Nvidia becomes first company to hit $4 trillion valuation

General market commentary

Equity markets closed higher on Wednesday, buoyed by gains in utility and technology shares, while consumer staples and the energy sector underperformed. The upward momentum followed President Trump’s announcement of new tariffs on seven countries, continuing a trade-centric policy approach. The Nasdaq rose 0.7 percent to 22,865, the S&P 500 climbed 0.6 percent to 6,263, and the Dow Jones Industrial Average also advanced 0.5 percent to 44,458. The Federal Reserve’s latest meeting minutes showed a split among officials on the prospect of rate cuts, though investor sentiment remained largely positive. In the bond market, yields edged lower, with the 10-year Treasury yield falling to 4.34 percent following a well-received auction of new government debt.

Elsewhere, Asian markets ended mixed as China's consumer inflation rose to 0.1 percent in June, slightly above expectations. The US dollar weakened against major global currencies, while commodity markets were mostly subdued. Trade developments remain in sharp focus, with new US tariffs announced on 21 countries and a revised timeline extending the negotiation window to August. Early deals, including with Vietnam and the UK, suggest some flexibility in tariff rates, potentially easing inflation concerns and supporting growth prospects.

Latest market and economic update

Most Asian equities rose on Thursday, led by technology shares following Nvidia's rally. South Korea’s KOSPI outperformed, boosted by chipmakers and a rate hold by the Bank of Korea. Japan lagged on stalled US trade talks and fresh tariffs. Gains were tempered across the region by ongoing concerns over President Trump’s escalating tariff measures.

US equity futures dipped slightly overnight despite after-hours gains led by technology shares. The market remained cautious amid renewed trade concerns following President Trump’s 50% tariff on Brazilian imports. Additionally, Federal Reserve minutes highlighting inflation risks tempered optimism, contributing to subdued futures ahead of the open.

European equities extended their gains on Wednesday, with the STOXX 50 rising 1.3% and the STOXX 600 up 0.7%, reaching near one-month highs. The aerospace, defence, and banking sectors hit record levels. EssilorLuxottica and UniCredit surged on corporate news, while mining shares fell amid a decline in copper prices, as US tariff concerns persisted.

The US dollar weakened, with the dollar index falling to 97.3 amid a broad shift toward riskier assets and declining Treasury yields. Minutes from the Federal Reserve signalled openness to rate cuts, further weighing on the greenback. Against the euro, the dollar slipped to 1.1737, reflecting softer sentiment despite gains versus select emerging market currencies.

Oil prices steadied near two-week highs in Asian trade despite a sharp, unexpected rise in US crude inventories, which raised demand concerns. Brent and WTI futures edged lower but remained supported by Middle East tensions. Renewed US tariffs, including a 50% copper levy, and fears of a trade war continue to pressure the market amid OPEC+ output increases.

Bitcoin surged to a record high of around $112,000, driven by rising institutional demand and a broader shift toward riskier assets. Gains were supported by the Trump administration’s pro-crypto stance and expectations of potential US rate cuts. Despite global trade tensions, investor appetite for the world’s largest cryptocurrency remained strong.

EU trade chief Maros Sefcovic said “good progress” had been made toward a trade deal with the US, possibly finalised in the coming days. The extended August 1 deadline offers more time, though Italy’s economy minister warned talks remain complex. Discussions reportedly cover protections for the EU auto industry, including tariff cuts, quotas, and export-based credits.

President Trump announced a 50% tariff on all Brazilian imports starting August 1, 2025, citing Brazil’s alleged attacks on free speech and unfair trade practices. He warned of further increases if Brazil retaliates and offered tariff relief for Brazilian companies manufacturing in the U.S., linking tariff changes to future bilateral relations.

President Trump called on the Federal Reserve to cut interest rates by at least 3 percentage points, arguing it would reduce national debt costs and attract investment. He claimed current rates were excessively high. Meanwhile, Fed minutes showed most officials support a possible rate cut later this year, depending on economic data and inflation developments.

Equities on the move

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

Samsung unveiled thinner, lighter foldable phones to counter Chinese rivals and Apple. The company is focusing on AI features in partnership with Google, premium pricing, and expanding production to offset US tariffs and China’s export restrictions. While foldables remain a niche market, Samsung aims to maintain leadership amid rising competition and supply challenges.

Tesla plans to expand its robotaxi service to the San Francisco Bay Area within a month or two, pending regulatory approval, CEO Elon Musk announced. The service, currently being tested in a limited Austin area with safety restrictions, will also cover a larger part of Austin soon, as Musk confirmed in response to social media queries.

