Trump piles pressure on Powell to cut rates

General market commentary

Technology shares drove US equity indices to new record highs, with the Nasdaq Composite climbing 0.2% to close at 21,058 and the S&P 500 edging up 0.1% to 6,363.4 — marking its fourth consecutive record close. Optimism around artificial intelligence investment and strong results from Alphabet, which reported double-digit revenue growth in cloud and services, helped lift sentiment. However, gains were uneven, as Tesla shares tumbled 8.2% on disappointing earnings, while the Dow Jones fell 0.7% and the small-cap Russell 2000 also declined. Energy shares led sectoral advances, while consumer discretionary lagged. Globally, equity markets were buoyed by renewed optimism over trade deals, with the Nikkei outperforming in Asia and European and Korean indices also strengthening. Signs of potential agreements between the US and both the EU and South Korea helped ease trade tensions, although the EU warned of tariffs on over $100 billion in US exports if talks falter.

Economic data released on the day painted a mixed picture. US new home sales fell short of expectations, signalling continued weakness in the housing sector, while manufacturing indicators showed ongoing pressure. Weekly jobless claims pointed to a labour market still facing sluggish hiring. Treasury yields rose slightly amid the data, while the dollar remained broadly flat. Meanwhile, President Trump made a rare visit to the Federal Reserve, renewing his calls for significant interest rate cuts and criticising the central bank’s $3.1 billion renovation project. Though tensions were evident between Trump and Fed Chair Jerome Powell, Trump said he did not intend to fire Powell. The visit, just ahead of a key policy meeting, raised concerns over political interference in the Fed’s independence but had little immediate effect on equity markets. The central bank is expected to hold rates steady at the upcoming meeting.

Latest market and economic update

Asian equities mostly fell this morning but posted strong weekly gains, buoyed by optimism over US trade tariffs and AI momentum. Japan and Hong Kong led weekly advances, despite a Friday pullback. China and Singapore also logged gains, while South Korea saw muted performance. Australia declined on profit-taking, and India struggled despite modest futures gains.

U.S. equity futures inched higher overnight following mixed gains in the previous session, with the S&P 500 and Nasdaq hitting record highs. Strong earnings from Alphabet boosted sentiment, while Tesla shares fell sharply. Markets await next week’s Federal Reserve meeting, with President Trump signalling no intention to dismiss Chair Powell after his Fed visit.

European equities rose modestly on Thursday, with the STOXX 50 and STOXX 600 up 0.3%, as investors weighed the ECB’s decision to keep interest rates steady and awaited clearer guidance on monetary policy amid easing inflation. Positive trade developments, including expected US tariff cuts on EU goods, further supported market sentiment.

The US dollar steadied near two-week lows on Friday, set for its largest weekly decline in a month amid easing US tariff concerns and optimism over upcoming central bank meetings. The euro held around $1.175, near a four-year high, supported by trade deal progress and the dollar’s weakness, with market focus on Fed and BOJ policy signals.

Oil prices held steady in Asian trading on Friday after climbing over 1% in the previous session, supported by easing US trade tensions and expectations of tighter Russian gasoline export controls. Brent rose to $69.29 and WTI to $66.13 per barrel. Hopes of further trade deals and limited US approval of Venezuelan oil operations also buoyed sentiment.

Equities on the move

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

Deckers Outdoor beat first-quarter expectations as strong international demand for Hoka and UGG lifted net sales 16.9% to $964.5 million. Despite higher costs from a 20% Vietnam tariff, the company plans price hikes to offset expenses. International sales surged nearly 50%, offsetting a slight US decline. Second-quarter sales are expected in line with estimates.

American Airlines restored its full-year outlook but gave a wide forecast range due to weak domestic travel demand and economic uncertainty. It expects adjusted earnings between a 20-cent loss and 80-cent profit per share in 2025. Despite a strong international market, domestic revenue fell 6.4%. Shares dropped over 9% after the update.

Chipotle’s shares fell 13% after weaker-than-expected quarterly sales and a lowered annual sales forecast, citing cautious consumer spending amid inflation. The company is boosting digital marketing and promotions to regain market share. Despite price hikes, Chipotle maintains strong pricing power and holds over a quarter of fast-casual restaurant visits in the US.

