Google avoids harsh antitrust penalty

General market commentary

Global equities closed lower on Tuesday as investors weighed renewed uncertainty around U.S. trade policy after a federal appeals court ruled that most tariffs imposed this year exceeded presidential authority. The Trump administration has appealed to the Supreme Court, leaving questions over the durability of future measures. The Nasdaq Composite fell 0.8% to 21,279.6, the S&P 500 slipped 0.7% to 6,415.5, and the Dow Jones Industrial Average lost 0.6% to 45,295.8. Real estate and industrial shares led the declines while energy and consumer staples gained. The U.S. 10-year Treasury yield rose to 4.28%, oil advanced 2.6% to $65.68 a barrel on supply concerns, and gold hit a record $3,599.40 per ounce on safe-haven demand and expectations of Fed rate cuts.

Company moves added to the picture with Kraft Heinz sliding 7% on plans to split into two firms, Academy Sports and Outdoors falling 7.6% on weaker earnings, and PepsiCo rising 1.1% after Elliott Management called for a North American overhaul. On the data front S&P Global’s U.S. manufacturing PMI rose to 53.0, signalling expansion, though the ISM index remained in contraction at 48.7. European shares slipped on higher yields and fiscal concerns while Asia ended mixed after a regional summit in China. Overall, markets remain caught between modestly improving economic signals, policy expectations and persistent trade-related uncertainty.

Latest market and economic update

Most Asian equities fell on Wednesday, following Wall Street losses amid uncertainty over U.S. trade tariffs. Australia’s ASX 200 dropped 1% despite strong GDP, dampening rate cut expectations. Chinese shares slipped on profit-taking, even after robust PMI data. Japan and Hong Kong also declined, while South Korea edged higher on stronger GDP, offset by weak tech shares.

U.S. futures were mixed overnight, with S&P 500 and Nasdaq contracts edging higher after an antitrust ruling against Google proved less severe than expected, lifting Alphabet shares by over 7% and Apple by nearly 3%. Dow futures slipped, reflecting caution amid tariff uncertainty and ahead of key payrolls data later this week.

European equities fell sharply on Tuesday as rising long-term borrowing costs and sticky inflation data weighed on sentiment. Banks came under pressure, with UniCredit, Santander and Intesa Sanpaolo down over 1.5%, while tech slumped, led by ASML’s 3% drop and Infineon’s 4.5% fall. Bucking the trend, Ferrari gained 2.3% and Schneider Electric rose 0.4% after upgrades.

The dollar index rose above 98.4 this morning, supported by safe-haven demand and ahead of key U.S. data including JOLTS, the Fed’s Beige Book and Friday’s payrolls. Despite elevated Fed rate-cut expectations, the greenback regained strength amid trade and geopolitical risks, pushing the euro lower to around $1.1635, reflecting renewed dollar resilience.

Oil prices were steady in Asian trading on Wednesday, holding gains from U.S. sanctions on Iranian oil shipments. Brent edged down to $69.13 a barrel, while WTI rose slightly to $65.63. Expectations of falling U.S. crude inventories supported prices, though soft economic data and weak manufacturing activity capped gains ahead of the OPEC+ meeting on September 7.

China’s services sector expanded more than expected in August, with the RatingDog PMI rising to 53.0 from 52.6, supported by firm domestic demand and stronger export orders. Analysts cited Beijing’s policy support and easing U.S. trade tensions but warned falling prices and profits could undermine sustainability. The upbeat data contrasted with weaker official figures.

Equities on the move

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

A U.S. judge ruled that Google can retain its Chrome browser and Android OS, while requiring it to share search data with rivals, providing a rare win for Big Tech. Alphabet shares jumped 7.2% and Apple rose 3%. The decision eases investor concerns but strengthens competitors, particularly AI firms, with the case likely headed to the Supreme Court.

Elliott Management disclosed a $4 billion stake in PepsiCo, urging a revival of its North American beverage business and potential divestment of non-core food assets. Shares rose 1.1%. Analysts noted Elliott seeks quick wins, highlighting missteps in soda and energy drinks amid shifting consumer demand and inflation pressures.

