Equities give up gains ahead of further bank earnings and

General market commentary

Equity markets ended Tuesday on a mixed note, as investor sentiment was influenced by fresh inflation data and the start of earnings season. The Dow Jones Industrial Average declined 1% to close at 44,023.3, while the S&P 500 slipped 0.4% to 6,243.8. In contrast, the Nasdaq Composite rose 0.2% to 20,677.8, marking a new all-time high. Outside of the technology sector, which continued to show strength, most sectors ended in negative territory, led by a 2.1% drop in materials. The rally in tech shares was largely driven by Nvidia, which surged 4% after announcing plans to resume GPU sales in China. Despite tariff uncertainty and economic headwinds, equities have remained resilient, with the S&P 500 now more than 25% above its April lows.

Tuesday’s market performance came alongside the release of the latest US consumer price index figures, which showed inflation in line with expectations. Headline CPI rose 2.7% year-on-year in June, slightly above forecasts, while core CPI held steady at 2.9%. Investors also digested second-quarter results from major banks, with JPMorgan and Citigroup posting strong figures, though Wells Fargo saw its shares fall sharply after lowering its full-year net interest income outlook. Meanwhile, Treasury yields edged higher, with the 10-year rate reaching 4.49%, as markets priced in fewer near-term interest rate cuts. Looking ahead, potential tariff increases and ongoing geopolitical tensions could introduce volatility, but pullbacks may offer investors the chance to rebalance portfolios and seek quality at more attractive valuations.

Latest market and economic update

Asian equities mostly declined this morning amid renewed concerns over President Trump’s trade tariffs and slowing Chinese growth. Mainland Chinese shares slipped after mixed GDP data, while Japan, South Korea, and Australia also fell. Hong Kong’s Hang Seng outperformed, rising 0.8% on strong tech gains driven by Nvidia-related optimism in China’s AI development.

US equity futures dipped overnight as investors grew cautious ahead of key corporate earnings and the June Producer Price Index release. Bank of America, Goldman Sachs, Morgan Stanley, and Johnson & Johnson are due to report. The pullback follows Tuesday’s mixed session, with inflation concerns weighing on the Dow and S&P 500, while tech-led Nasdaq edged higher.

European equities closed mostly lower on Tuesday as concerns over US tariffs on EU imports weighed on sentiment. The STOXX 50 fell 0.3%, while the STOXX 600 slipped 0.4%. Financials led declines, with Allianz, BBVA, and UniCredit down up to 2%. Ericsson dropped over 4%, while ASML gained 2.7% on eased Nvidia chip export restrictions.

The US dollar index held above 98.5 on Wednesday, near a three-week high, as traders awaited the Producer Price Index for further inflation clues amid Trump-era tariff concerns. The euro weakened to 1.1613 against the dollar, pressured by reduced expectations for Fed rate cuts after softer core CPI and cautious remarks from Fed officials.

Oil prices rose in Asian trade, rebounding after two days of losses. Brent climbed 0.4% to $69.01, while WTI gained 0.6% to $66.94. The recovery followed OPEC+ reaffirming its demand outlook despite rising output. Prices were earlier pressured by Trump’s tariff threats and modest increases in US crude and fuel inventories.

Equities on the move

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

Apple has signed a $500 million deal with Pentagon-backed MP Materials to secure a U.S.-based supply of rare earth magnets, reducing reliance on China. The agreement, including a $200 million prepayment, supports recycled production at MP’s Texas facility. MP shares surged 21%, while Apple aims to bolster its domestic supply chain amid geopolitical tensions.

Roblox has launched a new licensing feature, enabling intellectual property holders like Netflix, Lionsgate, Sega, and Kodansha to integrate popular characters into its games. Aimed at expanding beyond gaming, the move supports Roblox’s ambition to become a broader digital hub. The platform will streamline licensing access and plans to onboard more IP holders in 2025.

JPMorgan raised its 2025 net interest income forecast to $95.5 billion after strong investment banking and trading results. CEO Jamie Dimon highlighted economic resilience but warned of risks from tariffs and geopolitical tensions. Despite a 17% profit drop due to a prior one-off gain, the bank reported solid revenue growth and remains cautious on acquisitions.

Wells Fargo beat Q2 profit estimates but cut its 2025 net interest income guidance, causing shares to drop over 5%. The bank plans to grow deposits and loans cautiously following the lifting of its $1.95 trillion asset cap. Investment banking fees rose 9%, while credit losses declined, supporting profit growth despite tariff-related borrowing concerns.

BlackRock’s Q2 assets under management hit a record $12.53 trillion, but shares fell over 5% after a major Asian client withdrew $52 billion from an index strategy. Net inflows dropped to $46 billion, below forecasts. Despite solid equity inflows and growth in private markets and tech, revenue and active flows disappointed amid market and fee pressures.

Renault appointed finance chief Duncan Minto as interim CEO amid weaker-than-expected first-half cash flow and lowered its full-year operating margin forecast to 6.5%. The company faces soft European demand and rising competition. Cost-cutting and CEO succession plans, with candidates Denis Le Vot and Maxime Picat, will be key topics at its July 31 results.

Inditex plans to relaunch its budget brand Lefties in France to attract younger consumers and compete with low-cost rivals like Shein. Lefties, known for affordable fashion, currently operates mainly in Spain and Portugal. Inditex is also expanding other brands, including Bershka, Stradivarius, Oysho, Massimo Dutti, and launching Zara Man in the US.

Oppenheimer expects major semiconductor firms to beat earnings forecasts, driven by soaring AI infrastructure investment and recovering industrial and automotive demand. It raised price targets for Nvidia, Broadcom, and others, highlighting AI data centre growth and rising chip use in vehicles. Top picks include Nvidia, Broadcom, Marvell, and Monolithic Power Systems.

Jefferies downgraded DoorDash to Hold from Buy, citing that much of its growth is already priced in after a 45% rally this year. Despite expected EBITDA doubling by 2027, rising affordability initiatives may limit take rate growth. The $250 price target reflects a 120% premium, with cautious outlook on newer ventures.

Upcoming data and events

Today’s key economic data releases include the Producer Price Index and EIA Crude Oil Inventories, which could influence market sentiment. Earnings season continues with major companies such as ASML Holdings, Johnson & Johnson, Bank of America, Goldman Sachs, and Morgan Stanley all set to report, adding further impact to today’s market dynamics.

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