Equities end mixed on soft data

General market commentary

Markets ended Thursday on a mostly positive note as investors digested a full slate of economic data and corporate earnings. Inflation figures showed encouraging signs, with the US Producer Price Index falling 0.5% in April, defying expectations and offering further evidence that pricing pressures are easing. This follows a similarly subdued consumer inflation print earlier in the week. However, consumer spending showed signs of slowing, with retail sales rising by only 0.1% in April, dragged down by weaker discretionary spending. Interest rate-sensitive sectors, including utilities and real estate, led the market higher amid falling Treasury yields, as the 10-year yield dropped to 4.45% and the 2-year to 3.97%. While the S&P 500 rose for the fourth straight day, the Nasdaq broke its winning streak as growth-oriented equities underperformed.

Corporate earnings were also in the spotlight. Cisco Systems beat expectations with strong demand in its networking business, sending its shares sharply higher. Meanwhile, Walmart's results also exceeded forecasts, though management noted that tariffs may force price increases in future quarters. A proposed acquisition of Foot Locker by Dick’s Sporting Goods sparked significant market moves, with Foot Locker shares surging and Dick’s falling. First-quarter earnings season has been broadly positive, with nearly 80% of S&P 500 firms beating estimates and earnings growth tracking above 13%. Despite some headwinds from tariffs and moderating consumer demand, forecasts for mid-single-digit earnings growth in 2025 remain intact, supported by a still-resilient labour market and easing trade tensions.

Latest market and economic update

Asian equities traded mostly lower on Friday, with Japan’s Nikkei 225 falling 0.5% after weaker-than-expected Q1 GDP data, and Hong Kong’s Hang Seng shedding over 1% as Alibaba dropped more than 5% on a revenue miss. Mainland Chinese indices also dipped, while Australia’s ASX 200 bucked the trend, rising 0.6% on expectations of a rate cut by the Reserve Bank next week.

U.S. equity futures were flat overnight as optimism over the US-China trade deal and easing inflation pressures supported market sentiment. Notable after-hours moves included gains for Vistra Energy following a major acquisition announcement, while Applied Materials shares declined after announcing disappointing guidance and revenue.

European shares rebounded on Thursday, with the STOXX 50 and STOXX 60 closing marginally higher as investors digested earnings and assessed trade risks. Healthcare shares gained on US drug price cap signals, boosting Bayer and Sanofi, while Deutsche Telekom rose after raising guidance, though Siemens and Allianz declined following their earnings reports.

The U.S. dollar index eased to around 100.6 on Friday, ending the week largely unchanged after early gains from the US-China trade truce were offset by softer data and expectations of Fed rate cuts. Against the euro, the dollar remained under pressure, with EUR/USD trading at 1.1201, reflecting cautious sentiment amid concerns over slowing US consumer activity and trade talks.

Oil prices were steady in Asian trading this morning, following sharp losses the previous day amid growing expectations of a U.S.-Iran nuclear deal, which raised concerns over increased supply from Iran. Meanwhile, the International Energy Agency forecast stronger-than-expected global oil supply growth, while softer U.S. producer price data signalled easing inflation pressures.

U.S. Secretary of State Marco Rubio said all NATO members are expected to agree on a target of spending 5% of GDP on defence over the next decade by the 2025 NATO Summit in June. His comments come as Germany and other key members signal support for higher military spending, with most allies already meeting or exceeding the current 2% benchmark.

Equities on the move

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

Bayer is reportedly preparing to settle some Roundup weedkiller lawsuits in Missouri and may consider bankruptcy for its Monsanto unit if settlements fail, aiming to pause litigation and manage liabilities through court. The company has paid around $10 billion in claims and faces about 67,000 pending cases, while seeking a Supreme Court ruling to limit future damages linked to Roundup.

Applied Materials missed second-quarter revenue estimates, hit by weaker sales in its largest semiconductor systems segment amid US export restrictions to China, causing shares to fall over 5% after hours. Despite these challenges, the company reported higher-than-expected adjusted profit per share and forecast third-quarter revenue broadly in line with expectations.

