Equities continue to drift ahead of inflation data

General market commentary

US equities slipped for a second straight session on Wednesday, with the Dow, S&P 500 and Nasdaq each losing around 0.25–0.33%. Weakness was concentrated in technology, industrials, pharmaceuticals and telecoms, while energy and consumer staples outperformed. The retreat came despite a positive lead from Asian markets and mixed trading in Europe, as US government bond yields continued to rise following last week’s Federal Reserve rate cut, boosting the dollar. Oil added further support to energy names, with WTI climbing 2.5% on the day and 4% so far this week, trading at the upper end of its recent range.

Company-specific news drove notable share moves. Freeport-McMoRan plunged 17% after declaring force majeure at its Grasberg mine in Indonesia, where mudflows forced a halt to operations. Micron Technology slipped nearly 3% despite offering a stronger-than-expected revenue outlook, while Oracle fell 1.5% following reports it plans to raise $15 billion through bond sales, trimming some of its 85% year-to-date advance. Despite these setbacks, analysts remain upbeat on earnings prospects, forecasting S&P 500 profits to rise 7.7% year on year in the third quarter, led by particularly strong growth in technology and semiconductor firms.

Latest market and economic update

Asian shares eased on Thursday as investors took profits and positioned for month- and quarter-end flows. MSCI’s Asia-Pacific index outside Japan slipped 0.2%, while Chinese blue chips were flat and Hong Kong’s Hang Seng fell 0.2%. Japan’s Nikkei rose 0.1%, following strong monthly and quarterly gains, as caution tempered the recent rally.

US futures edged higher overnight after Wall Street’s decline, as investors awaited key data on jobless claims and the Fed’s preferred PCE inflation gauge. S&P 500, Nasdaq 100 and Dow futures each rose around 0.1%, though gains were capped by concerns over a looming partial government shutdown amid continued deadlock in Washington.

European equities were largely flat on Wednesday, with the STOXX 50 and STOXX 600 ending near the session’s open. Luxury shares weighed on the market, with LVMH, Hermès, Ferrari, L’Oréal and EssilorLuxottica falling 1.5–3%. Gains in crude oil firms ENI and TotalEnergies up 2% and defence shares Leonardo, Thales, SAAB and Rheinmetall up 3–6% offset losses.

The dollar index remained above 97.8 this morning, rebounding from the prior session as investors awaited US labour and inflation data to guide expectations for Fed policy. Futures imply only 43 basis points of easing this year. EUR/USD traded around 1.1750, reflecting caution amid uncertainty over rate cuts and a potential government shutdown.

Oil prices eased in Asian trading today after surging to seven-week highs, with Brent down 0.3% at $69.09 and WTI off 0.4% at $64.72 per barrel. A surprise 607,000-barrel drop in US crude inventories and rising geopolitical tensions over Russia supported the market, despite the modest pullback following yesterday’s strong gains.

Equities on the move

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

TSMC revealed plans to make AI chips up to ten times more energy efficient using AI-powered design software. By combining smaller “chiplets” and using tools from Cadence and Synopsys, complex designs are completed much faster than by humans. New technologies, like optical connections, are being developed to overcome limits in moving data on and off chips.

Qualcomm unveiled new chips for PCs and phones, including the Snapdragon X2 Elite for laptops, featuring a corporate security tool called Guardian. The feature allows IT departments to manage and update devices remotely, even when powered off, using 5G connectivity. Analysts say it could attract enterprise buyers and boost Qualcomm’s presence in the PC market.

Intel has reportedly approached Apple for a potential investment and closer collaboration, following recent stakes from Nvidia and SoftBank, as well as a 10% U.S. government investment. The talks are early and may not materialise. Intel, struggling in the AI chip race, seeks partnerships to strengthen its foundry business, diversify suppliers, and boost U.S. operations.

Oracle plans to raise $18 billion in debt to fund expanded cloud infrastructure amid rising AI demand, according to regulatory filings. The company has been increasing spending to support contracts with firms like OpenAI. Proceeds from the bond sales may also be used for stock buybacks, debt repayment, acquisitions, or other general corporate purposes.