Nvidia denied reports of supply shortages for its high-end AI chips, including H100 and H200, calling such claims “erroneous.” The company said it can meet all customer orders without delay and clarified that sales of its H20 product do not affect other chip availability. Shares fell almost 2% amid continued investor focus on AI demand.

The U.S. has revoked TSMC’s fast-track export privileges for its China facility, effective 31 December. Future shipments of American chipmaking equipment will require individual licences, potentially slowing deliveries. TSMC is assessing the impact while maintaining operations. Samsung and SK Hynix’s China plants face similar restrictions.

Amazon shares fell 1.6% yesterday after reports indicated U.S. Prime membership growth slowed during this year’s extended Prime Day. The company added 5.4 million new members, slightly below last year and internal targets. Despite strong sign-ups during the event, slower pre-sale growth highlights mounting competition and tariff-related consumer pressures.

Warren Buffett expressed disappointment over Kraft Heinz’s planned split, saying dismantling the company won’t solve its issues. He acknowledged the 2015 merger creating the food conglomerate “wasn’t a brilliant idea” but stressed Berkshire Hathaway, which holds a 27.5% stake, will maintain its position. Successor Greg Abel has also conveyed his concerns to the company.

Bernstein downgraded Siemens to Market Perform from Outperform, citing stretched valuations and limited upside after the company shifted from a historical discount to a record premium. Despite solid exposure to automation, electrification, and industrial software, earnings and revenue growth are largely priced in.

Bank of America cut its price target for ASML to €724, citing macroeconomic and tariff uncertainties weighing on near-term bookings. Q3 and Q4 order estimates were lowered, despite strong AI spending. The firm expects sales to dip slightly in 2026 but rebound in 2027, supported by new U.S. fabs and rising lithography intensity, while maintaining a Buy rating.

Deutsche Bank upgraded Schneider Electric to Buy from Hold, raising its price target to €240 after meetings with company executives. Analysts cited improved visibility in key segments, management’s reaffirmed 2025 margin targets, and a strong data centre pipeline. Growth is expected to continue into 2026, with a capital markets day scheduled for 11 December.

Deutsche Bank upgraded Ferrari to Buy from Hold, raising its price target to €520, citing the upcoming F80 supercar and ambitious mid-term targets. Analysts expect adjusted EBIT margins above 30% and a €3 billion share buyback. The F80 could add over €450 million in incremental earnings, exceeding current consensus estimates, with 2026 forecasts likely to be upgraded.

Deutsche Bank upgraded Sanofi to Buy from Hold, raising its price target to €110, citing positive expectations for late-stage trials of amlitelimab for atopic dermatitis. The company remains reliant on Dupixent, which drives around 50% of future pharmaceutical revenues. Analysts see the trial results as a potential catalyst to improve investor sentiment.

Morgan Stanley downgraded Commerzbank to Equal-Weight from Overweight, replacing it with ING as a top pick. Despite solid Q2 results and a supportive German macro outlook, the bank’s shares have more than doubled this year, trading at 1.3 times tangible book value. Price target was raised to €36, with limited near-term upside and strategic plan progress needed.

HSBC sees the luxury sector rebounding after four weak quarters, with sales set to improve in H2 2025 and stronger growth in 2026. Soft luxury brands, including LVMH and Kering, are gaining momentum from product launches and cost measures. Hermes was downgraded to Hold, while LVMH and Kering were upgraded to Buy amid expected sales acceleration.

Deutsche Bank downgraded e.l.f. Beauty to Hold from Buy, citing stretched valuations after a 25% rally since early August, despite long-term growth potential. Near-term revenue upside is limited amid slowing U.S. sales, social media backlash, and reputational risks. Price target was raised to $128, reflecting optimism for e.l.f. and Rhode’s international expansion.

Upcoming data and events

Today’s main economic releases include U.S. JOLTs Job Openings, Factory and Durable Goods Orders, alongside the Eurozone HCOB Composite and Services PMIs. Federal Reserve officials are also speaking. Earnings highlights feature Salesforce, Hewlett Packard Enterprise, Dollar Tree, Macy’s, and American Eagle Outfitters, offering insights into the health of key sectors.

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