NVIDIA became the first company to reach a $4 trillion market value, driven by strong AI demand and a record first-quarter performance. CEO Jensen Huang highlighted growth in reasoning AI, eased export restrictions, enterprise AI adoption, and reshoring manufacturing as key drivers. Analysts view this as a historic moment, with Microsoft also nearing $4 trillion.

Costco’s shares rose almost 1% in extended trading after reporting an 8% increase in June net sales to $26.44 billion, continuing steady growth. Comparable sales rose 5.8% overall, led by a 10.9% increase in international markets. E-commerce sales surged 11.5%. Excluding gas and currency effects, sales gains were even stronger, reflecting Costco’s successful omnichannel strategy.

Italian candy maker Ferrero is nearing a $3 billion deal to acquire WK Kellogg, the cereal maker behind Froot Loops and Frosted Flakes. The acquisition would diversify Ferrero’s US presence beyond confectionery. WK Kellogg, spun off in 2023, has faced weak demand and scrutiny over artificial dyes, while its sister company Kellanova was sold to Mars last year.

Merck will acquire UK-based Verona Pharma for $10 billion, gaining the respiratory drug Ohtuvayre to offset patent losses on its cancer drug Keytruda. The inhaled treatment, approved for COPD, could generate up to $4 billion annually by the 2030s. The deal marks Merck’s largest since 2023, supporting its post-Keytruda growth strategy.

TikTok is developing a separate U.S.-only app with its own algorithm and data system, aiming to meet U.S. regulatory demands and enable a potential sale amid ongoing U.S.-China tensions. The app will isolate U.S. user data and content, with a joint venture of American investors and ByteDance expected to own the new platform.

TD Cowen raised Meta’s price target to $800 and maintained a Buy rating, expecting Q2 revenue of $45.4 billion and EPS of $6.08, beating estimates. Strong ad growth, AI investments, and WhatsApp monetisation underpin optimism. Long-term forecasts were lifted, supported by engagement gains, video monetisation, and eased tariff concerns.

Oppenheimer upgraded Microsoft to Outperform with a $600 price target, citing strong confidence in its AI strategy and cloud growth. The firm believes the market underestimates Microsoft’s AI potential, comparing its AI business to Amazon Web Services. Azure’s growth and Microsoft’s rare “Rule of 60” profile support a premium valuation and long-term upside.

Morgan Stanley reaffirmed its Overweight rating and Top Pick status on SAP, noting reaccelerated reseller growth and positive channel feedback. While full-year 2025 growth forecasts were lowered to 3.2%, near-term trends remain encouraging. The bank expects SAP’s Current Cloud Backlog growth to stay strong and anticipates a positive market reaction to upcoming earnings.

Jefferies reaffirmed its Buy rating on Alibaba, citing strong AI-driven cloud revenue growth and record daily order volumes in instant commerce as key drivers. Despite margin pressures from growth investments, with EBITA expected to fall 15%, Jefferies remains optimistic about Alibaba’s medium-term prospects and anticipates positive updates on AI cloud and user engagement.

Redburn downgraded Monster Beverage to Neutral, citing rising U.S. aluminum tariffs that will increase production costs and squeeze margins in 2026. With tariffs doubling to 50%, aluminum costs could rise 26%, pressuring gross margins despite hedges. EPS forecasts for 2025–27 were cut 2–5%, and the shares’ recent 20% rally leaves limited upside.

Evercore ISI upgraded Doximity to Outperform, raising its price target to $70, citing cautious full-year guidance that could be exceeded. They expect steady pharma business growth, aided by increased GLP-1 drug spending, and forecast total revenue near $630 million in 2026. Strong margins and high operating leverage support potential earnings growth despite regulatory risks.

Goldman Sachs upgraded Indra Sistemas to Buy, raising its price target to €45, citing strong growth from increased European defence spending, especially in Spain. Forecasts include a 22% CAGR in defence revenue, 10% in air traffic management, and 5% in IT services. EBIT and EPS growth projections were also raised, highlighting significant upside potential.

Upcoming data and events

Today’s market focus will be on initial jobless claims data, a key indicator of U.S. labour market health that may impact investor sentiment and Federal Reserve policy. Major companies reporting earnings include Delta Air Lines, Levi Strauss & Co., and Conagra Brands, providing insights into sectors ranging from air travel to consumer goods.

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