S&P and Dow score record high closes

General market commentary

Global equity markets experienced positive momentum, with the S&P 500 reaching a record high on Thursday, buoyed by solid earnings from companies like NVIDIA, which exceeded analysts' expectations for both revenue and profit. The market was further supported by gains in communication and energy sectors, while utility and consumer staples lagged behind. Despite these advancements, concerns about potential macroeconomic challenges persist, as seen in the mixed performance across non-U.S. markets. In Asia, the South Korean central bank maintained its policy rate, while new U.S. tariffs on Indian imports came into effect, adding to global uncertainty. Meanwhile, geopolitical tensions, particularly Russia's airstrikes on Ukraine, pushed oil prices higher, with WTI crude benefiting from the turbulence.

On the domestic front, U.S. economic data pointed to a cooling labour market, although it remains relatively strong. Jobless claims slightly exceeded expectations, and continuing claims fell, signalling fewer people receiving unemployment benefits. The second-quarter GDP growth was revised up, bolstered by stronger fixed investment, while inflation, as measured by the Personal Consumption Expenditure (PCE) index, showed a slight uptick. Despite this, markets are anticipating potential interest rate cuts later this year, with the bond market pricing in multiple rate reductions. Investors remain cautious, particularly in the tech sector, where high-flying shares like NVIDIA and Marvell Technology have seen volatility amid trade uncertainties and tariff concerns.

Latest market and economic update

Asian equities had a mixed session on Friday. Chinese markets continued to outperform, driven by government stimulus and chip production efforts, with the Shanghai Shenzhen CSI 300 reaching a three-year high. However, Japan's Nikkei 225 fell due to weak economic data. Other regional markets were cautious, with South Korea and India also experiencing declines.

US equity futures held steady overnight ahead of the PCE price index release for policy cues. In after-hours trading, Autodesk surged 10%, and Ulta Beauty gained 2.5% on strong forecasts, while Dell Technologies fell 5% on a weaker outlook. The S&P 500 reached a record high, supported by resilient economic data and AI optimism.

European equities closed mixed on Thursday, with the STOXX 50 rising slightly and the STOXX 600 falling 0.2%. Shares of companies with exposure to US chipmakers and AI were mixed, such as ASML losing 1% and Infineon gaining 1.1%. Pernod Ricard rose 1.4%, and despite weak car registration data, auto producers gained, led by Chinese EV maker BYD.

The dollar index held steady around 97.9 on Friday, pausing its recent decline as investors awaited the PCE price index for inflation signals. Core PCE is forecast to rise 2.9% in July. The dollar is set to lose over 2% in August, with markets pricing in a 25 basis-point rate cut in September. EUR/USD is at 1.1661.

Oil prices fell this morning but are set for weekly gains, with Brent up 0.6% and WTI up 0.8%. Prices were supported by Ukrainian attacks on Russian oil terminals but weighed down by reduced US summer demand and increased supply from major producers. OPEC+ output rises and seasonal refinery slowdowns are expected to build global stockpiles.

Federal Reserve Governor Christopher Waller expressed support for a 25-basis-point rate cut in September, citing slowing job growth and contained inflation once tariff effects are excluded. He noted risks of a rapid deterioration in the labour market and advocated for further rate cuts in the coming months, guided by economic data.

Equities on the move

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

Marvell Technology’s revenue forecast missed market expectations, sending shares down 11.3%. The chipmaker reported weaker-than-expected growth in its data centre and custom ASIC segments. CEO Matthew Murphy cited "lumpiness" in business, while delays in Microsoft’s AI chips impacted Marvell’s prospects. The company expects third-quarter revenue to fall short of analysts' estimates.

Dell raised its annual revenue and profit forecasts, driven by strong demand for AI-optimised servers powered by Nvidia chips. However, shares fell 5.3% in after-hours trading as its third-quarter profit outlook missed estimates. Dell expects $20 billion in AI server revenue by fiscal 2026, while second-quarter revenue surpassed expectations at $29.78 billion.

SentinelOne raised its annual revenue forecast, driven by increasing demand for its AI-powered cybersecurity tools. Shares surged 9% after the company projected third-quarter revenue of $256 million. Its annualised recurring revenue (ARR) rose 24% to $1 billion. Second-quarter revenue grew 22% to $242.2 million, matching analysts’ estimates, with adjusted earnings per share of 4 cents.

Ulta Beauty raised its annual sales and profit forecast after exceeding quarterly expectations, driven by strong store sales and demand for trendy brands like Elf Beauty. The company expanded internationally and added celebrity labels, such as Fenty Beauty. Second-quarter sales hit $2.79 billion, and Ulta now expects annual net sales of $12–$12.1 billion.

Dollar General raised its annual earnings forecast, citing strong demand from value-seeking consumers and partnerships for same-day delivery. The retailer has benefitted from store remodels, cost savings, and increasing traffic, including higher-income shoppers. Despite tariff-related pressures, same-store sales rose 2.8%, with the company now expecting net sales growth of 4.3% to 4.8% in 2025.

Pernod Ricard forecast improved sales for fiscal 2026, despite weak demand and de-stocking in China and the US during the first quarter. The company expects a lower-than-expected impact from tariffs, projecting a better year compared to 2025. Long-term growth projections include 3-6% annual sales growth and organic margin expansion through 2027-2029.

Caterpillar has offered to acquire Australian software firm RPMGlobal, with RPM’s shares surging 17% after strong earnings. The deal's value is undisclosed, and RPM halted trading. Caterpillar also raised its 2025 tariff cost estimate to $1.5–$1.8 billion, citing additional levies, while increasing its third-quarter tariff forecast to $600 million.

German pharmaceutical firm Stada plans to launch an IPO this autumn, after postponing earlier this year due to market volatility. CEO Peter Goldschmidt confirmed preparations are underway, citing strong first-half growth. The company reported 6% revenue growth and record EBITDA, with a diversified portfolio across healthcare, generics, and specialty sectors.

Analysts raised their price targets for Nvidia following strong results. JPMorgan increased its target to $215, Morgan Stanley to $210, KeyBanc to $230, and Truist to $228. DA Davidson raised its target to $195, while maintaining a neutral rating, citing concerns over China. All analysts highlighted Nvidia’s strong AI infrastructure and growth prospects.

Morgan Stanley added Ferrari NV to its MAPS Global Equity list, citing the luxury carmaker's strong brand, resilience, and growth. The analysts highlighted Ferrari's revenue growth, global presence, and low price elasticity. Despite global uncertainties and tariffs, demand remains robust, with order books largely sold out and excitement around Ferrari's upcoming fully electric vehicle launch.

J.P. Morgan has placed Siemens on its ‘Positive Catalyst Watch’ list ahead of its Capital Markets Day on December 9, expecting the company to address its 73% stake in Siemens Healthineers. The brokerage raised Siemens’ price target to €300 by December 2026, citing improved margins, growth prospects, and cash flow from its restructuring.

Upcoming data and events

Today's main market focus is on US Core PCE Price Index, alongside Personal Spending and Income. In Europe, Germany's CPI and France's CPI and Consumer Spending are key to monitor inflation and growth. Among earnings, Alibaba's quarterly report is the most notable.

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