competition from Tesla, Waymo, and others.

GSK’s shares dropped 5% after a US FDA advisory panel voted against recommending approval for its blood cancer drug Blenrep, citing concerns over eye damage risks outweighing benefits. The panel rejected Blenrep combined with Velcade and Pomalyst, impacting FDA’s expected decision by July 23 and marking a setback for GSK’s US market re-entry.

Talen Energy’s shares rose 16% in extended hours after announcing agreements to acquire two efficient gas-fired power plants for $3.5 billion, boosting annual power generation by 50%. The deal is expected to increase free cash flow per share by over 40% in 2026. Talen plans $3.8 billion in new debt and aims to maintain a leverage target below 3.5x by 2026.

Oklo Inc. rose 4.3% after successfully completing the U.S. Nuclear Regulatory Commission’s pre-application readiness assessment for its Aurora powerhouse project. The NRC found no major issues in the license application phase, signalling progress in Oklo’s licensing efforts. The company plans to submit its first combined licence application phase later this year.

Scotiabank initiated coverage on Oracle with a Sector Outperform rating and $300 target, praising its AI infrastructure push via NeoCloud and the Abilene data centre. The bank expects GPU revenue to quadruple by 2026 and forecasts strong margins despite growth. Oracle’s cloud database partnerships and AI focus underpin its valuation premium and faster revenue growth.

KeyBanc raised price targets on Alphabet, Meta, Pinterest, and The Trade Desk, citing stable macro conditions and strong product cycles. It expects solid Q2 results, with Alphabet benefiting from AI growth and valuation appeal. The firm noted improved investor sentiment across digital ad platforms, driven by a stable ad market, travel recovery, and a weaker US dollar.

Upcoming data and events

Today’s economic data includes the release of building permits and housing starts in the US, offering insight into the housing sector. Earnings reports feature American Express, 3M, and Charles Schwab, providing key updates on consumer spending, industrial activity, and financial markets.

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