Alibaba shares surged over 8% after the company pledged increased AI infrastructure investment and announced a partnership with Nvidia. Plans include new data centres in Europe, Latin America, and Asia, alongside the launch of advanced AI models Qwen3-Max and Qwen3-Omni. Analysts raised price targets, citing Alibaba’s ambition to become a leading global AI services provider.

Freeport-McMoRan declared force majeure at its Grasberg mine in Indonesia, expecting Q3 copper and gold sales to fall 4% and 6%, respectively, after a mining blockage and earlier fire-damaged smelter. Operations may gradually resume in H1 2026, with production potentially 35% lower. Shares dropped 17%, while copper prices rose over 3% on tighter supply expectations.

Citigroup will sell a 25% stake in Grupo Financiero Banamex to Mexican billionaire Fernando Chico Pardo for $2.28 billion, valuing the bank at $9.12 billion. The deal, expected to close in H2 2026, advances Citi’s IPO plans and Latin America exit, with Pardo set to become chair and Manuel Romo remaining CEO.

SAP announced a partnership with OpenAI to launch “OpenAI for Germany,” a sovereign AI service for the public sector. Supported by Delos Cloud on Microsoft Azure and planned for 2026, the initiative aims to enhance government workflows, ensure data sovereignty, and support Germany’s AI ambitions, backed by SAP’s €20 billion digital investment.

A TotalEnergies-led consortium has won a tender to build France’s largest offshore wind farm, a 1.5 GW project off Normandy, marking the company’s first such award in the country. Germany’s RWE is leaving the consortium. The €4.5 billion project aims to supply one million households, with production expected to start in 2033.

Altice France is exploring the sale of SFR Business, its enterprise unit, as owner Patrick Drahi seeks to reduce debt, Bloomberg reports. The unit, offering connectivity, cloud, and cybersecurity services, could fetch several billion euros and attract interest from rivals like Iliad, Bouygues, and private equity, though a sale is not yet certain.

Wells Fargo upgraded Amazon to Overweight from Equal Weight, raising its price target to $280, citing AWS revenue acceleration driven by Project Rainier and partnership with Anthropic. The bank raised 2026-28 earnings estimates, forecasting $11.52 EPS by 2028, while noting risks from execution challenges, Trainium chips, and margin pressure from scaling AI workloads.

BofA Securities upgraded Schneider Electric to Buy, raising its price target to €265, citing strong growth, accelerating margins, and attractive valuation. Key drivers include data centre exposure, European construction recovery, and steady organic growth. EPS is projected to rise from €8.23 in 2025 to €11.40 in 2027, with increasing dividends and free cash flow.

Morgan Stanley reaffirmed SAP as Overweight and a Top Pick, citing strong long-term value despite near-term macro pressures and FX headwinds. While FY26 cloud growth forecasts were slightly trimmed, robust ERP upgrade demand, AI integration, operating leverage, and potential share buybacks support a 17% EPS CAGR through 2028.

Morgan Stanley upgraded ServiceNow to Overweight, raising its price target to $1,250, citing strong subscription growth, high renewal rates, and expanding workflow automation. Despite AI risks and federal spending concerns, early adoption of AI tools, efficiency gains, and positive customer feedback present a compelling investment opportunity amid market undervaluation.

Morgan Stanley downgraded Adobe to Equal-weight from Overweight, cutting its price target to $450, citing uncertainty over generative AI’s growth impact. While valuing Adobe’s core business, the bank noted slower Digital Media ARR growth, delayed GenAI monetisation, competitive pressures, and unclear near-term catalysts, suggesting better opportunities elsewhere in software.

Jefferies downgraded Vistra Corp to Hold from Buy, cutting its price target to $230 due to delays in the Comanche nuclear contract and the shares strong run-up. While the core business remains solid with raised 2026 EBITDA estimates, valuation concerns and reduced probabilities for future gas and data centre deals prompted the cautious outlook.

Upcoming data and events

Today’s U.S. economic data includes August durable goods orders, Q2 annualised GDP growth, initial jobless claims, and wholesale inventories. Housing figures are also due, with existing home sales and their monthly change for August. Earnings season continues with key results expected from Costco, Accenture, and CarMax.

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