TotalEnergies reported a 23% drop in Q2 earnings to $3.6 billion, hit by lower oil and gas prices despite higher production. Net debt surged 89% to $25.9 billion amid acquisitions and working capital increases. The firm plans $2 billion quarterly buybacks and expects a 3% rise in hydrocarbon output in Q3, with refining margins improving.

Deutsche Bank reported a better-than-expected €1.485 billion Q2 profit, rebounding from a loss a year earlier. Strong fixed-income trading offset weaker deal-making and euro strength. The investment bank led revenue gains, while retail and corporate divisions underperformed. CEO Christian Sewing said results keep Deutsche on track for 2025 targets, despite a downgraded corporate revenue outlook.

Puma expects a loss in 2025, revising down its outlook due to weaker sales and a significant impact from US tariffs. Q2 sales fell short of expectations, with declines in North America and Europe. Despite cost-cutting efforts, tariffs are forecast to cut gross profit by €80 million, weighing heavily on performance.

Blackstone reported stronger-than-expected Q2 profits, with distributable earnings up 25% to $1.6 billion and assets under management rising 13% to $1.2 trillion. The firm is preparing more IPOs than since 2021, signalling market optimism despite tariff concerns. CEO Schwarzman highlighted robust demand for AI infrastructure financing as a key growth driver.

Honeywell beat second-quarter expectations, boosting its annual forecasts on strong aerospace demand. Sales rose 8.1% to $10.35 billion, with adjusted profit per share at $2.75. Despite higher costs from tariffs and supply chain challenges, the company raised 2025 profit and revenue guidance. Shares fell 4.7% amid tariff concerns.

Newmont exceeded second-quarter profit expectations, boosted by a gold price rally with average realised prices rising nearly 40% year-on-year. Despite an 8% drop in production, higher prices and cost control supported earnings of $1.43 per share. The miner also launched a $3 billion share buyback and continued asset divestments to reduce debt.

Google Cloud secured a $1.2 billion, five-year deal with ServiceNow, marking a significant win against rivals AWS and Microsoft Azure. ServiceNow, which helps companies automate IT and personnel operations, has multiple cloud agreements but did not disclose contract values. Its Chief Product Officer, Amit Zavery, previously worked at Google Cloud.

U.S. publisher McGraw Hill debuted on the NYSE at $17 per share, valuing the company at $3.25 billion, reflecting a mixed investor response. The IPO raised $415 million, priced below its target range. Despite market uncertainty, McGraw Hill remains a leading education publisher, serving most U.S. K-12 and higher education institutions.

New Street Research upgraded ASML to Buy with a €790 price target, citing its strong 2026 positioning and high exposure to leading-edge chipmaking. Despite low visibility in wafer fab equipment spending, ASML is expected to outperform peers. Trading below historical multiples, it faces limited de-rating risk, with normal Q3 orders likely easing growth concerns.

Oppenheimer upgraded Spotify to Outperform with an $800 target, citing strong user growth and ad monetisation potential. The firm forecasts 75 million net new users annually through 2030 and €10 billion in ad revenue if Spotify narrows its free-tier gap. Despite short-term margin pressure, long-term gross margins could rise to 37%, supported by podcasts and cost control.

Barclays maintained an Equal Weight rating on Tesla, highlighting a growing gap between its AI-driven narrative and weakening fundamentals. Despite solid Q2 margins, risks loom from expiring U.S. EV tax credits, tariffs, and lower regulatory credit sales. While Musk pushes AI ambitions via Robotaxi and xAI, Barclays warns fundamentals may eventually reassert market relevance.

Mizuho warned rising competition in food delivery is squeezing margins at Alibaba and JD.com, slashing Q2 EBITDA forecasts due to heavy subsidies. Despite cutting price targets, it maintained Outperform ratings, citing defensive qualities. The bank sees profitability delayed unless regulation curbs the subsidy race, with food delivery and video units offering potential upside for Alibaba.

Goldman Sachs upgraded Birkenstock to Buy, citing strong pricing power, resilient margins, and global market share potential. With in-house European manufacturing and expansion plans in the U.S., Goldman expects 15% annual EBIT growth and a 26% margin in 2025. The €60 price target implies 21% upside, with risks from U.S. tariffs partly offset by brand strength.

Upcoming data and events

Key releases today include U.S. durable goods data, offering insight into business investment, and Germany’s IFO business sentiment, a gauge of economic confidence. On the earnings front, Volkswagen reports Q2 results, with investors watching closely for margin and EV performance amid broader concerns over global demand and competitive pressure.

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