Cava Group beat first-quarter revenue estimates with a 28.1% rise to $331.8 million, driven by strong demand and 10.8% same-store sales growth. It maintained annual sales and margin targets, raised new restaurant openings forecast, and plans no further price hikes due to effective supply-chain management despite tariffs.

Alibaba’s quarterly results missed expectations, with revenue rising 7% to 236.5 billion yuan, falling short of forecasts due to weak growth in both e-commerce and cloud segments. The disappointing performance highlighted ongoing concerns over soft consumer spending in China and muted demand for AI-related services.

Siemens reported a 29% rise in second-quarter profit to €3.24 billion and 7% sales growth to €19.76 billion, maintaining its full-year sales forecast of 3-7% despite economic uncertainty. While its automation unit’s revenue fell 5%, strong demand in Smart Infrastructure and Mobility helped offset the decline.

Thyssenkrupp’s second-quarter operating profit fell 90% to €19 million, hit by high economic uncertainty and tariffs affecting its automotive and steel businesses, causing shares to drop nearly 10%. Despite challenges, the group expects full-year adjusted EBIT of €600 million to €1 billion, with a 24% rise in submarine division profits supporting its outlook.

Boeing secured a $14.5 billion deal with Etihad Airways to supply 28 American-made aircraft powered by GE engines, strengthening US-UAE aviation ties. This followed Boeing’s largest widebody deal with Qatar Airways, which ordered 160 jets plus options for 50 more worth $96 billion during President Trump’s Gulf visit.

Shares of Fiserv fell over 16% on Thursday after the CFO indicated second-quarter growth for its Clover point-of-sale system is expected to match the slower performance seen in the first quarter. This tempered outlook, amid challenges converting non-Clover clients, unsettled investors and highlighted concerns over a plateau in a key growth metric within the competitive fintech sector.

Vistra Corp announced a $1.9 billion deal to acquire seven natural gas-fired power plants from Lotus Infrastructure Partners, adding nearly 2,600 megawatts of capacity to meet rising electricity demand from data centres and AI infrastructure. The move supports Vistra’s strategy to expand its energy portfolio and deliver strong returns while addressing the need for reliable power.

CVS Health has submitted a proposal to acquire a significant number of Rite Aid stores and patient data in Washington, Oregon, and Idaho, as Rite Aid prepares to shut down following its second bankruptcy. Other interested buyers, including Walgreens and Kroger, are also seeking to purchase assets while planning to retain Rite Aid’s workforce.

Coinbase forecast losses of $180 million to $400 million after a cyberattack exposed data of a small subset of customers, though login credentials were not compromised, and has fired implicated employees while reimbursing affected users. The crypto exchange also faces an SEC inquiry over its user metrics and a lawsuit over data security, casting a shadow ahead of its planned S&P 500 debut.

Berkshire Hathaway doubled its stake in Constellation Brands to 12 million shares worth $2.2 billion, cut holdings in Citigroup, Bank of America, and Capital One, and remained a net seller for the tenth straight quarter. It held $347.7 billion cash in March, kept its largest Apple position, and plans CEO succession in 2026.

Wolfe Research upgraded Pinterest to Outperform with a $40 target, citing a more stable macro environment, strong product improvements like Performance+, and an attractive valuation. The firm highlighted the recent U.S.-China trade deal, better-than-expected earnings, and third-party ad partnerships as key drivers for growth and increased confidence in the shares.

Wolfe Research raised its price target for Boeing to $230, citing a $100 billion order from Qatar Airways and growing confidence in the company’s production and cash flow recovery. The firm expects the order to add up to $1 billion to second-quarter results and noted positive signs in 737 MAX deliveries, with strong prospects ahead of the Paris Air Show in June.

Upcoming data and events

Key U.S. economic data scheduled for release today include April’s housing starts and building permits, which will shed light on construction activity. Additionally, the University of Michigan’s preliminary consumer sentiment index for May will offer insight into consumer confidence, potentially impacting market sentiment.

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