Investor sentiment was lifted by a robust start to the corporate earnings season and a drop in bond yields, with the 10-year US Treasury yield easing to 4.38% from its May peak near 4.60%. Durable goods orders for June fell 9.3%, less than anticipated, while core orders excluding transportation saw a slight rise. Meanwhile, the US dollar strengthened against most major currencies, and crude oil prices retreated on reports of a possible partial restart of production in Venezuela. Outside the US, European and Asian markets closed lower amid ongoing trade discussions between the US and the EU.
Positive momentum in US markets
Below, we outline the key elements that have been driving recent performance in US markets.
Key factors driving gains
Almost one-third of S&P 500 companies have already reported second-quarter results, with 82% beating expectations. These strong numbers have led analysts to revise profit forecasts upward. The performance of technology leaders, often referred to as the “Magnificent 7,” along with robust demand in artificial intelligence sectors, has been a key driver of momentum. Additionally, a weaker US dollar in recent months has supported multinational companies’ overseas revenues.
While market volatility remains subdued, upcoming events such as major technology earnings reports, the Federal Reserve’s policy meeting, and the latest US jobs report could introduce new challenges.
Outlook: opportunities and risks ahead
The global economic landscape remains favorable, often described as a “Goldilocks” scenario with steady job markets, controlled inflation, and improving trade policy clarity. Recent trade agreements have helped ease uncertainty, though overall tariff levels are still trending higher.
However, investors should watch for potential risks, including seasonal market fluctuations, policy changes, and signs of complacency. Given stretched valuations, future gains are likely to depend more on companies delivering solid earnings. A diversified approach, focusing on high-quality companies across different sectors, remains important for the months ahead.
Key trade developments
Recent trade negotiations have brought greater clarity for investment in global markets.
US-EU agreement
The US and European Union finalized a trade agreement that imposes a 15% tariff on EU exports to the US. This deal, which averted higher tariffs that were set to take effect on August 1, also includes commitments by the EU to make significant purchases of energy and defense products and to secure 600 billion in investment from the US. Investors have welcomed the news, particularly benefiting European automakers as well as US energy and defense companies.
US-China talks
The United States and China are also expected to extend their existing tariff truce by an additional 90 days, with discussions in Stockholm focusing on industrial overcapacity and trade fairness. Both sides have signaled optimism, with President Trump suggesting a deal is “very close.”
Market performance around the world
US futures
Following the US-EU deal, futures trading on Sunday evening saw moderate gains, with S&P 500 futures up 0.4%, Nasdaq 100 rising 0.5%, and Dow Jones adding 0.3%. Market participants are now bracing for a key week packed with earnings from major tech companies, a Federal Reserve decision, and crucial inflation data.
European stocks
European equities ended Friday mostly lower as investors balanced mixed corporate results against the backdrop of trade negotiations. The STOXX 600 fell 0.3% due to weakness in industrial and healthcare shares, although luxury and automotive sectors benefited from strong reports from LVMH and Volkswagen.
Currency and commodities
The US dollar strengthened against major currencies last week. However, on Monday it slipped slightly, with the dollar index dipping to 97.5 as the euro strengthened to 1.1757 on news of the trade deal, lifting investor sentiment.
Oil prices rebounded slightly from recent lows, with Brent and WTI crude up 0.3%. Market optimism after the trade deal supported demand expectations, but concerns over OPEC+ production and Venezuelan supply limited the gains.
Stock-specific highlights
Several individual stocks saw significant price moves due to company announcements, analyst actions, and earnings results:
- Tesla and Samsung – Tesla signed a 16.5 billion dollar chip supply agreement with Samsung Electronics, bolstering Samsung’s semiconductor operations through 2033.
- LVMH – Reportedly in discussions to sell its Marc Jacobs brand for around 1 billion dollars, while navigating a mixed luxury market.
- Volkswagen – Reported a 1.3 billion euro first-half hit from US tariffs, cut its full-year profit margin forecast to 4–5% from 5.5–6.5%, expects flat sales, and anticipates a recovery from 2026.
- Valeo – Shares dropped over 16% after cutting its sales forecast by 1 billion euros due to weaker global auto demand.
- Intel – Fell 8% after warnings of possible restructuring and reduced production capacity amid rising competition.
- Country Garden – Reached an agreement with creditors on restructuring terms for 14 billion dollars in debt, aiming for court approval in August.
- Estée Lauder – Upgraded to overweight by Morgan Stanley, which expects a recovery in margins and digital expansion.
- Procter and Gamble – Downgraded by JP Morgan due to weaker sales outlook.
- Carvana – Upgraded by Oppenheimer, which sees underestimated long-term growth potential.
Upcoming events to watch
The week ahead will be busy for markets, with key earnings reports expected from Microsoft, Apple, Amazon, Meta, Alphabet, Intel, Qualcomm, Boeing, Ford, PayPal, Visa, Mastercard, and Procter and Gamble. Investors will also focus on important central bank meetings from the Fed, Bank of Japan, Bank of Canada, and Brazil’s central bank, as well as GDP, inflation, and jobs data releases.
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